The murk behind Brent Council's Bridge Park deal that was opposed by the community last week

Bridge Park Complex with Unisys on the horizon

The Kilburn Times LINK today reports on a heated consultation meeting regarding the redevelopment of Bridge Park, Stonebridge, and the surrounding area including the Unisys landmark building. There were demands for the land sale to be halted.

The newspaper quotes Jay Martin of the Bridge Park Community Council as saying:
This is not a consultation, it's a fait accompli. It looks like this deal has already been done and decided. There are moral questions and legal questions to answer. There's the possibility that this whole thing might end up in a judicial hearing. 

 The moral and questions that Martin refers to are presumably directed at Brent Council's off-shore partners in this development.

The late and sorely missed Cllr Dan Filson who, while a Labour councillor, had a strong streak of independence, responded to Cllr Pavey's suggestion that tax havens had to be tackled at national level rather than local government, with this comment on Wembly Matters LINK:

I must say I was surprised that whilst mentioning the two companies involved were neither incorporated nor registered in the UK, the Cabinet paper did not mention that they were registered in tax havens namely Luxembourg and the BVI, nor that the leading shareholder in the holding company was a convicted fraudster. A quick Google search revealed this.

Possibly the council officers preparing the report felt these issues did not matter given the safeguarding phrase that the decision of Cabinet would be subject to meeting financial scrutiny (quite how these financial checks would succeed given that they had not succeeded in the months leading up to Cabinet was not made clear!).

The wider issue of the ethics of dealing with tax haven companies wasn't touched upon at all nor the fraudster angle. I understand Councillor Pavey's position that it needs government action to deal with tax haven companies (to say nothing of persons being company directors of overseas companies who, by my book, should be disqualified from holding any positions of trust in any company trading or owning land in this country).

However Brent can have its own policies; but what should they be here? The land south of the North Circular Road at Stonebridge Park has been a derelict eyesore for a couple of decades. Brent can engineer development here by intervention using such land as it has as a bargaining tool. If we take the ethical route and don't treat with tax haven companies will we get better or worse terms from other companies? Conceivably could Councillors be surcharged for not getting "best value" in a deal? Will any action happen on this site at all for another decade?

I don't know how I would respond on these issues. My disappointment was that no attempt has been made to address them before this particular decision came to Cabinet despite the identity of these 2 companies being known for some time, years even. So the Cabinet was obliged to agree to a deal involving these two companies without a financial appraisal in front if it and without a stated policy on dealing with tax haven companies. It leaves an unpleasant taste.

Ex Inspector of Taxes, Philip Grant, LINK revealed a link with Quintain:

 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).

Persuaded? Definitely not!

In January of this year Cabinet approved the land deal for Bridge Park nd Labour defeated Cllr John Warren's move at Full Council to have it debated. The is an extract from my report of the meeting:

In the course of the resultant discussion Cllr Warren, speaking to Muhammed Butt, Leader of the Council, referred to 'Your friend Mr Auchi'.  Sir Nadhmi Shakir Auchi is Chairman of the off-shore British Virgin Islands company General Mediterranean Holdings (GMH) which is Brent Council's partner in the redevelopment of Bridge Park.  Muhammed Butt is the lead member for the conditional land sale of the Bridge Park site to GMH.

At the Brent Cabinet on January 16th Cllr Margaret McLennan, Deputy Leader of the Council, said that she was 'thrilled' by the Bridge Park deal. LINK

Auchi is controversial because of a 2003 allegation of  fraud LINK and of course the whole issue of tax havens and tax avoidance is a current political issue with Jeremy Corbyn promising action by a future Labour Government.

Cllr Thomas intervened to call for Cllr Warren to withdraw his statement about 'Your friend Mr Auchi' directed at his leader, as the Council Meeting was being streamed and he wouldn't want a 'wrong impression' to be given. Warren, saying he couldn't remember exactly what  he'd said,went on to say, 'Mr Auchi has connections with the Labour Party. Let me say that. That is what I was referring to.'

The alleged link goes back to 2001 when the Guardian published an article entitled 'A Tycoon, a Minister and Interpol' LINK and involved Keith Vaz MP.

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.

Council's Bridge Park deal with developers indicates little affordable housing & no transparency

The site including Unisys, Bridge Park, Technology House and car breakers

Last week the Planning Committee discussed how to increase the amount of affordable housing provided by developers to meet the 50% affordable target and to make the issue of Viability Assessments mores transparent LINK.

Tomorrow the Cabinet will discuss a report LINK on the Unisys-Bridge Park-Technology House development which admits that the amount of affordable housing will be much lower than 50% and where an Appendix with a 'sliding scale' of affordable house is 'restricted' and not available to the public.  The scheme consists of c500 homes, hotel and leisure centre.

The scheme is rather similar to the Willesden Library development where the Council gets a piece of infrastructure in exchange for providing land. As readers will know the Willesden Green flats contain no affordable units and were sold to overseas investors by Singapore agents. In exchange we got a small 'Cultural Centre' which by coincidence is due to open tomorrow. The community lost a good local bookshop, a cinema and an open space.

At Bridge Park a new leisure centre will be built with a much needed swimming pool, but other features of the current centre will not be provided.

Among the lost facilities will be the function hall, small business units, nursery and meeting rooms for faith groups.  PLIAS Resettlement , a community based not for profit organisation that provides services primary targeting offenders and ex-offenders to enable them to integrate them back into society, will lose its base.  They join Stonebridge Adventure Playground and the Welsh School that lost their premises through the redevelopment just up the road. The report admits that despite a pledge to Cabinet in June 2013 to help the nursery find new premises, that has not been done.

The report's Equalities Assessment claims that a positive aspect is:

With a high young population, the provision of new housing in the local area which the population could take advantage of is a positive in that it provides the opportunity for young people to move out of their family home bit also provides the opportunity to stay in the local community.

Even the officers seem to recognise that this might be seen as disingenuous:

However, it is not known if new housing would be affordable, especially given that Stonebridge ranks as the lowest ward in terms of median household incomes.

Of course it won't be affordable, which is presumably what your secret Appendix says!

Another aspect that might set the noses of ex-Tax Inspectors Dan Filson and Philip Grant twitching, are the developer and finance details.

The ex-Unisys site is owned by Harborough Invest INC (Harborough) to whom General Mediterranean Holdings SA (GMH) are a parent company).  The Council will sell part of its own site (Technology House) to Harborough/GMH.

In June 2013 the Cabinet agreed to pursue this option with a different subsidiary company of GMH: 'Tucan, a special purpose vehicle proposed for the purposes of this development'.  GMH now say that Tucan Investments is no longer in the picture and the Council state 'GMH have explained that it would be sensible for the landowner to be party in the agreement rather than a new development vehicle.'

The main report Financial Status Checks (4.6) states

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.

Another aspects is of course ensuring that the Council (or rather we residents) are getting value for money. The reports says (3.6):

Since the June 2013 Executive, negotiations with GMH have been ongoing through their agent Nick Shattock Real Estate (NSRE) (now Chainwork Capital) [another change of name] to ensure that the Council receives best value for its lands. As a result the Heads of Terms have changed and it is proposed that the Strategic Director of Regeneration and Growth concludes negotiations and enters into Heads of Terms with GMH and Harborough Invest Inc in substantially the form set out in Appendix 3 of this report [which is restricted].

The Council employed Deloitte LLP in June 2014 to see if the disposal of their land to GMH represented 'best consideration' - Deloitte concluded it did not. the report goes on (4.4)

Deloitte LLP re-engaged with GMH, via their agent NSRE to seek in principal agreement to the various development costs, revenues and timescales. This exercise resulted in the Council receiving a revised offer from GMH as at September 2014. as a result of the discussions between DRE and NSRE, Deloitte LLP conclusion was that whilst they did not necessarily agree with all of the points raised in the NSRE offer letter, the Revised GMH offer for the Land at Bridge Park was above that of Deloittee revised opinion of value (Appendix 4) [yes, restricted of course].

The report goes on (5.6)

Through pursuing a deal with GMH the Council is not releasing the option of disposing of the Council land to the market and not giving other organisations the chance to bid for the opportunity if this had been available  on the open market. The land price has been robustly tested in order to align with best market price and external consultants to Brent have undertaken detailed development appraisal, valuation and sensitivity resting work confirming the GMH & Harborough proposal to represent best value.

The consultant's report has not been published.

Persuaded?