Friday 30 August 2013
For those that have not been following this saga the T & F committee, at their meeting on the 18th July 2013, asked the Council Legal adviser, Harvey Patterson, to produce all documents pertaining to Pleasurama dating back to 2002 focusing on the Council’s “Due Diligence” procedures.
For those that have been regular readers of this blog will know this exercise was very poorly done!!
At last night’s meeting Harvey produced a document and presented it to the members and eventually to the public, outlining 2 main aims:
A definition of due diligence (and why it is needed)
Information about the “due diligence actually carried out.
Taking point 2 first he stated “SFP Ventures (UK) Ltd is a “shell” (my word he uses single/special purpose venture) company .... it had little or NO CASH or ASSETS .... nor a track record of development”
He goes on to state “there is no evidence of ANY financial “due diligence” being undertaken prior to the development agreement being entered into in 2006”.
So to clarify a shell company with no track record or financial assets is allowed to enter into an agreement with TDC for a development that would be costing over £20M. No wonder the opinion of the committee was overwhelmingly incredulous when they heard this.
Both officers and Councillors have a lot to answer for in allowing TDC to get duped.
Now going back to point one Harvey states “due diligence is a voluntary act where the amount of diligent enquiry contemplated or undertaken will depend on what is at stake to the enquirer. In other words the higher the risk to the inquirer, the more intrusive and thorough the “due diligence” can be expected to be”
In other words because NO “due diligence” was carried out, nor was it even attempted, then the conclusion has to be there was NO risk to TDC. Well TDC the lost opportunities of a derelict site cannot have escaped your notice over the last 11 years.
Now I will turn my attention to the “alleged due diligence” carried out by officers prior to the Development Agreement being varied in 2009.
This very limited exercise was carried out during 2009 and only looked at the funding arrangements for the build. It comprises the following documents (the originals are now available from the TDC website)
1. A business reference (undated) for Cardy Construction ltd (hardly proof of funding).
2. Letter from Cardy to Shaun Keegan (dated2/6/2009) confirming they are willing to invest £1.5M in the project.
3. Letter from Keegan (also dated 2/6/2009) stating they have spent £2M to date. (not sure how he arrives at this figure (their accounts show spend of only £1.6M) and not sure how he knew of Cardy’s letter as it would have been in the postal system at the time).
4. Letter from SBP Banque to Brian White (dated 16/9/2008) stating the funding for the £1M deposit was in Geneva and was funded by SFP Services. (not relevant to the development funding issue but enlightening as to who is funding the project).
5. This last is so laughable as to be untrue. A letter purporting to be from SBP Banque to Brian White that states “DRAFT LETTER FROM SBP BANQUE TO TDC” “Dear Sirs, This letter is to confirm that our client WETMORE INVESTMENTS has funds deposited with the bank to facilitate immediate funding of £5M for the hotel and commercial elements of the Royal Sands Development at Ramsgate, Kent.”
So to clarify, and despite the picture painted by Brian White and Harvey Patterson (the authors of Annex 4), SFP can only point to £1.6M invested to date and a promise from Cardy that they will contribute £1.5M to the project. The rest was just empty promises so it was hardly surprising the conclusion reached by the officers in Annex 4 was there was insufficient proof of funding and the development should be TERMINATED immediately (2009).
2 questions immediately spring to mind
1. Why didn’t “shagpile” take notice of his officers and terminate?
2. How much money has been lost because the agreement wasn’t terminated?
So the lack of due diligence is going to lead (probably) to a high cost Court Battle to retrieve the site leases granted to SFP Ventures (UK) Ltd or a deal will be struck with Keegan and his cronies reimbursing them for out of pocket expenses and compensation for the loss of the leases. This is likely to exceed £8M a figure that Peterborough Council coughed up when they took on Keegan between 2003 and 2010.
So TDC your words come back to haunt you-
“due diligence is a voluntary act where the amount of diligent enquiry contemplated or undertaken will depend on what is at stake to the enquirer. In other words the higher the risk to the inquirer, the more intrusive and thorough the “due diligence” can be expected to be”