The BIG Issue

Bank of Money

We understand that Dictionary.com have just decreed that ‘complicit’ is the word of 2017. Therefore it is most appropriate that we  publish whistleblower Nigel ‘Highbrow’ Hobro’s audit of the BIG fund. A definitive account (thus far) of auditing failures written by someone who believes in public accountability and protecting the public purse about people who profit from the lack of both. 

THE BIG FUND Audit

Voluntarily and, for no pay, I have performed an audit of the BIG fund. Although I was one of two whistle-blowers I am going to trace what I would have done had I been in receipt of the data as a Council Internal Auditor.

I imagine that the Peer Improvement Board take Councillor Davies at his word, that WBC is open to learning from other councils. They arrange that a Bolton Borough Internal auditor job- swaps for a short period to bring objectivity to an investigation that, as per Cllr Philip Davies “was not fit for purpose” when performed by WBC’s own Internal Audit Service. Clearly it was not fit for purpose as both Beverley Edwards’ 350 page report, and David Garry’s 33 page report were riddled with partisanship, the main drive being to exculpate their colleagues. I am not shown their reports, let me imagine, just the gist of them lacking independence. As an internal auditor I very much welcome the freedom of not being obligated by ties of colleagueship and passage of years with any of the WBC staff I will be engaging with.

On receipt of allegations from two qualified and mature employees of a subcontractor working on a council project, I would have commenced by performing a type of SWOT analysis-Strengths Weaknesses, Opportunities and Threats. This SWOT analysis was demanded of every application for council funds whether BIG or Intensive Start Up Scheme (ISUS).

Pictorially the matrix is represented below. I would outline in words why such fractions were given.

What are the risks to the whistle-blower’s livelihood if he be lying-100%; and if he be truthful given the hoops he must go through at an Industrial tribunal, well very significant. Thereby I have analysed his risk to livelihood, irrespective of his truth or otherwise, as being 80%

If the whistle-blower is correct then what profit might he make? The answer is very small, if any, as the Council does not pay any bounty to a whistle-blower.

If the whistle-blower be correct what threat is there to a council officer? Given the unions within the council, given the dissemination of responsibility within the council, there is little threat to any individual council officer. This operates to enhance the possibility of lying by council officers as the penalty is much mollified by group responsibility, lack of punishment and the council’s desire to keep gross error from public view. In this case already some councillors and the press’ reportage has unmasked WBC Internal audit as “unfit for purpose”.

Examination of the history of the Martin Morton case and the Colas whistle-blowers gives a trust rating very high to the whistle-blower and correspondingly low to the officers.

first chart

My preliminary conclusion therefore is that I give credence to the whistle-blower. I examine his claims with a view to progressing further, anticipating systemic failure.

I ask for a contract with wirralbiz for the BIG fund work on which they might be paid up to £1,500 per case. All six of the files examined by the whistle-blower were prepared by wirralbiz.

Since it is clear that the files were concealed from him for a long time I presume they were a random sample. His access was to them was swiftly closed down after pressure from Invest Wirral. He has shown me emails to that effect.

I ask for a full list of BIG recipients notated as to wirralbiz prepared, and as to those independently prepared.

The contract for services re BIG is unsigned! which increases the factor of systemic risk.

There are 49 recipients of which 25 were prepared by wirralbiz.

Having received the arguments of the whistle-blower on the six files he examined I retrace carefully his logic.

Lockwood Engineering Ltd –    Evidence of a criminal offence of phoenixing the company assets into Harbac UK ltd. The transfer of £30,000 worth of equipment part funded by the council, with the Head of Regeneration’s consent, raises dramatically the risk of officers being deceitful.

Prima facie the whistle-blower is correct in that the liquidation of the company could have been predicted as high risk if very significant liabilities had been included within the cashflow given to the council.

M L Engineering Ltd  –    conclusive evidence of fraudulent representation by either the Fieldcrest ltd or by the business itself. If the latter, the contractor of wirralbiz is at the very least guilty of gross negligence. Negligence  is compounded because a prior claim already had been dismissed with the claimant presenting as a sole trader, but now presenting as a limited company.

I chose the above two as the whistle-blower had made claims thereon which imperilled himself, and, his having been proven correct,  requires me to compile a new SWOT. This incorporates the fact of the skimpy and unsigned contract which must have governed up to a maximum of £500,000 of Working Neighbourhoods money, and of the criminality involved in the first two wirralbiz files. I have learnt from the whistle-blowers that Invest Wirral dismissed out of hand their allegations between May and July 2011. Invest Wirral simply cited that chief accountants in WBC had been involved and could not possibly be wrong. Having read the first two files this  rings alarm bells as it took the first whistle-blower to demand an interview with Kevin Adderley for these allegations even to reach internal audit.

chart the second

I justify this analysis based on   1. The risk the whistle-blower has taken to point to criminal activity

  1. The detection of two out of six random files containing criminal behaviour not detected ,or even perhaps sanctioned by council officers, must lead me to suspect systemic failure.

Actions: read through remaining four of the whistle-blower’s files to see if more error does exist which may raise the probability of systemic error.

Company 3       The cashflow is extremely optimistic. The company’s solvency depends upon a loan owed it by a group company with no assets, a figure of over £1m pounds!                  

Company 4          The company does start out with £60,000 net deficit. There is an allegation of connexions between Mrs Basnett and the wife of the claimant director. The claim was dismissed by the whistle-blower but then resurrected despite his advice based on the BIG fund rules that claimants be solvent. Why?

Company 5          The company already has received a BIG grant so the second should have been examined more closely. The publication does have an intimate connexion with Egerton House, owned by WBC, and does not concern itself with exporting out of the Wirral and thereby the project was and remains disallowable under the rules of BIG  

Company 6       The sole trader is a director of a company that is insolvent. Prima facie this does present an equivocation vis- a- vis the solvency rules of BIG.

Review of the above files renders a percentage of error of 100% whereby I can conclude that the wirralbiz files are highly likely to contain a very significant error ratio since 6 out of 25 files randomly chosen are wrong in one way or another. That represents 25% of the wirralbiz files which in a random sample is highly significant.

Time taken 15 hours.

I must now consider the outline of the system which previously had been marked by David Garry, WBC Internal Auditor, as more than satisfactory. How did the errors in wirralbiz’s files pass muster with the WBC accountants and the independent panel?

I will commence by researching from the list any of the independently prepared BIG successful claimants who may have gone into liquidation. I locate two as below:

New Gaming Concept limited    – into liquidation  18/03/2010 and fully dissolved  25/06/2011

Corrin Kenny ltd  – entry into liquidation 22/03/2012

I ask for the files to discover that New Gaming Concept ltd’s claim had been tagged by the Chief Accountant to as invalid unless it could find £45,000 to cover its needs for the summer of 2010. The file shows a quick exchange of emails between Invest Wirral and Brendan Ludden, the director,in February 2010, where an unsigned claim form was provided as guarantee that North West Development Agency (NWDA) would provide more funds. Highly unsatisfactory and proved by events less than a month later to be unsound. The company filed for winding-up in March 2010.

The reason for the claim was to remove from Liverpool to Birkenhead so it was not a Wirral company when it claimed!

The company was heavily geared and the Liquidator’s statement shows a loss of public money in excess of £800,000.

I email a member of the Independent Panel as to what they saw at each meeting? He confirms no accounts were shown to them just a synopsis by a WBC accountant and the business plan itself.

I conclude that the Independent Panel whether they be from Federation of Small Business or some othe small business group, are to some degree operating in the dark.

Corrin Kenny Ltd- the file showed that the council had only sight of published accounts up to 31 March 2010 which were more than 8 months old. This was in contravention to the BIG requirement to produce management accounts of no less than 6 months old. Review of Companies House records highlighted that the accounts were unreliable as the comparative figures in the March 2010 accounts do not agree with the accounts filed with Companies House for March 2009.

Secondly, the project links communities within Wirral but does not export services outside of Wirral which in effect invalidates the claim. I note that the claimant address on the application is at Egerton House where Invest Wirral is located yet its stated offices on the internet are Innovation House, Bromborough. There may be a connection between the claimant and Insiders within Regeneration department as the application is full of buzz words relating to recent council schemes, going so far as to quote the previous CEO.

Within 10 months and, as I am performing this audit in August 2012, the company entered compulsory liquidation by petition of the Inland Revenue.

I note that of the two Budgets prepared independently of wirralbiz that I have reviewed, the New Gaming application does present a balanced cashflow, a Profit and Loss and Balance Sheet. The template adopted by wirralbiz, that used  in over half the successful applications does not incorporate Projected Balance sheets. The latter omission suggests the wirralbiz template is that used in the Intensive Start Up scheme, designed for start- ups without a history of trading , and not appropriate to existing and substantial businesses.

Time taken 5 hours.

Conclusion: I must extend my sample from 8% of the non-wirralbiz files. I will choose those that prima facie seem to break the rules of BIG.

I will restate my risk matrix after reading the following files:

Aspire Trust Ltd and Aspire Creative Enterprises Ltd

Quite properly the Chief Accountant, Bob Neeld expresses a reserve shared by the independent panel that the Aspire Trust Ltd is a charity which ab initio is excluded from BIG. It is Invest Wirral that advocates for the company and, on the basis of a prior application by Merseycare ltd, granted even though it was a charity, the Panel agree to consider a revamped application by a “trading arm” , and separate company ,to Aspire Trust ltd.

Aspire Creative Enterprises Ltd

The budgets are prepared using the Fieldcrest Ltd (i.e. wirralbiz) template which does not make a balancing document. Despite the turnover exceeding VAT limits no VAT is calculated in Year 1 nor in Year 2, but no-one from the council  identified this error. The charity having planned a turnover exceeding vat limits is obliged by VAT rules to register for VAT.

No-one flexed the projections for a worst case scenario, a fault common to all the wirralbiz files and likely to be so with independently prepared files. Bob Neeld simply states he cannot comment on a new business income flows. However in contradiction the Panel is told that although BIG fund excludes new businesses with less than one year’s trading, somehow this is evited by the Aspire Trust ltd, as opposed to Aspire Creative Enterprises Limited, having operated for some 10 years?

The projections do not explain why in a digital hub Cost of sales is 50% of sales? This is not a retail but a service based enterprise so what are Cost of Sales? No-one appears to have asked? Did the Panel see the Projections or just the synopsis?

The business projections appear to be wildly optimistic and I checked what Invest Wirral were given as monitoring accounts. The turnover for one year was just in excess of £3,000, a far cry from the £100,000+ projected.

The statement given to the Panel via Bob Neeld was that “the cash indicates that without the grant there would be cash deficits for the first four months”.

I created two Budgets one including the VAT required and one without, and in neither case did the cashflow require the full £15,000 grant. With VAT as per the projections the company needed £5,500, and without Vat just under £10,000. Bob Neeld would have better served had he recreated the cashflow, balanced it with Profit and Loss and with Projected Balance sheet before ever making a glib statement as above. It took me 40 minutes which given £15,000 was being given to a start-up and a quasi- charity, the case certainly deserved.

Alternately he might have stated that a start-up achieving a Profit of 0ver £20,000 in Year 1 without VAT ,and £12,000 with VAT, was improbable. Either way his short email to Invest Wirral appears to be rather in the manner of Pontius Pilate.

Total time 2 hours.

I have now to restate my probability of systemic failure before I examine LEC lights, or decide if indeed need to do so.

I estimate the risk to be above 90%. I have spent 22 hours, and commuted for 5 days from the Bolton Metropolitan borough. The charge to WBC to date is one week of my salary some £1,250 with a mark up of 100% for travel time and costs, that is £2,500.
Conclusions:

There is a grave risk for this project that wirralbiz files some 25 of 49, represent very poor value for money.

There was always a systemic risk in the diagram of procedures viz

Two at least of these claims involved fraud

No signed contract with wirralbiz can be located

Chief accountants when advancing caveats against projects are over-ruled presumably by the occlusion of their opinions and deprival of the historic accounts to the Independent Panel.

There appears to be a rush to hand the money out even though the Chief Accountant has told me funds could be carried over almost indefinitely, year to year

Other factors troubling myself include the probability of a cover-up:-

The dismissal of a qualified accountant, one of the whistle-blowers later, was because “Nothing would get past him” quote from Invest Wirral to Wirralbiz yet he dismissed just his first two claims , one from a start-up-ineligible- and one from a company with a £60,000 deficit.

The officers have claimed to me that he was a disaffected employee of wirralbiz yet I understand he was only made redundant 11 months after he made his allegations.

The second whistle-blower claims Kevin Adderley lied to him regarding liquidations in the BIG scheme. Generally he was lying because New Concept Gaming ltd and Lockwood Engineering Ltd had both  gone into liquidation before the interview whereas he claimed no BIG fund recipient had gone bust.. The officers have used sophistry to cover his statement and subsequent statements. They have claimed “going bust” is on completion of the liquidation, which usually takes 12 months, but this represents a turning upside down of common sense.

A further troubling observation is that, however cursory councillors’ approvals may be, a significant number of grants {20} were given without seeking the consent of councillors and on the say-so merely of Kevin Adderley and/or the Chief Executive. This provides a motive to cover up.

Recommendations

The internal auditors who presided over the enquiry have both left the employ of WBC.

The Chief Executive also has resigned.

For the above no sanction may be applied.

I recommend that Invest Wirral be advised of their failings and caution be applied in running such schemes as BIG ever again.

Kevin Adderley as a senior public official ought to receive some disciplinary proceeding.

The two files M L Engineering ltd and Lockwood Engineering ltd should be referred to the Police and communication should be opened with the on-going Liquidators as to the fate of the £30,000 worth of equipment funded by BIG which I suspect was transferred prior to Liquidation to Harbac without any payment being given.

The contract with Fieldcrest ltd, now employed by Invest Wirral should be suspended whilst the Police consider the allegations with regard to M L Engineering Ltd.

The failings I have seen would never have been located without the whistle-blowers who clearly have been resisted and not rewarded. Clearly the WBC should out of common morality thank them publicly and as soon as possible. Government auditors have told local government that 80% of serious failings are discovered by whistle-blowing and only 20% by systems. WBC needs to encourage whistle-blowers and not block them.

I will return to perform the Intensive Start Up Scheme which I have learnt from Government Internal Audit agency is currently being investigated, including Wirral’s ISUS, from a serious complaint from a Supplier to the scheme in addition the allegations of the two whistle-blowers. When I commence a week of ISUS investigation I will bring to it a clear appreciation of the value I attach to the allegations and considerable caution in dealing with the local government officers.

 

Better to reign in Hell,than to serve in Heaven ……

better-to-reign-in-hell

We are proud to publish the latest instalment of the BIG/ISUS/Working Neighbourhoods saga written by Nigel ” Highbrow” Hobro  which may answer a few questions raised by our readers and explain why we continue to follow this story.

We follow it because it’s everything that’s wrong. The incompetence, the ineptitude, the total disregard of what’s right and wrong.

Better to reign in Hell, than serve in Heaven:

“So spake th’apostate Angel, vaunting aloud

But inward rack’d with pain”

Satan is the Father of Lies whose feeble imitation of God is Gehenna, or Hell. Rather than serve Truth he will concoct a monstrous imitation, rather like Macbeth who preferred to be a false King than a faithful Thane.

We read much vaunting from Councillor P Davies and from his faithless band, that Wirral Borough Council is ever “open and transparent”. We read glossy brochures from Merseyside Special Investment Fund about its manifold successes and yet all are silent on their failures?

My Lord Leaky in the preface to “The Big Lie” https://wirralleaks.wordpress.com/2016/09/16/the-big-lie/ worried about the muteness of regulatory authorities. He did not elaborate but they are worth reciting here. A forensic investigator given access to the Beverley Edwards report signally fails to report of the warnings from that lady about the phoenixing of Lockwood Engineering Ltd’s assets into Harbac UK ltd. Remarkable it is, considering the discussions held with Andrew Walker, the Government Internal Audit Agent, that Grant Thornton can report of no wrong-doing by Council officers. Long before I and James (Griffiths) made our complaints GIAA was investigating the perversion of the tender process for the £3m Business Start up 2 (ISUS) project, and the intimidation by council officers of the most qualified candidate to run it who had an assessment of 88% compared to wirralbiz’s 36%! Yet still the 88% candidate did not secure the contract. Turning to the liquidators of Lockwood Engineering Ltd they found nothing unusual in an engineering company stating on oath that the engineering firm had no machinery whatsoever. When confronted with this anomaly and the starkly clear evidence of the BIG file their response was the liquidation was over. The liquidators of Harbac UK Ltd when presented with same evidence by devilish equivocation asked by what right did I question them, was I a creditor of Harbac UK Ltd? Finally they finished with a “well we have lost a lot of money!” (some £10k on their £395 per hour fees). At this time after a prolonged liquidation, due to there being no accounting records given to them, they propose to close the company in January 2017,without reporting any need for detailed investigation despite having had copious correspondence between myself and themselves (https://beta.companieshouse.gov.uk/company/07396044).

I have only started emptying the bucket but the above should be enough to persuade the reader that we should all share Lord Leaky’s concerns.

The Devil rules the world and he does so with coin!

What of Merseyside Special Investment Fund (MSIF) and connexions with the Big Lie article?
I don’t intend to befuddle the Reader but these matters are not a clear as the springs in Paradise. Pandemonium is a phrase well coined.

Unlike Councillor Davies in the press release referred to in the Ministry of Truth article

https://wirralleaks.wordpress.com/2016/11/14/ministry-of-truth/

I will warn the Reader that there is some speculation in what I am going to write. I feel entitled to speculate when my adversaries plainly lie. Councillor P Davies undoubtedly is a clever man ( really? – Wirral Leaks) and with fingers in many pies as can be seen from his personal website :

I represent the Learning Partnership on the Wirral Local Strategic Partnership and the Wirral Waterfront Board. 
I am a non-executive director of the following organisations: The Mersey Partnership; Greater Merseyside Enterprise; the PSL Group (Pentra); The Lauries; Wirral Multi-cultural Organisation; and the Laird Foundation.
I also represent Wirral Borough Council on the Merseyside Objective 1 Programme Monitoring Committee and chair a post-2006 European funding lobbying group as well as the Wirral Pathways (Priority 4) Board .

The key words are THE Mersey Partnership, Wirral Waterfront Board and Merseyside Objective 1 Programme Monitoring Committee and chair a post-2006 European funding lobbying group. I believe these posts extend in substance back to the beginnings of wirralbiz and of the strange case of New Concept Gaming Limited. Speculation coming…Councillor Davies would associate closely with Mark Basnett, Director of the Liverpool Enterprise Partnership, for, after all he had also been a member of the LEP and has many photo opportunities with Mrs Paula Basnett, ex Head of Invest Wirral , and now Head of Wirral Chamber of Commerce. Invest Wirral was in charge of the BIG fund and Mrs Basnett was charged from early 2011 with supervision of the renegade Directors of wirralbiz. If myself, Lord Leaky or Paul Cardin were the three witches on the blasted heath cackling before Macbeth, a picture can be conjured up. These people were and are an elite, an Eurocracy, who run Roman triumphs through the media hailing their achievements with our money, European money, and who would recoil at having their failures equally trumpeted.

New Gaming Concept Ltd

The following is neither lie, nor speculation.

In October 2009 Councillor Jean Stapleton signed off a BIG grant to the company who had already received public funding of £845,000 via Subsidiaries of MSIF and via the NWDA.

In March 2010 the same company filed for Liquidation with an accumulated net loss of £905K. All the European, BIG money and NWDA money was declared lost at the final Liquidators report in (https://beta.companieshouse.gov.uk/company/05427776) except for £5,000!

No accounts submitted to Companies House in the lead up to the investment of £845,000 of public money on 30th January 2008 were endorsed by professional accountants. Indeed the 30th April 2008 accounts did not even allude to the floating charge nor the debenture created on 30th January 2008.

Speculation follows:

Shoddy indeed was this for a recipient of £845,000 of public money, even dishonest. I wonder whether the accounts filed for 30th April 2009 on 8th December 2009 were truthful in outlining £461,494 of debtors when three months later the Statement of Assets

At liquidation the Debtors are described as £90,000 of which the liquidator by June 2011 has collected just and precisely £NIL. With Invest Wirral running the show given the revelations in the Grant Thornton BIG investigation one can imagine the BIG panel being duped.

This case has not been followed by any detailed investigation for like wirralbiz it does not suit the Eurocracy, among whom I count Cllr P Davies, to rake over the ashes. Certainly I doubt if Joe Public would ever have heard of this monumental waste if it had not been for the determination of the whistle-blowers to nail the LIE.

I have asked MSIF under FOI for their file on New Concept Gaming Ltd and received the fastest ever response to any FOI, that they were not subject to FOI. I have asked NWDA and its successor, DCLG, and WBC, for their files who of course are subject to FOI.

I conclude that Readers should be aware of just how little protection we are afforded from deception by Councillors or downright robbery by some private companies, by any organ of the state or duly appointed agent of the same. CAVEAT EMPTOR and respect to WIRRAL IN IT TOGETHER and WIRRALLEAKS who do the next best thing which is to put travesties on RECORD.

The Key To The Lock

KEYHOLE

Following on from yesterday’s Freedom of Information post which anticipates tomorrow’s Notice of Motion set before Wirral Council we proudly present an in depth analysis of and comment on the wirralbiz case by whistleblower Nigel “Highbrow” Hobro.

This was made possible only by the (forced) release of information held by Wirral Council under the Freedom of Information Act.Readers will be able to reflect on the desperate attempts that the Council went to deny the information by use of delays and attempts at exemptions.Furthermore there is a chance to consider the role of the Council’s external auditors Grant Thornton in this long running saga.Our only comment is that in the financial year 2014/15 Wirral Council paid them £259,000  – you do the math and draw your own conclusions!.

The Key to the Lock is Harbac Limited

What key will open up the locked away truth about the obfuscations and dilatoriness of the investigation of wirralbiz? Why would a near complete audit report on BIG be hidden for 3.5 years and only revealed by compulsion from the Information Commissioner? Why would WBC spend £50,000 on a process of independent audit from September 2012 to March 2013; then a further 4 months for “further research”; then a further year before revealing two reports, those of Grant Thornton and Dave Garry Chief Internal Auditor, but deliberately redacting out all mention of that of the Principal Auditor, who had been Mr Garry’s superior. The Council pleaded s36, interference with its conduct of business and s40 of FOI law, not to reveal names of officials, when it delayed the FOI request that wanted sight of this 370 page report of the Principal Auditor, for one full year.

However when WBC published the 370 pages it was littered with references to B Edwards, or “edwardsb”, D Garry; D Bradbury and some further ten of BIG fund recipients that it had already refused to reveal to another FOI request. Perhaps the s40 protection of names of individuals, was a convenient delaying tactic and no more?

Certainly the chaotic mess that the Council was in during early 2012 ,with the alternatives of Parliamentary Commissioners or the Peer Improvement Board before them ,might have been a great incentive to delay the revelation of what would have been another scandal added to the dung-heap of Social Services, Colas and uncollected rents. The wirralbiz revelations might have tipped them over the edge even with the Edwards report as it stands, with its indications of sloppy work; the failure to check files for quality on a multi-million pound contract; the clear indication that Invest Wirral in three days checking of files spurred by James Griffiths whistle-blowing, found 22 of 44 files with forged signatures and multiple other defects in the remaining 22. Such was their concern that they arrested the contract insofar as it paid for 18 month reviews and all non-ISUS work, referred to as wirralbiz +. They did not stop the visible public Lecture series nor the £500 grants just the backroom work. B. Edwards’ report was thereby enough as it stood to prove malfeasance but WBC rather preferred to let that go and unleash the cheats and incompetents on erdf monies ,just not with WBC, giving them leeway without let or hindrance to obtain two further erdf contracts in 2012. Even WBC knowing of the sins of wirralbiz did not stop WBC from meekly washing them right out of their hair by paying them a further £350,000 in final payments, in December 2011, July and October 2012, no questions asked. All the above indicates a deliberate attempt to move the scandal quietly away from WBC and the responsible officers and park the problem on the door-steps of others.
The Dark Heart of the Matter

But there is one matter which crossed into potential criminality and the condoning of it, with only superficial questions asked, and which is the “dark heart” of the matter.

We all expect that a local authority relying on law to conduct its activities should in all matters seek to uphold the law. Where the council can fine litter-bugs with an on-the-spot £80 fine we in parallel expect it to inform other authorities constituted by law where it has learnt of law-breaking. We do not expect the self-interest of officers within WBC to override this duty in any circumstance, nor do we expect the public authority deliberately to conceal that a criminal action has been condoned at its highest levels.

Rather than pursue all the labrynths and corridors of this scandal through which you have been previously led- perhaps even to obscure the view of this “Dark Heart”- let me take you reader by the hand and let us examine more closely the Lockwood Engineering Ltd/Harbac UK Ltd affair regarding the award of £20,000 towards the purchase of machinery costing £30,650.

Grant Thornton investigated the Lockwood case in November /December 2012 and had at its disposal the work of “our predecessors”. Yet where one of these two predecessors, the Principal Auditor reports at 12.11

“The point is to bring to the attention of the Head of Legal and Member services the possibility that the relationship between Lockwood and Harbac may indicate asset stripping of Lockwood by Harbac” ,

Grant Thornton dodges this issue. The reader may be misled where a forensic department of a national audit firm writes instead absolutely nothing about this major concern but deems it necessary to note the company changed its name soon after incorporation which is very common for new incorporations!. I find it hard to accept that Grant Thornton made no mention of this transfer. It was left to the council to refer to a legitimate transfer in its apologia embedded within Grant Thornton’s BIG Executive summary.

Where an auditor makes no mention of a concern important to the Principal Auditor and where the Council hides a report for 3.5 years because it refers to that concern we may smell a rat. The abrupt termination of the Audit and Risk committee when that afternoon they received my intended speech was a very strange affair indeed for my speech contained an unexpected attack on the officers rather than on wirralbiz. Perhaps they feared I might also leave the beaten track and go on to discuss Lockwood/Harbac.

Reader let us revisit the time of May 2010 when Lockwood Engineering ltd made its BIG application. It had existed for 10 months only and submitted Management Accounts to 30th April 2010 and forecasts from May1 2010 to April 30 2011. The forecasts and the management accounts did not correspond and, when adjusted by myself to correspond , clearly showed that the company would be unable to pay its debts as and when they fell due. When an advisor, Fieldcrest Ltd was paid £1,000 for the work#, and a Chief Accountant for WBC cannot see the obvious, or if they do see it, keep silent, then you have to consider that the BIG process is wide open to partiality and corruption. Likewise neither well-paid individual could sense the unreality of a projected annual turnover of £2m compared to a 10 month turnover of £457.877 in the management accounts. By these silences the Panel was induced to pass the grant.

Ongoing Reviews

The council undertook reviews to ascertain whether the objectives of BIG were met. Council staff visited the Lockwood premises for the purposes both of BIG and for the purpose of the three apprentices started under the WBC apprenticeship scheme funded by Working Wirral. The two directors appear to have fallen out and Mr Harding set up an absolutely new company , Harbac uUk Ltd on 4th October 2010. The grant had already been paid on 27th July 2010 either without any signature of any director, or signed and displaced by a later application.(see below) Mr Harding signed another application form on the 7th October 2010# and became a director of Harbac Uk Limited on the 11th October. I hope you are getting more suspicious than Council officers were at the time. Grant Thornton elide over this as if they had not read the 13th January 2012 report by writing “We assume, therefore, that the BIG application was incorrectly dated”.

We can assume that council officers visiting Lockwood whether for Apprenticeship monitoring or for BIG monitoring were innocently blithe of theses goings on, never discussed the rapidly dwindling fortunes of the company but were content that “outcomes” for apprenticeships and BIG investment could be ticked off. We are entitled likewise to assume the opposite! There may have been a growing panic among the council officers and the misdating of the application for BIG by five months may have been a clumsy error by them to cover up, or indeed even at that date in October 2010 an indication they were legitimizing the transfer of the books, assets and business of Lockwood to Harbac.

What to make of the assertion

“its business and assets had previously been transferred with the approval of KA {Kevin Adderley} to a successor company…There is evidence that KA was aware that the original company had continued in existence following this transfer”
It makes more sense that KA knew of an October 2010 transfer than of a March 2011 transfer which appears more to be a late referral to the Legal department. We have here a muddling of the defence mounted by officers and I support the thesis that an informal knowledge in October 2010 was later covered by procedural rectitude in March 2011 just before the Creditors Voluntary Liquidation was announced in April 2011.

The problem is washed over by the statement by an officer that during an inspection in March 2011 they were suddenly apprised of the transfer and that the director promised to repay the liabilities of Lockwood Engineering Ltd. Did not the offer letter state at paragraph 10

Under the terms of this Grant Agreement you agree to maintain the premises of the Company, or of any successor to the Company in Wirral for a minimum of three years commencing from ·the date of the final grant payment

I explain that the anomaly of the 7th October 2010 dating of an application substituting the May 2010 application form with a replacement one, shows that some council officers were aware of the transfer in October 2010. If I be correct then of what value are the Director’s assertions he would pay off the liabilities of Lockwood Engineering Ltd? The officers have already been misled by the May 2010 financial figures that move from a Balance sheet value per the management accounts of March 2010 of £60,885 positive to a deficit of £218,000 at April 2011.  But the officers are so lenient that they nominally accept that it is a parting of the ways of the two directors, Mr Lockwood and Mr Harwood, that necessitates the movement of the assets. I imagine he told them that despite him personally having no monies left 
The Directors of Lockwood have considered other financing options with their Bank without success and they cannot provide any additional security or collateral. The Directors have already invested heavily in their business during the start up stage and have only taken minimum salary from the business and at this time do not feel that they can offer the personal securities their Bank requires.
That the trading of Harbac UK Limited would be sufficient both to support itself and to pay off the debts of its prior company…a likely story for a group of ingénues but not for an officer experienced over 20 years in Regeneration.
It appears that WBC officers have translated a grant to an entirely new company with no known financial backing-no mention is made that the new director P Backhouse is providing capital and with Mr Harding having no new funds. The concern with business plans, applications and the approval of an independent Panel or a Councillor is cast to the winds. It is easier for the officers to hide the failure from the original Panel than to perform due diligence. The fact that the Legal Department is not immediately informed but has to wait for a further 5 months to be told in March 2011 bespeaks deliberate and guilty concealment. I do not believe that the husk of Lockwood Engineering Ltd, left idle between October 2010 and 21st April 2011 represented anything more than an attempt to cloud over the deed of the deliberate transfer of its order book and assets to Harbac UK Ltd. The Principal Auditor certainly does point to the possibility of asset stripping. By warning the WBC Legal department of this the Principal auditor is indicating that the Legal Department has not informed any regulatory body for the 9 months since it knew of the transfer. The Legal Department has relied on the words in any offer letter referring to “any successor company” with no regard to the claims of the creditors of Lockwood Engineering Ltd.

Referral to a regulatory body

The liquidators, Begbie Traynors, of Liverpool confirmed to me by email that they had had no knowledge of the £30,650 worth of fixed assets funded by BIG. The assets are not mentioned in the April 2011 Statement of Assets and Liabilities nor did they find them in the accounting records. The liquidators of Harbac UK Ltd would only correspond with a creditor or a representative of a creditor.

Begbies Traynor don’t seem ever to have received any correspondence from WBC! By what sophistry this has been omitted I do not understand? Perhaps these assets for which WBC paid in July 2010 were never entered into the ledgers of Lockwood Engineering Limited?

ETHICS

The law is the cornerstone of commercial dealings, the rules of the House if you like. What WBC seem not to have weighed against the three jobs and three apprenticeships created is the loss to other contractors of £91,000# With Harbac uk Ltd liquidation amongst the list of unpaid creditors is £12,772 to WBC Business rates section and £4,972 to a company based in Price Street Birkenhead. WBC officers are not gods and it is not their prerogative to arbiter as to what part of law should or should not be enforced, according to what suits them best.
Conclusion

If I appear to be going on about these matters it is for no reason other than that WBC has dragged out over three years the information that ought to have been available in April 2012. It is myself that has been put upon and obliged to return to matters of many years ago. It is significant that to my knowledge not one person has been disciplined in WBC nor any contractor or director of wirralbiz. If the obfuscators of WBC believe they have done a great PR job well they have all the means at their disposal, endless amounts of public money to fritter away. They have indeed burnt a lot of this fuel. Yet I can write so frankly and without fear of legal action from WBC-some PR job!