Monday 20 July 2015
We do not know ... what else we did not, and still do not know, or - Questions: and some answers - about the £13.5m depot sale
Last week Mrs Angry updated her post on the Abbots Depot story: see here -
This was after receiving a response from Barnet Council to an FOI request which was not, in fact, a response, but an announcement that they would not reply to the request for at least another ten working days.
The pretext for this delay was that they considered that some of the information she had asked for was 'exempt', and they needed another two weeks to consider whether disclosure of the information was in the public interest, or if it was, in the time honoured tradition of 'open government', here in Broken Barnet, and the covert war against the principle of transparency, more appropriate to sit on the information, and keep it all under wraps.
Well, of course such a reply is always a cheering indication that the material you are requesting is so embarrassing that the authority is desperate to keep it out of your hands, and rather than worrying about the public interest, they are worried about the exposure and political fallout that may result from publication.
Mrs Angry was having none of it, however, knowing full well that transparency over the matter of the £13.5 million purchase of a site sold only the year before for a mere £750,000 could only ever be in the public interest ... and she also pointed out that they had not fulfilled their obligation, clearly indicated by the Information Commissioner, to explain exactly what was the nature of the exemptions they were claiming. (Hint: not wanting people to see what a balls up you've made of something is not a valid exemption).
It was a surprise, however, to see, the very next day, that the material asked for was suddenly released after all.
How odd. Could it be, thought Mrs Angry, that amongst the Tory ranks the mistrust that certain members have in the way in which their own officers - and our private partners and outsourced contractors Capita & HBPublic Law, all of whose employees feature throughout this correspondence, have handled this business ... has led to pressure to release the evidence she had asked for?
The truth is that a significant number of Tory councillors are now beginning to realise just exactly what is the new reality, here in the hollowed out council they have created, and their natural suspicion of senior officers -whom they know really regard them as a flipping nuisance, and creatures to be indulged, or kept in the dark as much as possible - is beginning to stir some resentment amongst the Conservative group. Strange bedfellows, Mrs Angry. No, best not to dwell on that line of thought.
The chickens, Tory councillors, are now coming home to roost, are they not?
Looking through the emails now released, as expected, some names had been redacted: some of which are possibly officers of a seniority which does not exempt them from identification, and which will be challenged, as Mrs Angry has done previously, and successfully, when senior officers and consultants tried to hide from her eye of scrutiny, in response to an FOI request.
(Note to person in charge of the black felt tip: it is pretty easy to work out whose names you are redacting. Use a thicker pen, in future).
Because the evidence of these emails makes one thing undeniably clear: councillors were not given the truth, the whole truth, and nothing but the truth, at the appropriate time, in regard to the interesting history of the Abbotts depot; and that senior officers most certainly knew before the Full Council meeting of December 16th that, in direct contradiction to the statement given to Labour's Geof Cooke as late as May 19th:
"to the best of our knowledge, there have been no changes to the freehold or leasehold positions since 1/1/14' ...
Read on, and see if you think that that position, maintained then and now by Barnet and Capita senior officers, overseen by our outsourced legal service, is in fact fairly defined by that phrase ... 'to the best of our knowledge': and then ask yourselves, readers, if that is the best service they can provide - why the heck are we throwing so much money at them, as demanded by the contracts that our Tory councillors so happily approved?
How is such a statement compatible with the evidence below, including this mysterious email, heavily redacted, for some reason, sent only a few weeks ago?
We were aware of this purchase from the beginning ... why did you not tell the councillors, then?
Click on enlarge, to read the document.
And now, in combination with material published by a local residents' group yesterday, containing questions - and long awaited answers - to Cllr Cooke in regard to the matter, it is clear that there is now an urgent need for a full, independent investigation into the depot purchase, and the way in which councillors of all parties have been kept in ignorance of the facts by their own officers, and of the part played in this mess by the contracted legal service, HBPublic Law, and of course our contractual partners, Capita.
Readers should compare and contrast the two sources of information, and make up their own minds about the story of Abbotts' Depot, and to decide whether or not, even now, before the first waste lorry has dumped its load on the site, there is a pervasive smell of rotten borough wafting across the area.
Here are the questions raised by Cllr Cooke, and the response from Barnet's Chief Executive, Andrew Travers, on the 9th July, as published yesterday by RAAD, Residents Against Abbotts Depot, via their Facebook page, Say NO to Abbotts Depot. As well as the aspect of the information withheld from councillors, there is the complex issue of if, in fact, we have secured full use of the site in questions, and if the apparently informal use by another company raises a threat to our huge investment in this purchase. It should also be remembered, incidentally, thatin the not too distant future, this site may well be needed for railway sidings for the Crossrail 2 expansion.
One significant omission from the attempt by senior officers to defend their representations to councillors on the depot transaction is this: why were councillors told that the £13.5 million value was based on a previous transaction of £8million, a few years ago, supposedly around 2006/7?
Where is the proof of this sale, and if there is none, on what basis was the valuation made?
As you will see, Geof Cooke is one of the few really tenacious Labour councillors, astute and obstinate in his attempts to hold officers to account, as one saw at the Audit Committee, in the days when, as it should be, an opposition, Libdem Chair was in charge, ie Monroe Palmer, and there was actually a chance of securing some scrutiny of council finances. Since then, of course, the Tories have appointed ... a Tory Chair.
The questions from Cllr Cooke, and the original responses, which he found to be unsatisfactory, followed by supplementary questions from him, labelled GNC. The most recent clarification from CEO Andrew Travers is in red. Mrs Angry's comments in orange and annotated Mrs A. There are typos in the original format, unedited.
1. Regarding Abbots Depot, on 12/11/14 John Hooton *1 informed us that ‘The site has been in long term use as Abbots Depot and has remained vacant since they ceased to operate’ but on 19/05/15 Matthew Walters *2 informed us (via Members’ Enquiries) that ‘There is no formal arrangement with regards to the Winters use of the Abbots site, however Winters are currently using part of the Abbots Depot on an informal basis’.
*1 the Chief Operating Officer.
*2 Head of Corporate Programmes at Capita-Barnet
Original Response: Correct, the fact that Winters were using part of the site on an informal basis came through the site due diligence after November 2014
GNC: Why was the council under a misapprehension on 12/11/14? Had Cergold misinformed the council? When it was discovered that councillors had been misinformed why was no correction issued?
Response: It is perfectly normal for issues of this nature to be identified during the due diligence phase of a transaction like this.
This is true, in part. It is fairly normal for issues of this nature to be overlooked, in the natural way of things in Broken Barnet.
2. Regarding the Abbots Depot site, on 25/11/14 John Hooton informed us that ‘The purchase price was £8m some 7/8 years ago, this figure is being confirmed with the Land Registry’. There was no update until 19/05/15 when Matthew Waters informed us (via Members’ Enquiries) that ‘With regards to the sale of Abbots Depot in June 2014, the Land Registry search we carried out has revealed that Cergold purchased the property in June 2014. The directors of Cergold are the Comer Brothers and according what the Comers (sic), they had ownership for several years before then’ and that ‘The price stated to have been paid on 11 June 2014 was £750,000’.
Original Response: Land Registry entries indicate on 11 June 2014 a price of £750,000 was paid for the transfer of the freehold of the Abbots Depot site to Cergold Limited. The Council is not privy to the reasons behind this agreement but is confident that the £750,000 figure quoted does not reflect the open market value of the site Abbots Depot site. The reason that the Council is confident that the figure does not reflect market value is that the two companies involved in the purchase and sale of the freehold are owned by the same people.
GNC: Was the ‘open market’ valuation based on an assumption that planning permission for residential development could be obtained without any change to adjacent land? I am still awaiting the response to an overdue member’s enquiry as to the exact identity of the vendor in 2014.
Response: The valuation included an assumption that residential planning permission could be achieved. Details of the business case for acquiring the site were set out in the exempt appendix of the DPR approving the transaction. This appendix remains exempt until the transaction is complete should planning permission be granted. In the interests of transparency the intention is that the details of this exempt report will be published once the purchase of the site is complete should planning permission be granted.
Please note the $64,000 question has been ignored: or rather, the £8m question. Where is the proof of this purchase? Is there a clue to the accuracy of this reference in the vagueness of the date, ie 'some 7/8 years ago?
3. The report to the 16/03/15 meeting of the Assets, Regeneration and Growth committee, which was referred to the full council meeting on 14/04/15, requested approval of payment of a premium to buy out a ‘Waste Operation lease’ on land for which ‘The freehold interest in the site is owned by Network Rail’ (identified by a map provided to councillors as the main Winters site) but on 19/05/15 Matthew Waters informed us (via Members’ Enquiries) that in relation to the part of the Abbots Depot site occupied by Winters ‘The vacation and clearance of this area is also covered as part of the acquisition of the Winters Site’.
Original Response: It came to light during the pre-contract due diligence that Winters were occupying part of the Abbotts Depot site for storing their skips. We asked the vendor to explain the basis of this arrangement but they merely stated it was informal and the arrangement would be terminated before completion. In the contract with Cergold Limited to purchase the Abbots site, they are obliged give vacant possession so it is incumbent on them to ensure that Winters vacate before completion.
GNC: If Winters vacating Abbots Depot is a requirement on Cergold, in what sense is ‘The vacation and clearance of this area is also covered as part of the acquisition of the Winters Site’?
Response: Vacant possession of the Abbotts site is assured through the contract with Cergold. The agreement for the assignment of the lease on the Winters site also includes a provision that Winters will not to relocate to any other part of the wider site of the former railway sidings (including Abbotts Depot).
4. The three items of information above were provided at 16:36 on 19/05/15 in response to a challenge to the comprehensiveness and accuracy of an earlier response at 14:51 on the same day. That response stated that ‘To the best of our knowledge, there have been no changes to the freehold or leasehold positions since 1/1/14’.
Original Response: Correct. There was an error in the responses provided at 14:51 on 19/05/15, which were clarified at 16:36 on the same day. This confirmed that Land Registry entries indicate on 11 June 2014 a transfer of the freehold of the Abbots Depot site to Cergold Limited took place.
Mrs A: 'An error'? How did that 'error' come to be on such a scale, when senior officers knew perfectly well as early as at least 9th December what the real background was? And why was the information not forwarded as a matter of course to councillors at that point?
GNC: How did the June 2014 transaction come to be overlooked despite a direct question and how can the correction to a blatant error be described as a ‘clarification’?
Mrs A: Get out of that one, if you can:
Response: The reason for the clarification is that the 2014 transaction was between parties with shared ownership. Therefore even though technically the Land Registry records a change of ownership the same individuals retained ownership and control of the site.
Mrs A: Erm? Please answer the question ...
Unnumbered: Assuming that the most recent information is correct, I suggest that the decision making process to acquire the two sites should be investigated because relevant information was withheld from at least some of the councillors making the decision.
Original Response: It is not the case that relevant information was withheld based on the respsonses provided above and bleow. The monitoring officer has reviewed the decision making process and is confident that it was robust.
Mrs A: 'It is not the case that relevant information was withheld ...' Readers must compare the emails to the responses here, and decide for themselves.
Robust, again? See below. Or 'bleow'.
GNC: Is it your view that occupation of Abbots Depot by Winters and the recent purchase of Abbots depot for £750,000 were not relevant information for councillors voting through expenditure of £13.5m plus a substantial lease buyout premium?
Response: Yes, neither of those issues are relevant to the price paid, which as set out above was supported by a business case. In the case of the occupation of the site by Winters, the Council would have a right to be compensated by Cergold in the unlikely event that they failed to deliver vacant possession on completion. The price paid in June 2014 would be relevant only if it was paid on a transaction at arms length, which it was not.
Mrs A: Just extraordinary. Neither of those issues relevant? All previous transactions most certainly WERE and ARE relevant when there is a process leading to the purchase of a site costing £13.5 million, and no apparent evidence of how that valuation was reached.
A. The occupation of part of the Abbots Depot site by Winters was not disclosed. It may be under an informal arrangement but that does not necessarily mean it was irrelevant.
Original Response: We believe that all relevant and material information was provided at the appropriate time in order to support the council's decision making process. It came to light during the pre-contract due diligence that Winters were occupying part of the Abbotts Depot site for storing their skips. We asked the vendor to explain the basis of this arrangement but they merely stated it was informal and the arrangement would be terminated before completion. In the contract with Cergold Limited to purchase the Abbots site, they are obliged give vacant possession so it is incumbent on them to ensure that Winters vacate before completion.
GNC: No follow-up
a. Did the Council take legal opinion as to whether Winters had a right to stay on till any date or to be given time to vacate? If so what was the advice?
Original Response: Yes, the Council took legal advice throughout. In the contract with Cergold Limited to purchase the Abbots site, they are obliged give vacant possession so it is incumbent on them to ensure that Winters vacate before completion.
Mrs A: how legally binding are these 'obligations' and duties which are apparently 'incumbent on them'?
GNC: The question was about advice received by the council about Winters’ legal rights occupying land informally, not about Cergold’s contractual obligation to deliver vacant possession. Please answer the question.
Response: The council's solicitors did enquire of the seller's solicitors who cited that contract terms that they were selling with vacant possession and stating that Winters would vacate before completion.
Mrs A: Can we have full confidence in a response that is grammatical nonsense, and apparently with no proof of certainty?
b. Are Winters paying Cergold for use of part of the Abbots Depot site?
Original Response: This is not a matter for the Council, however, we asked the vendor to explain the basis of this arrangement but they merely stated it was informal and the arrangement would be terminated before completion.
Mrs A: er, well yes, it is a matter for the council, if it may have an impact on our investment in the site ...
GNC: Did the council receive legal advice that whether or not Winters was paying Cergold was irrelevant to any legal rights Winters might have in the matter?
Response: Legal gave advice that the arrangement with Winters might amount to a protected business tenancy, regardless of whether any rent was being paid. It appeared to legal that rent was in fact being paid in kind, namely Winters were allowing Cergold to use some of their skips. However, the vendor's pre-contract representations suggested the arrangement was informal and a personal one between the Comers and Winters (i.e. not constituting a legal estate in land). The risk of possession not being given was judged to be very small.
Mrs A: Ah ... regardless of whether any rent was being paid ... oh dear. And 'suggesting' the arrangement was informal, 'judging the risk of possession to be very small' ... Reassured, much, readers?
c. Was the possibility of Winters not vacating Abbots Depot when required recorded as a risk on the project risk register before the proposal for the Council to acquire the main Winters site and, if so, what was the mitigation?
Original Response: The risk of Winters not ceasing their informal use of the Abbots site was not recorded in the risk register as in the contract with Cergold Limited to purchase the Abbots site, they are obliged to give vacant possession so it is incumbent on them to ensure that Winters vacate before completion.
Mrs A: bored with this now. What I said before.
GNC: Is it not the case that there was a risk to the council’s depot relocation plan if Winters had legal rights at Abbots Depot that prevented Cergold from delivering vacant possession when required?
Response: Following conversations with the vendor's solicitors we understand the arrangement is undocumented and informal and as vacant possession is assured through the terms of the proposed purchase we do not believe there is any risk to the Council's depot relocation plan.
d. Would Winters’ occupation block access to the bulk of the site to the south and thus affect the Council’s plans?
Original Response: If the informal arrangement for Winters to use part of the Abbots site were to remain in place after the council purchased the Abbots site then this would impact the council's plans. However, in the contract with Cergold Limited to purchase the Abbots site, they are obliged give vacant possession so it is incumbent on them to ensure that Winters vacate before completion.
GNC: No follow-up
e. Does the proposed agreement between the Council and Winters explicitly cover evacuation of Abbots Depot?
Original Response: No, Winters have not been paid for the vacation of the Abbots site. Vacant possession of the Abbots site is assured through the agreement to purchase the Abbots site. The agreement for the assignment of the lease on the Winters site, includes a provision that Winters will not to re-locate to any other part of the wider site of the former railway sidings (including Abbotts Depot).
GNC: No follow-up
f. The identification of the ‘waste operation lease’ site was initially vague in the committee report of 16/03/15 but it did specify that the freeholder was Network Rail (with no mention of Cergold) and the map that was provided on request did not identify any part of the Abbots Depot site being part of the ‘waste operation lease’ site. So was the premium specified in the exempt papers just for a lease of the Network Rail site or did Winters’ occupation of part of the Abbots Depot site give them additional negotiating leverage that increased the price to the Council?
Original Response: The 'waste operation lease' site referred to is the Winters site and the freeholder of this site is Network Rail as stated in the committee report of 16/03/15. Winters had no additional leverage as a result of their informal use of the neighbouring Abbots site as vacant possession of the Abbots site is assured through the agreement to purchase the Abbots site from Cergold.
GNC: How could an agreement between the council and Cergold nullify any legal rights that might be held by Winters?
Response: There is no suggestion that Winters has or claims a lease. The arrangement is informal and the vendor has warranted that it will end before completion.
Mrs A: how legally binding is 'warranted'? Is it worth the paper it may or may not be written on, do you think?
g. Was the Winters’ occupation of part of the Abbots Depot site a factor in the officer decision to recommend acquisition of the main Winters site (which is not operationally necessary and was not proposed in November 2014 when negotiation to acquire Abbots Depot was recommended)?
Original Response: No. Winters' informal use of the Abbots site was not a factor in the decision to purchase the Winters' site as vacant possession of the Abbots site is assured through the agreement to purchase the Abbots site.
GNC: Question f above applies here too.
Response: There is no suggestion that Winters has or claims a lease. The arrangement is informal and the vendor has warranted that it will end before completion.
h. Was the inclusion of Winters’ evacuation of part of the Abbots Depot site in addition to their main site the reason why they did not want their freeholder, Network Rail, to know the buyout premium or even, apparently, that Winters was interested in selling its lease?
Original Response: The council is not privy to this information
Mrs A: 'The council' appears to have sat in the privy throughout this whole process, with its fingers in its corporate ears, humming a merry tune, when it should have been asking hard questions of the various interested parties ...
GNC: So why is the public not allowed to know the premium paid by the council to Winters?
Response: This is commercially confidential information. The council has entered into confidentiality obligations with Winters in the contract between them.
Mrs A: Ah. Aha. Yes, of course. Commercially confidential information. Obligations to Winters. Not to councillors, or we, the long suffering taxpayers?
B. Officers have now confirmed that Cergold paid only £750,000 for the whole of the Abbots Depot site in 2014. If the most recent purchase price had been disclosed to councillors then Cergold’s profit from selling the freehold for £13.5m would have been a very valid area for questioning by councillors. Councillors have yet to be provided with an explanation as to why the council is prepared to pay £13.5m for a site that only a year ago was bought for £750,000.
Original Response: Land Registry entries indicate on 11 June 2014 a price of £750,000 was paid for the transfer of the freehold of the Abbots Depot site to Cergold Limited. The council is not privy to the reasons behind this agreement but is confident that the £750,000 figure quoted does not reflect the open market value of the site Abbots Depot site. The reason that the Council is confident that the figure does not reflect market value is that the two companies involved in the purchase and sale of the freehold are owned by the same people.
Mrs A: If the Council is confident that the figure does not reflect market value, why did it keep its suspicions to itself, and not use this interesting fact to negotiate a better deal, and better value for money for residents?
GNC: Is the council confident that appropriate UK tax will be paid on Cergold’s profit of £12.75m (1,700%)?
Response: This is not a matter for the Council to comment on.
Mrs A: Presumably, then, the Council has informed HMRC of any concerns it may have in regard to the alleged under-valuation of the £750K transaction by the Council's landlords, and would be developers of North London Business Park?
C. The 16/03/15 committee report made no mention of Winters’ plan to move out of the Oakleigh Road South area irrespective of any prospect of the Council paying them to go away so the appropriateness of paying them a substantial premium did not receive appropriate consideration, even though it was raised by opposition councillors.
Original Response: The Winters site was not actively being marketed prior to the Council entering into negotiations for the reassignment of the lease, so plans for the operation to move out of the area irrespective of these discussions remain a matter of speculation. If Winters did intend to vacate the site, the lease would have been available on the open market, therefore, without intervention, the Council would not have been able to prevent another similar waste operation from occupying the site.
GNC: The Winters site (and the Mill Hill depot site) are safeguarded for waste use and it is Barnet’s obligation as a North London planning authority not to allow a reduction in waste-processing capacity in North London. How does the council propose to discharge that obligation in respect of the Winters site?
Response: This is a matter for the Council to engage in through the updating of the North London Waste Plan. Following re-assignment the Winters site will continue to be zoned for waste management and processing. Our proposals seek to increase the operational efficiency of the waste service which will ultimately improve the capacity. We anticipate these improvements will be required to accommodate the projected increase in throughput of waste and recyclables over future years.
D. The information in points 1-3 above came to light only through research by affected residents and persistent questioning by me. The information was withheld, for whatever reason, when it should have been disclosed first voluntarily by officers prior to decisions by councillors and then in response to explicit questioning. In the event all that I have is confirmation of what I put to the officer in question. I and other councillors do not know what else we did not and still do not know.
Original Response: We believe that all relevant and material information was provided at the appropriate time in order to support the Council's decision making process.
Mrs A: Do we? That's a cracker. The extent, and 'robust' nature, of your self belief is ... quite something.
GNC: Do you not accept that residents and opposition councillors have strong reason to doubt the council’s wish to be transparent on this matter?
Response: We believe that all relevant and material information was provided at the appropriate time in order to support the council's decision making process. The monitoring officer has reviewed the decision making process and is confident that it was robust.
London Borough of Barnet
Finally from me: as regards the decision making process being reviewed by the part time Monitoring Officer, and being found to be - ha, that favourite word - 'robust', may we please have clarification of the terms of reference used by the Monitoring Officer, and an explanation as to how a definition of 'robust' was, in his view, appropriate in the case of the process under review?
An extraordinary set of responses, by any measure, but seen in the context of the emails released through FOI, well: more than extraordinary - an indictment of this council, its management, its administration, the failure to communicate essential information to elected representatives, the apparent failure by contractual partners to ensure due diligence into the case for such a vast investment of taxpayers' money.