Not Me, Guv

In a letter to the “Echo”, Mayor Anderson states unequivocally that it is not the business of the council to get involved between private companies. For once, I find myself in agreement with him on this issue, but with one caveat. That is, that what he says and what he does are entirely different -even contradictory – matters. On the basis of his letter, it is difficult to tell whether his odd take is down to stupidity, incompetence, or both. After all, this is the man who has regularly paraded himself as an entrepreneur and a facilitator, passing smoothly between the public and the private sectors.

There is no better example of his confusion than his eager involvement in the proposed new Everton Football Cub stadium. Essentially, this is a private sector deal between EFC and Peel, both private companies. That is, until the mayor plonked himself in the middle, offering to facilitate cheap finance for the project with the Liverpool council-tax payer carrying the risk. He needs to decide once and for all where his priorities lie – as mayor, having consolidated extraordinary powers within his role, this is no small matter.

If the Bramley Moore stadium is a goer, it is reasonable for LCC and the Combined Authority to see how they might help the project with ancillary works, like road access. Any support must be within the existing parameters within which those two bodies operate, and in accord with other demands and priorities. It is neither reasonable nor responsible for LCC to be placed as the fulcrum for such a private sector project if there are more pressing demands facing the local public sector.

This issue arises as the BBC’s “Panorama” programme goes to air on Wednesday. It will be raising the sorry state of failed developments within Liverpool and elsewhere; and, remember, what happens in Liverpool reverberates across the city-region as a whole. However, I suggest a note of caution. I believe the programme’s prime target is the Tory notion of a Northern Powerhouse. Looking at the scam artists who have been at work in Liverpool is only a part of their brief. That is sad for us as Liverpool seems to have suffered far worse than elsewhere at the hands of the crooks behind the massive frauds involved – perhaps as much as ninety million pounds! – and this raises more questions.

For example, why is it that the scale of developer dereliction is greater in Liverpool than elsewhere? Why are the fraudsters responsible so blatant and seemingly confident here, in their repeated efforts to fleece gullible people with Liverpool- based scams? What action has been taken by Merseyside Police and the district auditor to look into these matters? Why has the local media been so reluctant to publicise the sorry state of affairs which passes for governance relating to planning, development and regeneration within the city?

Mayor Anderson knows full well that the council has responsibilities in these areas of fraud. LCC freeholds are involved, and the council has dealt repeatedly with serial scammers who pose as legitimate developers. He knows that due diligence ought to be exercised, to ensure that the council is dealing with fit and proper persons. Instead, LCC has given a nod and a wink to companies bought off the shelf, with no track record, and run by people with records of bankruptcy and criminality.

I have said it before, perhaps more in hope than expectation. There will come a point when the appropriate authorities (flawed as they may be) will have no choice but to take action and intervene in the management of the city of Liverpool. It might be the hitherto ineffectual district auditor, the police, or even central government, but it will happen. When it does, mealy-mouthed excuses and Pontius Pilate-like prevarication, will cut no ice. Personally, I believe that the sooner that day arrives, the better.

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Inside Information

No sooner had I posted my blog “Investment Blues” than fresh information was made available to me, illustrating some of the points which I had tried to make. The information to which I refer, comes from Liverpool City Council’s NDR debtors list, which shows what they are – and, as yet, are not – seeking to recover.

I have two entries before me naming member companies of the Signature Living Group. You might recall that I was showing that many of these “developers“ sit atop a hydra-like collection of companies. In this case, there are two in question. The Signature Living Arthouse Square Ltd is in default with the council to the tune of £79,629, and has been summonsed for that sum. Signature Living Hotel Ltd has an outstanding debt of £89,439, for which no summons has yet been issued.

The latter figure is particularly interesting as I understand that the debt relates to the car park at what was once known as Millennium House, and is now the flagship Shankly Hotel. It is worth recalling the sale of the then council headquarters to Signature Living. Its sale value at the time was twice reduced to a knockdown price. What few understood was that the sale price included two cash cows – a refurbished (at council expense) gymnasium, and a car park. Interestingly, the current debt is listed as a retrospective charge. This, of itself, raises questions as to what exactly the debt is for, when was it incurred, and why it has now surfaced as an “unsummonsed outstanding debt”?

Now, far be it for me to suggest the Signature Living have done anything illegal. It is common practice for some businesses to run up debts and to be late payers. Nor is it unusual – if regrettable – that member-companies of a group go into forced liquidation as has Signature Living Contractors. However, I have a hearty detestation of those who cynically collect profits from an insolvent company whilst genuine investors, suppliers, sub-contractors, and employees pay the price. What concerns me even more is the interaction such scoundrels have with public bodies like Liverpool City Council.

When Millennium House was originally sold, I raised questions with the district auditor (Grant Thornton’s), the then chief constable, and the police and crime commissioner. I was struck by the sublime indifference of each to the concerns expressed; so much so that I questioned my own judgement in querying these matters at all. However, subsequent experience and events have convinced me that I was right to do so.

Groups like North Point Global, PHD 1, Pinnacle, Bilt, and others still active, have all shown that senior council figures are either unable to deal with them, indifferent to them, or conniving  at their activities, at the expense of the tax payer and legitimate business. Much of this is in turn due to the lack of transparency and accountability in the council and its dealings. After all, the figures I have quoted refer to just one of the council’s partners (I nearly added “in crime” but that may be considered libellous!!). We know that the total amount of recognised debt to the council is huge without knowing the true cost of the depredations of these companies. I must note, however, that the ordinary citizen would be persecuted for a parking fine or for a missed council tax payment.

We all know that it is in the nature of our society that there will be rogues – and rogue outfits – who will constantly try it on, in both the public and the private sectors. Indeed, there are those who will abuse the voluntary sector – just look at the unresolved scandal of the council-owned football car parks. However, most councils try to ensure that the public purse is protected as if it is their own personal funds involved. Liverpool’s administration gives the opposite impression, treating public funds as the private spends of a drunken sailor.

Investment Blues

Developers really are shameless, especially in Liverpool.  For example, as Signature Living seeks planning approval to turn Kingsway House in Hatton garden into yet more flats, Her Majesty’s Custom and Excise petitions to have Signature Living Contractors wound up, on the basis of their failure to meet their tax commitments. Needless to say, the Signature Living Group without doubt will continue to pay handsome dividends to its directors.

It is no accident that such companies are generally part of a “group” or partnership, or party to a Special Purpose Vehicle (SPV). They have many faces, and more lives than the proverbial black cat. Legally, each company may be seen as an independent concern, although they and others in their group share the same directors, the same accountants, the same lawyers, the same offices. To the layman, they are the same entity. What their owners and/or directors know –and rely on – is that they are not the same entity in the eyes of the law. Far too often, one arm of these deceptive octopuses is chopped off, only for the rest to carry on, and their operators to cruise on without a care in the world. Those who suffer are gullible investors and unwary sub-contractors who are left to carry the financial can for such unscrupulous con artists.

Yet it is not just the private sector which is without shame. This week has seen in Liverpool the annual jamboree known as the International Business Festival. To listen to the mayor, his faithful sidekick, Gary Millar, and his senior salesman, Max Steinberg, Liverpool is an investors’ paradise. Try telling that to those conned over the many failed projects in the city, including New Chinatown. The biggest investor in Liverpool appears to be the council tax payer, via the funds poured into Liverpool Airport, the Finch Farm training ground, the Cunard Building, and riverside terminal facilities. If the mayor has his way, we could even end up as the major investor in EFC’s proposed new stadium.

Investment from elsewhere? Well, this past week has seen the annual report into foreign investment into the various towns and cities of the UK which is published by EY (Ernst Young), one of the world’s big five “bean counters”. Each year, they list the success stories in the competition to attract overseas investment; for Liverpool, the 2017 report does not make the best of reading, despite the steady stream of guff spewed out of the mayor’s office and fed to the public by the Echo.

Liverpool came seventeenth in the national league table for direct foreign investment in 2017, behind such places as Coventry, Barnsley, Reading and Warrington. The north west region as a whole increased foreign investment by 17%, led by the ever successful Manchester which was, in turn, second only to London. Liverpool, however, fell back by 10% on its 2016 figure. Warrington, just fifteen miles away, increased its foreign investment in the same period by a massive 400%!

As I recall, the mayor and his mouthpieces have “bigged up” Liverpool’s economic success for years now, although the data to justify the claims is hard to come by. What, for example, has resulted from the mayor’s trip to Birmingham, Alabama? How about his freebee to Surabaya in Indonesia? What of the many trips by him and Cllr Millar to China?  The only result of the latter seems to have been a host of angry and disenchanted investors who have been ripped off by so-called developers.

 It is one thing to be positive about the city and what it has to offer, presenting it to the world with the objective of attracting investment and thus creating jobs and prosperity across the whole city-region. It is quite another to fly in the face of reality, promoting a false prospectus. Currently, in cahoots with the Echo, every plan, dream or aspiration is trumpeted as a done deal. Inflated figures and unrealised objectives inevitably lead to disillusionment and cynicism in the local community, in business, and in potential investors.

It would serve the city better if the mayor’s office and his acolytes, together with his allies in the local media, were to leave bloated and unrealistic claims to the snake oil salesmen who seem to have proliferated in the city in recent years. When the mayor spoke to the IBF about the threat of robotics and artificial intelligence (AI) to jobs, perhaps he was thinking of his own future and that of his colleagues. After all, even a crude form of AI in the Cunard Building is better than none at all.

A city-wide clear out is required, and ought to be initiated within the city before outside agencies feel compelled to do it for us. A healthy start to a fundamental change of approach would be the release, in full, of the CIPFA report commissioned by the former Finance Director, into the mayor’s proposals for the city council’s involvement in the financing of a Bramley Moore stadium.

Russian Oligarchs

Recent revelations about the owner of Chelsea FC – Roman Abramovich – set me thinking about what could happen with regard to Everton FC’s plans for a new stadium. Abramovich is close to Russian president Vladimir Putin, and has been having great difficulty in renewing his visa for the United Kingdom. Connections have been made between the sources of his huge wealth and the desirability of allowing him further residence within the United Kingdom in these tense times in Anglo-Russian relations.

As a result, he has pre-empted any attempt to bar him entry by applying for Israeli citizenship (he is a Jew, and can easily do so under the Israeli “right to return” law). This would not only give him ten years’ tax-free status in Israel for his massive overseas income; it would also enable him to visit the UK without a visa. More immediately relevant to local concerns, he has halted his planned investment in a £1 billion new stadium for Chelsea FC.  I will explain the possible connection.

Another oligarch resident in London, and involved in football club ownership, is Alisher Usmanov. Also a friend of Putin, this multi-billionaire is the second biggest share holder in Arsenal FC. However, his attempts to buy out that club have been thwarted by its American owner, Stan Kroenke. Thus, Usmanov is said to have been looking elsewhere to fulfil his football ambitions. This is where matters become interesting for the people of our city-region, because his business partner is Farhad Moshiri, principal shareholder in Everton FC. Indeed, their joint company USM, based in the tax-dodging British Virgin Islands, is the sponsor of Everton’s training ground at Finch Farm (you may recall that the freehold for this facility was bought at tax payers’ expense by Mayor Anderson in another flight of football fancy).

Last year, a company called Appleby which has a base (amongst other off shore favourites) in the Isle of Man – another haven for tax dodgers – had its confidential files compromised, and they became known as the “Paradise Papers”. This company exists to help the rich and the super-rich to avoid paying tax, and to keep their affairs hidden under a cloak of secrecy. Unfortunately for them, the leak of the papers blew their cover.

Many big names were shown to use these morally reprehensible services, including those of Moshiri and Usmanov, via their involvement in Blue Heaven Holdings, registered in the Isle of Man. The strong suggestion was that Moshiri’s buy-in to EFC was facilitated by Usmanov’s money. Needless to say, both Moshiri and Usmanov denied this. If it was the case, Usmanov would have been in breach of rules prohibiting anyone having a major shareholding in more than one football club. However, there remains intense speculation that Usmanov might yet emerge as the owner of EFC, once he has disposed of his Arsenal shareholding.

You might ask what all of this has to do with the city-region. Well, it would have major implications for the city-region, for EFC, and for its proposed new stadium. For example, what would happen if there was to be a continued crackdown on Putin’s cronies domiciled in the UK?  What if it was applied to Usmanov as it appears to have been to Abramovich? It may seem far-fetched at the moment as he is not an official stakeholder in EFC. Yet, if Abramovich is the yardstick for the good faith of Russian oligarchs in football, it would not augur well for EFC and the city.

I realise that some fans do not give a hoot as to who might own EFC as long as they have a huge bank balance and a willingness to dip into it. However, Liverpool council tax payers would have great concerns if they were being used to provide guarantees and carry risk via loans to such people. After all, the track record of Russian oligarchs is characterised by supreme indifference to those mug enough to allow them to exploit their gullibility. Remember too, that council tax payers across the whole city-region are also expected to indirectly subsidise infrastructure ancillary to the proposed stadium by way of Combined Authority grants. Self-evidently, such money spent on this mammoth project cannot be spent on the needs of the surrounding five boroughs.

I simply ask whether or not you would be prepared to put your trust in a Russian oligarch, particularly given the city council’s abysmal record in invigilating major projects? I certainly would not. A new stadium?  By all means, but keep the council out of its financing.