Cabinet warned over 'dealing with a convicted fraudster' in Bridge Park development

Cllr Dan Filson, Chair of Scrutiny,  made a dramatic intervention in the discussion of the Bridge Park redevelopment at last night's Cabinet meeting.

He drew attention to a paragraph in the report about the Council's development partners:

General Mediterranean Holdings SA and Harborough Invest Inc are both in overseas ownership and not registered at Companies House, As such the process for carrying out financial checks on these companies cannot be completed in the normal manner and the required financial information in an appropriate format is awaited. Finalisation of negotiations and entering into Heads of Terms with these companies will be subject to confirmation of satisfactory financial standing.

 Filson pointed out that the companies were not registered at Companies House but instead were overseas registered, a Luxembourg Holding Company and the British Virgin islands. This meant that the usual financial checks could not be carried out.

The founder and chairman of General Mediterranean Holdings is Sir Nadhmi Shakir Auchi. In 2003 LINK Auchi was convicted of fraud following his involvement in a $504 million corruption scandal centred on the French oil company Elf Aquitaine which Wikipedia says was described as 'the biggest political and corporate sleaze scandal to hit a western democracy since the second world war.'

Auchi was given a $2.8 million fine and a 15 month suspended jail sentence. Filson warned that the council is dealing with a 'convicted fraudster'.

Earlier Philip Grant had posted this comment on an earlier blog LINK:

As Martin suggests, this article did attract my interest.

When offshore companies are involved, that will always raise suspicions about who is really behind them, and whether tax avoidance may be involved, although in this case you can read a little about GMH on Wikipedia:-

'The General Mediterranean Holding (GMH) is a financial holding company established in 1979 in Luxembourg City, in southern Luxembourg, founded by Anglo-Iraqi businessman Nadhmi Auchi.

GMH is a diverse business group with activities in Banking & Finance, Real Estate & Construction, Hotel & Leisure, Industrial, Trading & Pharmaceuticals, Communications & IT and Aviation.'

The (publicly available) details do not say in which overseas territory Harborough Invest Inc. is incorporated, or resident for tax purposes.

By chance, I have come across GMH's "agent", Nick Shattock, before, when I was an Inspector of Taxes, and he was a director of Quintain Estates and Developments Plc (having previously been a partner in a firm of City solicitors). That information is on public record, and (of course) I cannot disclose anything which happened when I was responsible for dealing with the Quintain group's company tax affairs, because of Civil Service confidentiality.

As a (past) director of Quintain (the developer behind Wembley Park), it is likely that Mr Shattock has already had dealings with Brent's Strategic Director of Regeneration and Growth, Andy Donald. The report to Cabinet proposes that negotiations over the "deal" between Brent and GMH should be left in the hands of Mr Donald (as the "deal" with Galliford Try over the Willesden Green Library Centre redevelopment was).

I have written before about Andy Donald's philosophy LINK but it is worth bearing in mind this particular comment of his:

The decision makers are never going to read all that text. There is a massive disconnect between the decision makers and the officers.

Andy Donald was unwell yesterday but the decision makers, the Cabinet, went ahead and approved the Bridge Park report.

I had pointed out in my earlier posting that the Officer's report made the Appendix on the sliding scale of affordable housing restricted so that the public are unable to see it. Cllr Margaret McClennan said that the developers had offered 10%  (50 homess out of the 500 planned) against the Council's target of 50%. She said that Brent Council wanted at least 30%. Cllr Pavey said the despite the gain of a leisure centre and swimming pool officers should be pushing for a greater amount of affordable housing.

Cllr Mashari said that the Cabinet should not get so caught up in the detail of affordable housing that 'we forget the marvellous facility that Brent would get through the development.'

Questioned about the fear that the housing would be sold abroad as had  happened at the Willesden Green Library development Cllr McClennan said that the Council would demand that the homes be first marketed locally.

The Recommendations adopted by the Cabinet 'delegate authority to the Strategic Director of Regeneration and Growth (Andy Donald) in consulation with the Chief Finance Officer and Chief Operarating Officer to enter into negotiations, finalise and enter into a land sale agreement with General Meditteranean Holdings SA and Harborough Invest Inc.'

Asked about how any issues that might arise from the negotiations and financial checks would be dealt with the Cabinet were told that the lead member, Margaret McClennan, would be consulted.

The fear that several members of the public were left with was that, given the overseas status of the companies involved,  Brent might be able to do little to persuade them on the proportion of affordable housing and marketing front.