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”
4 comments:
Assuming this is correct, the taxpayer of Thanet is facing a massive bill (unless TDC grows a backbone and decides to sue SFP). Presumably, now that this meeting has been held, one of the first tasks for the legal team will be to prepare a summary of possible scenarios in the resultant costs, so that contingency plans can be made. What I would like to know is who was responsible for this mess and can anything be done to hold them accountable? If those who failed to properly scrutinise this company are still working at TDC,can they be fired? If they have already left, can money be reclaimed from their pay-off or pension?
If the external legal advice is to be worth anything, someone has to now draft clear and full instructions to Counsel disclosing all the facts. I wonder who that might be? One of the officers already involved perhaps???
So far, the committee of Councillors is doing a good job for a change, but I wonder how long it will be before pressure is applied to not ask embarrassing questions.
Richard if you limit your musings to Pleasurama I will post any deviation will mean they will not be published
Patterson, White, McGonigal are these not the same names that failed to carry out any meaningful due diligence, and certainly have not shown any evidence of any due diligence, prior to allowing Transeuropa to operate free for over two years and run up a £3.4million unsecured debt? It is more of the same. When will these people be held responsible?
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