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.

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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.

Half a Story

After consistent and persistent pressure from a number of sources, the Liverpool Echo has finally given a more informed account of one of the development scandals currently blighting Liverpool and its reputation with investors. I emphasise one of those scandals because today’s front page story deals only with what has been blindingly obvious for years to those who choose to see – that is, that the companies ‘North Point Global’ and ‘Pinnacle’ have been central to a major scam that reaches far beyond Liverpool, yet they are not the only self-defined ‘developers’ taking the city for a ride.

Perhaps one should be grateful for small mercies, but it has taken literally years for the Echo to partially meet its obligation to keep its readers informed as to what has been going on in the city. The paper cannot claim ignorance – I and others have repeatedly given them substantial information and incriminating evidence. From the senior editor down, they have been made aware. Nevertheless, until now, there has not been a comprehensive account of the magnitude and extent of this scandalous situation. I suspect that the current attempt to divert attention from their professional neglect has been prompted more by the impending Panorama special on the matter, than by a late blood-rush of journalistic ethics.

However, even this attempt at compensating for the Echo’s culpable neglect of the scandal remains incomplete. True- it tells of the huge sums involved £90m according to the banner headline. It also lists the number and names of the derelict sites involved. It even tries to give the local regulators – Liverpool Council Building Control, and the Fire and Rescue Authority – a clean bill of health for their walk-on parts. It is what is omitted that I find striking.

The article fails to point out the repeated and approving publicity (free, I assume) given to these scam schemes by the newspaper. It appeared that over a matter of years, it was ready to publish any old public relations bilge given to it by the developers on behalf of these schemes. Most recently, for example, the Echo was singing the praises of the Victoria House project in James Street despite being repeatedly told that this was just the latest in a long line of dodgy developments which was doomed to failure.

Far more telling has been the Echo’s failure to include any real reference to the city council’s abysmal role in this mess. This omission leaves the story only half told to date. After all, the council has been the great enabler in all this, on behalf of the crooks and con men behind these schemes. Without the complicity of key council personnel, either through incompetence or malfeasance, it is difficult to see how these people could operate so successfully. It is the council – or rather, the mayor, with council support – which sets the strategic plan for the city within which dodgy developers seem to thrive. The council also controls the planning committee. Whilst the latter is subject to legal constraints and imperatives, it also has powers over developers which it can use where it is appropriate. More directly, the council, its Members and its officers, have an obligation to exercise due diligence when dealing with fly-by night companies with less than reputable operators.

I give you just one example. Passing reference is made in the article to Peter McInnes as the promoter of North Point Global and its construction arm, PHD 1 (the construction press referred to him as chairman). When McInnes was named in open court by the police as a money launderer, he moved quickly to close down the PHD 1 group of companies (six in total )  and immediately replaced them with the Bilt group (also six in number). His sister, Julie had been the director of PHD 1, and then became director of Bilt. Her job was ‘to look after his interests’ although none were recorded at Companies House. Effectively, the same companies but now ALL defunct – same officers, same business address, and same property interests (e.g. the old Coconut Grove site in Tuebrook), seamlessly transferring council contracts from one to the other. Yet the council continued dealing with them.

Many years ago, local government was besmirched by the Poulsen scandal. Local politicians and officials paid a price and went to gaol. I recall that one of the conclusions reached by the subsequent inquiry was that for corruption to thrive within local government, it required the participation or connivance of both elected members and officers. It now remains for the police to establish if that has been the case in Liverpool City Council. Meanwhile, we can but hope that the Echo will find the wherewithal at this late stage to find a sense of purpose beyond its recent record, and keep its readers fully informed.

Cock Up Council

Some clowns masquerading as journalists, have described recent Liverpool city council manoeuvrings as political drama. I must say that to the long suffering local public, it has looked more like political farce, and typical of the council under the stewardship of Mayor Anderson. Other boroughs within the city-region have had their difficulties and their reshuffles – a regular occurrence at this time of the year after local government elections. So it is also the case with other cities around the land; but nowhere seems to get it as spectacularly and embarrassingly wrong as Liverpool.

The recent mess actually began with the repeated attempts of senior councillor, Frank Prendergast, to get answers as to where exactly hundreds of thousands of pounds raised through car parks associated with the two football clubs, went. So frustrated was he by the dogged refusal of those responsible – including cabinet members and the Beautiful Ideas Community Interest Company – to give him a clear account, that he resigned from the council’s Labour group in disgust. This issue brought the simmering tensions in the Cunard Building to a head.

Then came Cllr Barry Kushner’s abortive attempt to take the position of Labour group deputy leader from Cllr O’Byrne. Along with Cllr Hanson, Cllr Ros Gladden and Cllr Roy Gladden, he is part of the self-described “Team Joe”. Not the most illustrious collection of councillors, you might recall that Anderson did in Hanson for reported comments about the Gladdens. This speaks volumes about the current isolation of the mayor in Labour circles when this is the best support which he can rally. The mayor is not a politically astute individual, and the failure of his newest acolyte, Cllr Kushner, to supplant Cllr O’Byrne has only served to exacerbate the internal political problems he faces in the Labour group and the council.

The mayor had hoped for the defeat of Cllr O’Byrne so that he could ease her out as deputy mayor (and putative rival) on the back of that defeat, only for that particular Plan A to be thwarted when she narrowly hung on as deputy group leader. Not to be discouraged, our foolhardy mayor ploughed on with the dismissal from his cabinet of Cllr Small (another perceived rival), having blamed him for what the mayor saw as a Labour failure in the recent local elections. This sacking, in turn, saw Cllrs Munby and O’Byrne storming out of the cabinet, with stinging, if belated, criticism of Anderson’s ruling style. At least, that is what they said; or did they jump – like the proverbial rats – before they were pushed? Either way, it matters little. The fact of the matter is that the ruling Liverpool Labour group is split right down the middle, with few obvious signs of even the possibility of reconciliation.

Perhaps of greater long term significance than the opportunistic games of political has-beens was the withdrawal of Cllr Lana Orr from other than her ward duties. Bright, well-educated and young, she and those like her represent the best hope for Labour’s political future health. It is surely now obvious to a younger generation (and to Momentum) that what purports to be a progressive, Labour-run council is nothing of the sort. It is simply a throw-back to the worst days of boss politics, saddled with a “my gang versus your gang” mentality. Currently, it is also a council in which its members and its officers are faced with a multitude of allegations of malfeasance.

One way or another, it will all end in tears. So out of touch are the mayor and his cronies that they now appear to believe their own fake news. Yet the deep well of dissatisfaction with the way the city is being run is now close to overflowing. At the very least, when nominations are sought in 2019 for a Labour candidate for city mayor, we can expect a serious challenge to the current incumbent. That is, if the government, the national Labour Party or the police have not intervened by then.

Political Post Mortems

Although we now know who won which seats across the Liverpool city-region, we are still to feel the aftershocks of the recent local elections. There have been some very obvious consequences for the Labour Party, dominant in Knowsley and St Helens. The latter had already seen a leadership change, with Cllr Barry Grunewald replaced as council leader by Cllr Derek Long. However, the bigger shock to Labour was the loss in the Rainhill ward to an independent. This was down principally to the strong local belief that the council was ignoring local opinion over proposals to build in the area on much valued green space.

Perhaps events in neighbouring Knowsley were more of a shock. The wards with the highest electoral turnout all returned non-Labour councillors – a Lib Dem, a Green and an independent. All three were linked by the highly contentious issue of building on green spaces. Gary See had been widely tipped to take over as leader from Cllr Andy Moorhead, whose leadership had been a disappointment to his group. The electoral defeat of Cllr See was temporarily a cause for celebration by Cllr Moorhead, who believed himself to be safe from challenge after his rival’s political demise. To his dismay, Cllr Graham Morgan came forward to make a successful challenge for the leadership.

As in St Helens, Labour failed to appreciate just how alarmed voters were by council plans to flog off green spaces to developers. Where voters saw the opportunity and the platform from which to challenge hitherto Labour dominance, they did so. Elsewhere in Knowsley, for example, derisory turn out figures of 20% in wards like Shevington and Cherryfield, illustrate just how the Apathy Party was the major winner in these elections.

Meanwhile, Labour control continued in Sefton, Wirral and Halton, but left no room for complacency. The political pendulum can –and regularly does – swing quite dramatically within those three boroughs with unpredictable outcomes. Failure to meet voters’ legitimate priorities coupled with a perception of politicians taking them for granted, means anything can eventuate at elections, given the recurrent failure to galvanise the voters to actually turn out in numbers to vote. Whilst the problem is not just a local phenomenon, there is a persistent instability at a local level which does nothing to enhance real local democracy.

Liverpool, according to Mayor Anderson, was a real disappointment for Labour. The loss of three seats, including one held by one of his cabinet members, and the failure of Labour to reach its targets in south Liverpool, were alarming to the mayor. What he fails to realise as he looks around for scapegoats, including his campaign co-ordinator, Cllr Nick Small, is that he himself is principally responsible for the electoral performance he seeks to bemoan. Ask just about anyone in Liverpool, and they will tell you in no uncertain terms that they wish to see the back of Joe Anderson. He is a political albatross.

There have been many disastrous decisions taken whilst he has been mayor, not least his own assault on the city’s green spaces. However, there are other very obvious failings like his inflated self-image as both a political and commercial entrepreneur. His most recent folly was to suggest that the council might sell Cunard Building (itself a disastrous buy) and move into the abandoned Pall Mall site to “ kickstart“ that particular picture of dereliction. He ought to steer clear of that and other problematic “developments“, and the scams centred on them, until the criminal justice system has finished their investigations.

Meanwhile, internal political turmoil will be at the heart of the city’s ruling Labour group until at least its annual general meeting. Mayor Anderson sees enemies all around him. His deputy, Cllr Anne O’Byrne, is being challenged by ambitious Cllr Barry Kushner for the post of deputy leader of the Labour group, but NOT as deputy mayor. Of course, the deputy mayor is appointed by the mayor whereas the deputy leader is elected by the Labour group. Is this goodbye to the much disliked Cllr O’Byrne? Is it simply a tactic to enable Anderson to dispose more easily of his difficult deputy? Moreover, who is leader of the Labour Group? The inference is that it is the mayor; yet he is not a councillor. The conundrum is: how can a non-councillor be the leader of a group of elected councillors? Welcome to the crazy world of Liverpool politics.

Election Time

As we near the local elections in May, there are already signs of fundamental change across the six local councils of the city-region. The Labour Party dominates all six local councils and will continue to do so, but various leaders are under pressure. Halton Labour group remains divided between Widnes and Runcorn interests, which should ensure that Rob Polhill steps down only when he sees fit. That, of course, is not the case in neighbouring St Helens, where an ailing Barry Grunwald has already stood aside for Derek Long, a man of great experience on both Knowsley and St Helens councils.

Speaking of Knowsley, I am told that Gary See is the favourite to lead the council in the next year; whilst over the river in Wirral, Phil Davies is under great internal pressure, not least because of his plans for a Haringey Council-style housing deal. Presumably, Bootle councillors will continue to dominate Sefton Council. Liverpool, of course, is the largest council in the city-region, but its unique governance – with an elected mayor – complicate its electoral chances.

Control of Liverpool council cannot be changed at this election but it does not mean that there is no concern for the ruling party. As recent parliamentary and local elections tend to show, those who bother to vote in the city, vote Labour. The oddity now is that virtually total control is in the hands of the elected mayor; the council merely nods in agreement. It remains to be seen whether a disaffected electorate turns out and votes against Labour candidates in protest, or whether they opt to stay at home in apathy. There is no doubt that there will be little positive enthusiasm on behalf of most of the current council.

Frankly, it is dispiriting that the Apathy Party seems to be in the ascendancy at the local elections. Councils – and other elected representatives – need to be opposed and held to account. Otherwise, democracy is an empty word. My own view is that the Australians have it right with legally compulsory voting. The franchise is a responsibility as well as a right. After all, the voter always has the opportunity to spoil their vote if there is no candidate on offer who meets their requirements.

Meanwhile, the Liverpool mayor has offered another incredible flight of fancy to his open-ended commitment to subsidise two billionaires (the Bramley Moore stadium). He now says that he might sell the Cunard Building, and move into the derelict Pall Mall project, in order “to kick start it”. Apart from all the questions which swirl around his original purchase of the Cunard Building, he has learnt nothing about the dodgy developers behind the many failed projects in the city. Either that, or he is just brazen in his contempt for honest and hard-working Liverpool council tax payers.

These, and many other questions, will continue to be asked; perhaps some will eventually be answered by our failing authorities and regulators. At the very least, the local elections will give some indication of how well-informed and concerned local electors are.