west*wales*news*review

West Wales News Review — analysis with a sustainability slant

Know Your Place! Don’t Annoy Big Shots!

The dangers inherent in upsetting people who are richer and more powerful than you have not been removed from our particular political system.

This week Jacqui Thompson, the Llanwrda blogger who in 2011 was arrested, handcuffed and detained for trying to film part of a public council meeting on her mobile phone, was in court to argue against the immediate forced sale of her family home, owned by her husband, forestry worker Kerry, and herself.

The court appearance was the latest episode in the long-running conflict between Carmarthenshire County Council’s chief executive Mark James, one of the highest paid government officials in Wales, and housewife and (unpaid) community councillor Jacqui.

Mr James secured a publicly funded indemnity to sue Jacqui for libel, specifically for calling him a Pinocchio and for referring to a slush fund.  His action was in response to Jacqui’s  high-risk decision to sue him for libel, after he had criticised her and her family on another blog, Madaxeman, run by Mr Martin Milan.

A key factor is the elected councillors’ decision to offer an indemnity for Mr James’ libel claim. The Wales Audit Office said this was unlawful, and it is forbidden in The Local Authorities (Indemnities for Members and Officers) (Wales) (Order) 2006 — but apparently allowed under a catch-all clause of Section 111 of the much earlier Local Government Act 1972, which permits  authorities to do “anything (whether or not involving expenditure …… ) which is calculated to facilitate or is conducive or incidental to the discharge of any of its functions”. Even rob a bank, perhaps, the wording is so permissive. The council relied on the loophole contained in the 1972 Act, as described in People First’s article below:

http://www.peoplefirstwales.org.uk/2016_11_01_archive.html

The Executive Board meeting which agreed to the indemnity, as reported above, heard that any damages would be paid to the council (paragraph 12, sub-section i).

    “(i) The Head of Paid Service has confirmed that he is not motivated by a wish to benefit financially and that accordingly should his action be successful any damages awarded to him will be paid over to the Authority and will not be kept by him.”

Mr Justice Tugendhat, at that point soon to retire, awarded Mr James damages. In his opinion — and libel is often all about opinion, about balance of probabilities, not hard evidence — Mr James was all right and Jacqui was all wrong. The judge’s words prompted Jacqui’s insurers to cancel her conditional fee agreement, leaving her personally liable for every £. She cannot pay it all, even if the family’s bungalow (which has an agricultural tie) is sold.

Last week the judge in the County Court, Carmarthen, declined to allow Mr James permission to sell the house immediately. Instead, there is a ten-year stay of execution, and Jacqui has to pay £250 a month towards the damages bill of £25,000 plus interest and fees, a total around £36,000 before the County Court hearing. The total now exceeds that by over £14,000, because the judge added the latest fees to the damages. Even so, it’s not as much as the nearly £22,000 which Mr James’ team wanted.

Mr James was supposed to pay damages over to the council. That was the arrangement when the indemnity was agreed. Yet last week he appeared to have changed his mind. The court heard, through his counsel, that he could “stuff the money in the gutter” if he wanted.  That’s not what the Executive Board agreed to!

Elections are coming, on May 4th. The Executive Board will have some changes due to retirements, and perhaps after the vote there will be a completely fresh line-up. Hopefully the new board will remind themselves of paragraph 12, sub-section i.

Especially as residents all over the county are looking at their new Council Tax bills and wincing.

PDR

 

 

 

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Rubbishing Alternative Facts

Announcing the closure of the Llangadog recycling centre, operated by All Waste Services, Carmarthenshire County Council’s busy press office stated “Alternative arrangements are being made to provide recycling banks for residents at Llandovery Rugby Club”.

Not alternative at all, according to the rugby club, which has issued a sternly worded statement as follows:

“When CCC [Carmarthenshire County Council] approached the Rugby Club seeking an additional location for recycling skips in the Llandovery area the Club’s Directors asked whether it had anything to do with the future of the service available in Llangadog and we were assured by CCC officers that there was a need for additional facilities in Llandovery and the approach had nothing to do with the facility in Llangadog.

“The Club was willing to accommodate the request as it meant additional facilities for Llandovery and surrounding area.

“The Club was not aware that the Llangadog facility was closing until a press release was issued by CCC. We were not consulted on the wording of the press release issued by CCC which can be interpreted as implying that the new unit at the Rugby Club replaces the Llangadog facility.”

Llandovery Rugby Club’s statement also makes clear that cans, glass and paper will be the only materials recycled there, and urges the county council to “identify, at the earliest opportunity, adequate recycling facilities for the communities around Llandovery”.

The council’s unfortunate press release highlights the dangers of reporting to cast the best possible light upon events.

In this case, the rugby club saw not illumination but a mirage.

Alternative facts? A less polite term may come to mind.

 

Scarlets Plunge Deeper into Debt

Directors Remain Optimistic

The disappointing financial repercussions of the Scarlets’ super-sized stadium at Trostre, Llanelli, threaten the capability of Scarlets Regional Ltd to continue as a going concern, in the view of auditors Broomfield & Alexander.

The accounts for the year to June 30th 2016 show a pre-tax loss of more than £1.5 million, 50% greater than the previous year’s loss of just over £1 million.

The directors have invested in players, and the Scarlets have played pretty well in the current season. They stand 5th in the Pro 12 at the time of writing, below Leinster, Ospreys, Munster and Ulster – but 5th is not 1st, and there is still a way to go.

Broomfield & Alexander point out that, at the end of June 2016, the company’s net current liabilities exceeded assets by £2.718 million. In their view, this indicated “the existence of a material uncertainty which may cast significant doubt about the company’s ability to continue as a going concern”.

The auditors also question the £9.394 million value of the stadium as reported in the accounts, the implication being that the valuation is too high and may be impossible to realise if Scarlets Regional runs out of money. The stadium, which opened in November 2008, cost £23 million to build.

Despite the Scarlets playing lively rugby, the average gate for Pro 12 home matches in 2015-16 was 7,353, including the 4,000 or so season ticket holders, although the stadium can seat 14,870. The wide expanses of empty seats show that the claim ‘build it and customers will come’, a refrain which has been heard inside Carmarthenshire County Council, is wide of the mark.

The Scarlets owe the county council £2.614 million, which is due for repayment in 2023. Total equity in the rugby company continues to fall and at June 30th 2016 was down to £2.640 million, against £3.826 million a year earlier and £4.169 million the year before that. The county council’s investment on behalf of the people of Carmarthenshire is looking uncertain, despite the fact that a top notch rugby side brings non-financial benefits such as sporting confidence and local pride.

The board of directors, who have dug deep into their pockets to keep the rugby region going, remain optimistic, according to the accounts. Chairman Nigel Short, of Penderyn Distillery, wrote of the board’s determination to “continue to invest in development of talent”, although this had led and could well lead again to the business making a loss.

The directors “have a reasonable expectation that the company has adequate resources to continue in operation for the foreseeable future”, they report in the accounts.

Those resources are likely to include more of their own money. Perhaps a lot more.

Financial Conduct Authority has Investigated Corran Company

Down on the marshes at The Corran Resort and Spa, Laugharne, at the development into which investors – including pension savers — poured over £19 million and lost nearly all of it, the hotel management are advertising multiple job vacancies, for a receptionist, therapists, housekeeping supervisor, spa cleaner, and food and beverage team members.

The recruitment boom comes after the Financial Conduct Authority has investigated former owner Kayboo Ltd.

Keith Stiles, a director of the insolvent Kayboo, bought the hotel through his new company Glendore Real Estate Ltd for £150,000 in a pre-pack deal just before Kayboo went into administration.

The administrators, HBG Corporate, took over on October 18th 2016 but are now seeking creditors’ permission transfer the steaming hot potato to Robert Dymond and Lisa Hogg of Wilson Field Ltd of Sheffield, for a creditors’ voluntary liquidation.

Liquidation has been held up since November, while the Financial Conduct Authority investigated “various matters surrounding the company”. The results of their investigations have not been revealed.

Not that there is much left to liquidate. The administrators say that “For the period 12 November 2016 to 8 March 2017, the Joint Administrators have received £33 of interest into the estate bank account, held for the benefit of the creditors.”

HBG Corporate clocked up £47,975 in fees — £17,000 of which have been paid — and £33,753.31 in disbursements, totalling £81,728.31. Administering a bust company is an expensive business.

For previous history see, for example, here, here, and here

Llangadog’s Recycling Centre to Close

Valued public service lost

Yet another blow for the people of north-east Carmarthenshire—Llangadog’s recycling centre is closing on March 31st

The centre, run by All Waste Services, achieved very high recycling rates, between 80% and 85% in 2014, when the county average was 55%. This was above the all-Wales target of 70% by 2025. When operating at its peak the centre provided some 10 jobs for local people. Opening hours were long and there seemed to be a bin for all types of waste, except for potentially hazardous items like asbestos roofing sheets.

Hefin Roberts, head of All Waste Services, said in 2016 that the operating budget was halved in 2013-14, and prices for recycled materials also dived, making it impossible for the centre to break even. He had been subsidising it personally, he said.

Discussions between All Waste Services and the county council have failed to reach an agreement, and on March 10th the council’s press office issued a statement saying from April 1st residents should take black bag and garden waste, electrical items, wood and other bulky items to the Wernddu site near Ammanford.

Wernddu is a dozen miles south west of Llangadog, which itself is 20 or so miles from the outer reaches of its catchment area.

The county council says it hopes to have some recycling bins at Llandovery Rugby Club by April 1st, but these would not accept many of the materials which have been deposited at Llangadog.

Maria Carroll, Labour’s candidate for Cilycwm in county council elections on May 4th, who takes a close interest in recycling services, said:

“It has always been the view of local people, who are dependent on this service, that a long term commitment to the provision of a Recycling Centre in north Carmarthenshire is needed. This did not happen and the [Llangadog] Centre has been subjected to a roller coaster ride of uncertainty and threat of closure. It seems we now find ourselves once more in the position that our Centre, which provides a highly regarded public service, is at risk of closure with little notice and with no public consultation.”

Closure means that fly tipping is likely to increase, with damaging impact on the environment and potentially on the important tourism industry. The loss of jobs is also troubling.

Demonstration at Llangadog’s recycling centre when it faced closure in 2014. Public pressure helped to keep it open, but now in 2017 the gates are likely to close for a final time in less than three weeks.  

Beware Opaque Investments

Too many cooks spoil the broth. Too many companies in the mix may damage your investment.

We are in an era of low returns, but people saving and investing for pensions want – need — to generate more than 1% or 2% a year, and The Corran hotel scheme at Laugharne, ostensibly offering leases of hotel rooms, or of fractions of hotel rooms, appeared to offer just what they required.

Rowanmoor Trustees Ltd, trustee of The Rowanmoor Pensions Self-Invested Personal Pension Scheme, approved investments in The Corran for pension clients. One of those clients showed me a copy of his ‘Agreement for Sale of Membership of a Company’. Not ‘for sale of a lease’, note.

The agreement was between the ‘Founder Member’, Kayboo Ltd, the company owning some of the property shown in marketing materials for the scheme, and Rowanmoor Trustees Ltd.

Kayboo “wishes to procure the admission of the Purchaser (the pension client) to membership of the Company…”  The ‘Company’ is Hurst House Fractional K Ltd, one of the fractional ownership companies set up to hold the leases. Hurst House is the former name of The Corran.

“The Company has/shall enter into a 999 year lease (“the Term”) granted in accordance with the laws of England and Wales… The Lease entitles the Company to 365 days usage of the Property in each year,” said the agreement.

Further on, the document says “The Company has entered into a lease agreement with the Founder Member.”

Well, that did not apply in most cases because only three leases had been completed when Kayboo and its sister company, hotel management company East Marsh Operational, went into administration in October 2016, four years after the first ‘leases’ were sold to well over 400 investors who paid in some £19.21 million. Around £2.52 million of that was returned to investors – their own capital, not rents from the hotel, according to abbreviated accounts presented to anxious investors in summer 2016.

The complexity of the scheme is clear from the agreement, which describes roles for the ‘Founder Member’ (Kayboo Ltd), the ‘Company’ (in this case Hurst House Fractional K Ltd), the ‘Purchaser’ (the pension client, represented by Rowanmoor Trustees Ltd), and also the ‘Manager’ (East Marsh Operational Company Ltd, supposed to hold a sub-lease from Hurst House Fractional K Ltd).

Rowanmoor Trustees took care to curtail their own liability. The document states that “In the event that the Purchaser is required to provide warranties under the Sub Lease that the liability of Rowanmoor Trustees Ltd shall in all respects be limited to the assets of the Rowanmoor Pensions self invested person pension for the Scheme Member”.

So apart from a risk to its reputation, Rowanmoor Trustees Ltd – Kayboo’s counter party in the agreement – removed liability risk from itself.

Rowanmoor used to market itself as the UK’s largest independent small self-administered scheme provider, but in July 2016 was bought by Embark Group in a private cash transaction. Rowanmoor’s managing director Ian Hammond chose to retire.

A problem for any investor in such an opaque transaction is that no participant will intend to work for nothing. Everyone will seek a slice of the pie, making the advertised returns – varied between sales agents, but around 10% a year for ten years and 12% annually for the next five, and repurchase at 125% of the sale price in years five to 14 and 150% in year 15, even less likely to materialise.

For reasons that are hard to fathom, the administrators – Harbour Business Group – sold The Corran to Glendore Real Estate Ltd, a company of which Keith Stiles, a director of the failed Kayboo, was in January 2017 the sole director. The price? £150,000 – when investors had piled in over £19 million.

The scandal also raises questions about the due diligence – or lack of it – undertaken by pensions providers.

Spending per Head on Council Services — It’s Not Enough

Which local authority in Wales spends the most, per head, on running services?

The answer is Rhondda Cynon Taf, at £2,503 per head in 2016-17 — £620 more than Monmouthshire’s £1,883, at the foot of the table.

But in the context of rising need, neither of these figures seems sufficient.

The figures are for gross revenue spending, the amounts councils spend on their operations, in contrast to capital spending on new buildings and infrastructure.

The four authorities with per head spends over £2,400 are all former coal and steel heartlands which have suffered during the years of industrial decline in Wales, and in the UK overall. Neath Port Talbot still, tenaciously, retains its steelworks, but workers there have just traded future pension income for continuing jobs today.

West Wales authorities do not feature in the top ten. Carmarthenshire is 11th, with spending per head of £2,237. Ceredigion and Pembrokeshire, 15th and 18th with £2,207 and £2,194 respectively, are rural counties where service provision is relatively expensive, there are miles of highways to maintain, and ageing populations with rising needs for social care. Carmarthenshire and Ceredigion both have over 20% of their residents aged 65 plus, and in Pembrokeshire the over-65s are almost 22% of the total population. In Rhondda Cynon Taf, though, barely over 17% are over-65s, and in Merthyr Tydfil under 17%.

The three authorities with the lowest spend per head all border England, and Monmouthshire at the bottle of the table is relatively affluent, certainly compared with the old industrial valleys, but is not exactly Kensington and Chelsea.

Perhaps the main question should be whether any of the per head spending figures are remotely adequate — and if they are not, where on earth additional resources could be found.

Authority Population Gross revenue spending £ Revenue spending per head £
Rhondda Cynon Taf 237626 594740636 2503
Merthyr Tydfil 59139 147089203 2487
Blaenau Gwent 69549 172392888 2479
Neath Port Talbot 140879 342450123 2431
Denbighshire 95144 227048068 2386
Torfaen 91799 217125719 2365
Caerphilly 180481 423500568 2347
Newport 147749 344970686 2335
Gwynedd 122605 278949310 2275
Bridgend 142038 322011255 2267
Carmarthenshire 185485 414917359 2237
Conwy 116561 260430342 2234
Swansea 243046 541221865 2227
Anglesey 70170 155129718 2211
Ceredigion 75864 167432294 2207
Cardiff 360491 794863354 2205
Powys 132303 290899698 2199
Pembrokeshire 123858 271721880 2194
Vale of Glamorgan 127985 275225417 2150
Wrexham 137929 287429837 2084
Flintshire 154372 309230624 2003
Monmouthshire 92639 174477964 1883

Population figures are for the start of 2016-17. Gross revenue spends are from the Welsh Government. 

Corran’s Tangled Web:Intentional Misrepresentation?

The strange story of some £16.7 million of lost investments in The Corran Resort and Spa, Laugharne, becomes ever more troubling. Investor Ian Dixon discovered that Kayboo, in administration since October 2016, sold 166 fractions of hotel ‘suites’ on land then owned by EHF Hospitality Ltd and which contained no hotel accommodation.

EHF Hospitality’s property at East House Farm is now with Secured Bridging Finance, the mortgagor. Secured Bridging Finance’s Alan Lister contacted West Wales News Review with the following information:

“Our company, Secured Bridging Finance Ltd (via our company’s wholly owned subsidiary company) owns Barns 3, 4, 5, 6, and 7, East House Farm. From time to time Mr Peter Burnett [director of Kayboo Ltd, East Marsh Operational Company Ltd, Pennaf Premier Group Worldwide Ltd and several other companies] enquired about purchasing our barns, but he failed to follow through.

“Our barns appear from the diagram in your article to be included in the fractional ownership scheme. We were not aware that our barns were included.

“While the five barns continue in our company’s ownership we would not have agreed, had we been asked, to their being included in any such scheme.

“We are concerned that our barns – and perhaps our company – may have been intentionally misrepresented as being under the control of the promoters of the scheme.”

EHF Hospitality’s sole current director is Matthew Roberts, who was declared bankrupt in September 2014. Companies House proposes to strike off EHF Hospitality, which has not submitted any accounts since the year to February 28th 2011. Former directors of EHF Hospitality are County West Secretarial Services Ltd (February 4th 2010 to September 23rd 2013) and Paul Manley, of Newquay, Cornwall, for a single day, February 4th 2010.

Paul Manley was, from February 29th 2016 to October 11th 2016, a director of Glendore Real Estate Ltd, which currently owns The Corran, and of the hotel operating company Plustocks Management Ltd (to October 13th). These two companies have replaced Kayboo Ltd, which owned the hotel, and East Marsh Operational Ltd, which ran it. East Marsh Operational Ltd is, like Kayboo, in administration.

Kayboo and East Marsh Operational Company director Keith Stiles remains a director of Glendore Real Estate and of Plustocks Management.

So round and round we go. Round and round.

Ian Dixon also reports that Kayboo sold 133 fractions of suites on land owned by Paul Manley, and that Malthouse Farm, the intended third phase of The Corran’s expansion, was not owned by Kayboo or by Kayboo director Peter Burnett, contrary to a statement made on the application for planning permission (which Carmarthenshire County Council rejected because of flooding and environmental risks, and which was also rejected on appeal).

Investors thought they were buying 999-year leases on land, and property on it, in many cases for their pensions.

But most of them were buying nothing at all.

The depressing story is far from finished.

SUNK – Investments Drown in Carmarthenshire Marsh

Corran Resort and Spa Investors Lose Millions

The Corran Resort and Spa at East Marsh, Laugharne, on the flat coast west of the Taf estuary and immediately north of the seven-mile long Pendine Sands in Carmarthenshire, is at the centre of an angry campaign by investors whose individual losses range from about £17,000 to  well over £100,000, and total just on £16.7 million.

Investors’ losses include pension savings, highlighting the dangers of the UK’s new liberalised regime which allows people wide freedom to invest or spend their pension funds as they like.

Rooms at The Corran –  ‘suites’ in marketing parlance – were sold to 416 investors, many of whom purchased fractions of a suite, as little as one-twentysixth for £17,000 or £18,000, depending on the seller.

The hotel was owned by a company called Kayboo Ltd and operated by sister company East Marsh Operational Company Ltd. Both went into administration on October 18th 2016, although the official date for the appointment of administrators was a couple of weeks later on November 3rd.  Investor Ravinder Singh’s claim on East Marsh Operational for about £2,500 in unpaid rent was the first falling domino which led directors Peter Burnett and Keith Stiles to put the companies into administration. “They used it as an excuse for the ‘Notice of Intention’ that they filed and to ‘blame’ me for the companies going into liquidation,” he said. “I am one of the leaders of a group of investors who are seeking a return of our investment and hopefully justice served on the perpetrators of this fiasco.”

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The Corran Resort and Spa. Photo from marketing promotion

Kayboo’s latest published accounts, for the year to March 31st 2015, show fixed assets – land, property, machinery, furniture – of £14.5 million. Debts to be paid in the following year were £1.572 million, and debts repayable after that, £14.167 million. The company’s share capital was only £1, but a ‘revaluation reserve’ of £1.264 million padded out the balance sheet, and shareholders’ funds were reported as £861,000, more than double the previous year.  In the following months, investors’ funds continued to flow in.

Eighteen months later, Kayboo was apparently so poor that the administrator thought it a good idea to sell the hotel for £150,000 in a pre-pack deal to Keith Stiles, one of its directors, so that it could remain open and continue employing staff. The deal was completed on October 18th 2016. Pre-pack deals are legal although apt to anger investors who have lost their money.

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The Corran from the air: marshland getaway. Photo from marketing promotion

Investors bought room fractions through intermediaries such as Barrasford and Bird of Tavistock, Devon, and pensions specialist Rowanmoor of Salisbury, Wiltshire, which enabled individuals to put Corran investments into their self-invested personal pensions.

 

Missing Leases

Investors thought they were buying leases, and started to do so in 2012, before the hotel reopened under new Kayboo ownership in 2013, after closure in a previous period of administration. Yet by November 2016 only three leases had been completed, according to Stuart P Kelly, joint administrator alongside Stephen Clark, both of HBG Corporate Ltd, a small firm of insolvency practitioners in Tarleton, Preston. Mr Kelly revealed this while chairing a creditors’ meeting on November 30th in the Angel Hotel, Castle Street, Cardiff.

Why only three completed leases, plus five executed but not completed? The leases should have been held in the fractional ownership companies set up for the purpose, but chartered accountant David Bates, a director of The Fractional Ownership Consultancy and of the numerous companies set up to hold the leases, told the creditors’ meeting that although he had signed many and returned them to Kayboo Ltd and East Marsh Operational Company Ltd,  he did not know what was registered or counter-signed.

This prompted one of the investors present to comment that all the investors who had paid to belong to Kayboo Ltd have “no property interest, no interest in anything at all, all they have is membership of  a company with no assets”.

Where are the other leases? The administrators did not seem to know.

This is among the many issues which Oliver Jackson, a partner in Freeths Solicitors representing investors, has raised with the administrators.

 

Some Significant Names in The Corran Story

David BATES Chartered accountant, director of The Fractional Ownership Consultancy and a large number of fractional ownership companies, based in Heswall, Wirral. Agreed with the administrators, HBG Corporate Ltd, to stop investors adjourning the creditors’ meeting on November 30th 2016 to allow them time to present documentary evidence contradicting information presented by the administrators.

Jamie BROWN Developer of property in Portugal arrested near Cross Hands in December 2011 for possession of cocaine and unlicensed guns and ammunition at Hurst House Hotel, now The Corran Resort, and in 2012 sentenced to five years in prison.

Peter BURNETT  (55) Director of Kayboo Ltd, East Marsh Operational Ltd and several other companies including Pennaf Premier Group Worldwide Ltd. Contact address is in Port Talbot. Pennaf Premier Marketing (director Stephen Paul Turner, dissolved August 16th 2016) provided The Corran Resort & Spa’s website, http://www.corran.com.

Jeremy (Jerry) COBB  Former director of The Fractional Ownership Consultancy Ltd, and based in Sotogrande on the Costa del Sol, Spain.

EAST MARSH OPERATIONAL Company Ltd Set up on February 22nd 2012 to operate The Corran on behalf of Kayboo. Put into administration on October 18th 2016.

The FRACTIONAL OWNERSHIP CONSULTANCY  was incorporated on October 12th 2005 by company secretary Marlborough Secretaries Ltd of Farnley House, La Charroterie, St Peter Port, Guernsey, for agents Marlborough Trust Company Ltd of the same Guernsey address.

Oliver JACKSON Partner in solicitors Freeths, representing investors who have lost money.

KAYBOO Ltd Company which entered administration on October 18th 2016, set up on October 4th 2010 to own The Corran Resort and Spa. The early directors were Aderyn Hurworth, appointed at the date of incorporation and resigned October 15th 2010, and Charlotte Thornley (sometimes written Thornlky at Companies House) Acourt Dutton, appointed October 19th 2010 and resigned November 28th 2012. Charlotte is also a company director under the surname Roberts – she is married to Matt Roberts (see below).

These directors were succeeded by Keith Michael Stiles (August 1st 2012), County West Secretarial Services (August 20th 2012), and Peter William Burnett (January 11th 2013). There are connections between the old and new regimes, for example Charlotte Thornley Acourt Dutton, Keith Stiles, Paul Manley and County West Secretarial services were all at different times directors of Golden Oriental Catering Ltd, incorporated on June 26th 2002 and dissolved on December 9th 2014.

Stuart KELLY  Administrator of Kayboo Ltd and East Marsh Operational Company Ltd, jointly with Stephen Clark, both of HBG Corporate Ltd, insolvency practitioners of Tarleton, Preston in Lancashire.

Paul MANLEY (61) Director of Glendore Real Estate Ltd and Plustocks Management Ltd, the companies which have replaced Kayboo Ltd and East Marsh Operational Company Ltd.  Address listed is in Newquay, Cornwall.

Les MILTON Former director of The Fractional Ownership Consultancy Ltd, based near Jeremy Cobb in Sotogrande, Spain.

Neil MORRISSEY  Actor and singer Neil Morrissey, a star of the 1990s TV sitcom Men Behaving Badly, and subsequently the voice of Bob the Builder. He bought Hurst House Hotel in 2001 but failed to make it pay. In its final year of trading under his ownership, the venture lost over £1.375 million. Administrators from the accountancy firm PwC sold Hurst House Hotel to Neil Morrissey’s business partner Matt Roberts in a ‘pre-pack’ deal which enabled the business to keep operating.

Matthew (Matt) ROBERTS Former business partner of Neil Morrissey in Hurst House Hotel. Bankrupt in September 2014. His wife Charlotte (see under Kayboo, above) runs a fractional investment scheme for an eco-village, the Convent in the Hills, in Norway and also runs The Convent, a hotel in South Woodchester, Gloucestershire, which is being developed with the assistance of crowdfunding.

Ravinder SINGH  Investor in The Corran whose Zenith Consultancy is owed about £2,500 in unpaid rent. Mr Singh is allied to a group of investors who refused to accept Kayboo’s initial proposal, in July 2016, to rescind the obligation to provide investors with leases, and instead to issue non-voting shares in the project. These shares would receive 76% of any profits for a defined number of years but lack any element of ownership. Kayboo cited Mr Singh’s claim as the reason why Kayboo and East Marsh Operational had to go into administration.

Keith STILES (57) Chartered quantity surveyor, director of the two companies in administration and of the two replacement companies, Glendore Real Estate Ltd and Plustocks Management Ltd. Mr Stiles is a director of nearly a dozen other companies. Correspondence address is in Bedfordshire near Whipsnade Zoo.

 

Sales Hype

Rooms in The Corran Resort and Spa were sold to investors, through intermediaries, on the promise of 999-year leases. Property firms selling space in The Corran  in 2016 included Emerging Developments SL of Marbella, Spain, which offered one twenty-sixth of a boutique suite for £18,000 (valuing the full suite pro-rata at £468,000), and promoted the enticing potential returns from one package as 10% annually for ten years, 12% for the following five years, repurchase at 125% of the sale price in years five to 14, and at 150% in year 15.

The Villa Company was another property investment firm selling fractions of rooms in The Corran, from £18,000 and with returns up to 12%. “Invest with just £18,000 and receive on average £2,300 per year,” says an advert. “After 15 years the developer will buy back the property. Speak to one of our advisors now to learn more or book a viewing trip to The Corran.”

Neither Emerging Developments nor The Villa Company is currently offering investments in The Corran, but Solo Property Investments Ltd of London N4 – Finsbury Park – was still (January 11th 2017) advertising the “opportunity” in these glowing terms:

“An incredible UK property opportunity in a glorious rural setting with luxury suites and facilities to match, including a spa and fine dining restaurant, it’s no wonder The Corran’s success has resulted in profits for owners”. Incredible indeed.

Promoting fixed returns of up to 12% a year, and assured resale of up to 150% of the original capital investment, the marketing message emphasizes “the safety of an operating hotel and a deal almost unrivalled in today’s UK property market”.

In January 2017 Global Property Investors of London SW11 – Battersea — was another firm still inviting investments in The Corran, from £17,000.

The returns offered seemed excessive to West Wales News Review, which reported on the scheme here and here. In addition, the investments are unregulated and so should be made only by people who can afford to lose everything they have put in.

 

Buying Non-Existent Property?

In March 2013 the local planning authority, Carmarthenshire County Council, gave Kayboo permission to convert East House Farm, less than a mile away from the main hotel and bordering the dunes of Laugharne Burrows, into hotel rooms. This scheme was marketed as ‘phase 2’ but has not been completed.

A further phase, at Malthouse Farm less than 400 yards or so from the hotel hub, was rejected on appeal in October 2014, after the planning authority had turned it down because of possible flooding and risks to wildlife. An ambitious scheme for 200 holiday lodges, also on the marsh, failed to secure permission in December 2015, for similar reasons.

Far from having 77 suites and 200 lodges, as per the master plan, The Corran has 21 rooms, according to its website. Yet the fractional ownership companies should contain leases for which investors have paid in excess of £19 million, as recorded on documents available at Companies House. No investors with their wits about them are going to pay around £900,000 for a single hotel room, even if it is called a ‘suite’.

 

Where Did the Money Go?

Investors paid in £19.210 million, Kayboo reported in July 2016.

It had all gone by then. Kayboo’s expenditure analysis lists heavy costs, including.

  • Site acquisition cost over £3.641 million
  • Developer finance took £2.184 million
  • Commission and fees to sales agents exceeded £4.910 million
  • Subsidising the hotel operating company £2 million
  • Constructing a spa £850,000
  • Initial refurbishment of the existing hotel £650,000
  • Other construction work at the hotel £179,000
  • Preparation for the second phase, which would have 28 rooms, £640,000
  • Payments to the design team and planning costs £515,000
  • Legal fees and charges £400,000
  • Pennaf management and marketing (Pennaf did the website) £380,000
  • Marketing and promotional events £150,000
  • Payments to The Fractional Ownership Consultancy £120,250
  • Repayment to Lloyds Bank £70,000

Investors got some of their money back, £2.52 million classed as rental payments – but as they are deducted from the amounts investors paid in, they do not at all appear to be derived from sums paid by visitors to the hotel.

The money was exhausted before the 28 rooms in Phase 2 were completed, although investments in these rooms were sold.

As for Phase 3, after 200 holiday lodges were refused planning permission in December 2015, Kayboo floated a smaller scheme for 41 lodges in summer 2016, but did not apply for planning permission before going into administration.

The rapid exhaustion of investors’ funds, in what seems to be a speculative crowd-funding project, suggests wildly over-optimistic costings in the first place, or fatally weak cost control, or irresponsible advertising, and quite possibly all three.

Hotel suppliers are out of pocket, too.

They are creditors of East Marsh Operational Company Ltd, which ran the hotel for Kayboo and shares Keith Stiles and Peter Burnett as directors. Creditors include Thomsons Laundry of Haverfordwest, owed £29,099; Castell Howell Foods Ltd of Cross Hands, £16,317; and the butchers Eynon’s of St Clears Ltd, £10,079.

Huw Eynon of Eynon’s butchers had the impression that the hotel was doing well, and in one month had revenue of £200,000. For some reason, East Marsh Operational Company was saddled with obligations for rent payments to investors, when investors themselves are convinced their ‘agreements’ are with Kayboo. They tried, at the creditors’ meeting in November, to persuade administrator Stuart Kelly to adjourn the meeting to allow investors time to gather proof of this, but he refused. He had enough votes from David Bates, of The Fractional Ownership Consultancy, to push ahead regardless of investors’ wishes.

“The requested adjournment would have allowed time to investigate which company was responsible for about £3.5 million in outstanding dividends,” said Mr Eynon afterwards.

He continues to supply the hotel with meat, and says the payment arrangements are now very different. “It is cash on delivery,” he said. “Under Kayboo, the management at the hotel did not deal with payments, they just logged income.” He thought that one of the directors had dealt, or did not deal, with payments to suppliers.

Now that Keith Stiles has obtained the hotel for £150,000, through Glendore Real Estate Ltd, he can in future sell it on for whatever the market will pay, because there is no limit clause in his purchase agreement. This was a bone of contention at the creditors’ meeting.  Robert Dymond of insolvency practitioners Wilson Field, representing investors, said that “regardless of the outcome of today’s meetings and whether the administrators’ proposals going forward are accepted, modified or rejected, it is likely that the investors will want to challenge and overturn this sale.”

 

Kayboo’s Offers

Before a creditor’s claim forced Kayboo into administration, in summer 2016 the company proposed ending the obligation to provide investors with leases, and replacing it with the issue of non-voting shares in the project which would share 76% of any profits. If all went well, investors would receive their capital back in 2023. The directors would receive 26% of profits plus salaries, too. To judge from recent history the chances of the hotel, in six years to 2023, generating profits for investors totalling around £11.5 million — based on an annual return of 10% —  would be in my opinion akin to winning the mega jackpot in the Euro Millions lottery.  Investors made their displeasure known.

Kayboo then made another offer, to distribute 80% of profits to investors over a longer time frame, until 2031. The directors would receive 20% of profits, as well as their salaries. This deal still had no certainty, and no property ownership, other than the intention to repay original investments in 2031. Despite exhortations from sales agents Barrasford & Bird to accept the offer, because in their view it offered a better chance of funds recovery than if administrators took over, investors remained  unconvinced.

Kayboo and sister company East Marsh Operational Company duly went into administration.

 

Angry Creditors’ Meeting

Creditors’ meeting chair Stuart Kelly closed it down “to avoid any unrest” because the attendees were becoming angry.  Investors felt they were being railroaded into agreeing to the rushed deal which the administrators made with Keith Stiles, and were also denied votes, because at the date of administration – October 18th 2016 – they had not attempted to withdraw their money from the fractional ownership companies where the funds should have been invested, and therefore were not classed as ‘creditors’.

Of course, at that date, investors by and large had no idea that their money had disappeared into a series of massive payments to others. Investors wanted to adjourn the meeting to allow them time to make alternative proposals, but chartered accountant David Bates, representing The Fractional Ownership Consultancy, a force behind schemes to sell bits of hotel rooms, student rooms, parking spaces and so on, and a designer of the fractional ownership companies, was marching in time with Mr Kelly.

David Bates claims that Kayboo owes The Fractional Ownership Consultancy £164,394.67 in unpaid fees. Mr Kelly allowed all of this to count in the voting, but investors’ claims were cut to a nominal £1 each – meaning that although the investors have lost millions of £s, they were outvoted by Mr Bates’ Fractional Ownership Consultancy.

“Where did the money go,” investor Andrew Elder asked Stuart Kelly. “How can you sell the hotel back to the same crooks without knowing?”

Mr Kelly did not appear to regard the money trail as urgent. He told Mr Elder that the investigations part of the administration process was currently at a stage of infancy, but that as part of the administrators’ duties, there would be a thorough investigation into the companies – Kayboo and sister outfit East Marsh Operational Company — and where the funds had gone. “However,” he added, “I must reiterate, if that sale was not completed the hotel would have closed.”

Investor Jeff Matthews said he knew at least two investors who would have paid £200,000 plus for the hotel, but Mr Kelly claimed to be unaware of any interest from a second party. Mr Matthews continued: “I have met with Keith Stiles, and he claimed that the hotel is worth a lot more than £150,000. Is it possible that the sale could be unravelled?”

“It is possible,” replied Mr Kelly, “but it is a matter for the court”.

Mr Kelly told the seething creditors that the operational company, East Marsh, was losing cash because sales revenue was insufficient to cover its expenditure. East Marsh was being financially supported by Kayboo, he said.

“I do appreciate all of the concerns and a full investigation will be conducted,” he added.

An angry investor criticised the administrators for failing to tell investors what was going on. “You just sat in your office and didn’t have a problem with that,” he complained. “Who’s paying your fees? Inside job?”

Mr Kelly refuted the accusation with a single word. “No”, he said.

Meanwhile, the 416 investors have set up two closed Facebook groups to share experiences and co-ordinate action. The Corran Investors Initiative has 322 members, and The Corran Equitable Society has 224.

 

The Fractional Ownership Consultancy and its Associates

Chartered accountant David Bates, of Heswall in the Wirral, Merseyside, is at the heart of The Fractional Ownership Consultancy. He has dozens of directorships of fractional ownership companies, including those set up for The Corran. In The Fractional Ownership Consultancy, Mr Bates’ fellow directors included, in the past, Jeremy James Cobb, of Floresta, Sotogrande on the Costa del Sol, Spain, and Les Milton, also of Sotogrande. Jeremy Cobb is reported by the information service ZoomInfo to have represented the Marlborough Trust Company Ltd, which with Les Milton initiated The Fractional Ownership Consultancy.

According to the Guernsey Chamber of Commerce, it was a developer in Portugal who asked the founders of The Fractional Ownership Consultancy to construct a legal mechanism which would facilitate the sale of fractions of property on resorts.

Coincidentally, Portugal property developer and cocaine addict James ‘Jamie’ Brown, jailed in 2012, was arrested late in 2011 for possession of a cache of cocaine and illegal handguns when a guest at Hurst House, as the hotel was called before it became The Corran in 2013.

The FOC’s current directors are David Leslie Bates, Julia Rachel Day, Lucy Ann Whitfield, and SMD Secretaries Ltd. Jeremy James Cobb was a director from January 31st 2006 to October 1st 2010, and Les Milton for exactly the same span of time.  Both became directors four or so months after the founder directors, Marlborough Nominees Ltd, Marlborough Trust Company Ltd and Marlborough Secretaries Ltd, all of St Peter Port, the capital of tax haven Guernsey.

The Guernsey Chamber of Commerce had a link to The FOC’s website, but that appears to have disappeared.

The Chamber of Commerce says: “The Fractional Ownership Consultancy Limited provides developers of worldwide holiday property with legal structuring, administration and consumer finance solutions enabling them to offer fractional ownership as part of their marketing mix.

“Over 12 years ago the individuals comprising FOC were asked by a developer in Portugal to construct a legal mechanism which would facilitate the sale of fractional product on their resorts. After years of successful operation and refinement it was decided that the product, and most importantly the back office systems which make it all work, were robust and ready to be rolled out to other developers and territories.

“They have since successfully implemented fractional ownership on a number of developments in Portugal, Spain, Greece, the UK, Turkey, Florida, Cyprus and Cape Verde.

“FOC now have over 10,000 fractions under management and have just launched OysterShare – a direct and equitable alternative to traditional shared property ownership, usage and holiday experience models.”

Two former directors of FOC, Nicholas Robert Hannah (January 31st 2006 to October 31st 2013) and Adrian Bradley Howe (May 15th 2009 to October 1st 2010) have fallen foul of the Guernsey Financial Services Commission, which on November 21st 2016 barred them from holding directorships for five years and fined them each £35,000 – and if they had been better off, it would have been £50,000. The censure was for management negligence and making false statements, in their capacity as directors of Marlborough Trust Company Ltd, another former ‘director’ of FOC.

The Marlborough Trust Company, fined £100,000 by the Guernsey Financial Services Commission, is implicated in the 2009 failure of Arch Cru, a group of funds which invested £400 million on behalf of around 20,000 private investors. Marlborough Trust Company was, it appears, ultimately responsible for investment decisions over the assets underlying 23 of the Arch Cru funds held in SPVs – special purpose vehicles – for property, wine, and a company owning other companies which invested in ships.

So the management of Marlborough Trust Company was inadequate. Could this weakness extend to its involvement in the Fractional Ownership Consultancy?

FOC’s David Bates appeared keen to keep his companies’ involvement at arm’s length. He said that investors’ contracts were with Kayboo, not FOC.

The contracts were mainly for non-existent assets, though, while their investments had sunk into the marshland.

Administrator Stuart Kelly said he would engage a firm of forensic accountants to prepare a report on the fate of investors’ moneys, and the report would be presented to the Financial Conduct Authority. This week (January 23rd 2017) a spokesman for Stuart Kelly refused to say whether forensic accountants had been engaged, because the whole matter was completely confidential.

 

Troubled History

The Corran location has a colourful past. The Corran name dates from 2013: before that, it was Hurst House on the Marsh, and prior to that, just Hurst House, a grade II listed small Georgian house built in 1797, with outbuildings.

The actor/singer Neil Morrissey, a star of the 1990s TV sitcom Men Behaving Badly, and subsequently the voice of Bob the Builder, bought Hurst House Hotel in 2001 but failed to make it pay. In its final year of trading under his ownership, the venture lost over £1.375 million. In 2004 he had purchased Brown’s Hotel in Laugharne town, but that did not succeed either.

Administrators from the accountancy firm PwC sold Hurst House in 2008 to Neil Morrissey’s business partner Matt Roberts in a virtually identical move to HBG’s with Keith Stiles late in 2016, a ‘pre-pack’ deal which enables the business to keep operating.

Matt Roberts and his company Followset did not stay afloat long. Two years on, in 2010, Hurst House owner Followset was in administration, this time with Grant Thornton.  Kayboo was set up the same year, and East Marsh Operational Company two years later in 2012.

The disappointing commercial history of Hurst House may reduce the number of lenders and investors willing to fund its growth in future, but on the other hand, big investors know how to protect themselves.

Many of those who thought they were buying  part of a hotel room at The Corran were not professionals but individuals, including pension savers and pension pot investors, attracted by the enticing advertising.

Current English and Welsh law relating to property investments fails to protect them against incompetent or reckless business practice at best, wilful misrepresentation at worst.

 

 

‘Slow Down’ Plea from Porthyrhyd

Porthyrhyd — in this case the country village north of Llanwrda, not the Porthyrhyd near Cross Hands — suffers from excessive speed as traffic taking a short cut from the A482 to Llandovery whizzes through without the hindrance of any limits.

Siloh, on the same route, also has no speed restriction.

This could change in 2017-18, thanks to pressure from local people, led by county councillor Dafydd Tomos and community councillor Arwel Davies. Monday (January 23) served up a lunchtime surprise to John McEvoy, road safety and traffic manager with Carmarthenshire County Council, when he arrived to meet Dafydd Tomos.

Mr McEvoy found himself facing some two dozen residents of Porthyrhyd and Siloh assembled in the Beudy belonging to Dr Brinley and Mrs Stephanie Jones, Drovers Farm, prepared to state their case strongly. Mr McEvoy had good news, though — he agreed that a 30 mph speed limit is necessary, and said he hoped it would be in place before April 2018. He also promised to visit Siloh and look at the need for speed restriction there.

Heavy vehicles, and delivery vans rushing from drop to drop, are an important part of the traffic problems on minor roads, which generally lack pavements and so are shared with walkers. The closure of local services like schools, shops and post offices, and the scarcity of public transport, means that more people have to travel by private vehicle.

If just the financial costs of transport — let alone the road safety and environmental dangers — were included in calculations, the closure of public amenities in rural areas would make a lot less sense.

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John McEvoy, road safety and traffic manager with Carmarthenshire County Council, tells Porthyrhyd  residents that speed limits should be introduced in the coming financial year

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Dafydd Tomos, the Plaid Cymru county councillor for Cilycwm, who backs the campaign for speed limits 

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Arwel Davies, Cilycwm community councillor, who pressed for the meeting

 

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Residents of Porthyrhyd and Siloh in the Beudy at Drovers Farm on Monday (January 23) to press for 30 mph speed limits through both villages. Dr Brinley Jones of Drovers Farm is left in the second row 

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