Monday, 24 April 2017

Beyond the Bamboo Curtain - (Part Two)

DOUGLAS SHEPHERD with the second chapter on the great Eco Resources failure

A damning report from the provisional liquidator of the Premier Eco Resources Fund [ERF] gives details of the complicated structures and flawed decisions which led to the collapse of the company, leaving investors, shareholders and creditors out of pocket by many millions of dollars.

In part one of the story we revealed the problems directly associated with a vote taken in December not to liquidate the ERF, which claimed to be investing in bamboo plantations in Nicaragua and South Africa, and the insolvency expert's assertion that the result may not have been legitimate.

But the liquidation process is underway after an Isle of Man judge rejected arguments that the fund should not be dissolved.

ERF has close associations with another Premier Group business, New Earth Recycling & Renewables [Infrastructure] Fund [NERR] which will be familiar to taxpayers in the Scottish Borders. NERR is also in the hands of liquidators who are investigating the reasons for its costly collapse.

Gordon Wilson, the ERF liquidator says: "Whilst we have not as yet made a final determination of the reasons for the fund's failure, mainly because there are still some fundamental uncertainties about exactly what has occurred, we have reached some preliminary findings and conclusions.

"In our first report as controller in August 2016 we said 'it is apparent to us that the three principal companies involved have been in difficulties for well over a year. They are all, in our considered view, insolvent and most likely have been insolvent for some time'.

"The financial difficulties can, in our view, be directly attributed to the decisions taken early in the life of this structure, in particular to give special redemption terms to the shareholder vehicles linked to Mr [Troy] Wiseman which saw them redeem over half their shares in cash".

Mr Wiseman, an American businessman and entrepreneur, is the main figure in the EcoPlanet Bamboo Group set-up which manages the plantations.

The report goes on: "In addition, the financial difficulties were compounded by an apparent under-regard for the longer term financial consequences on the investment strategy of paying that redemption cash out of the structure".

There is also evidence that the later acquisitions of plantations in late 2013 were intended to bulk up the assets of the fund so that it would be of a size which would attract more new investors "with apparent under-regard for the related risks and cash flow needs of the additional assets.

"The result for the majority of those 180 or so people who subscribed cash is that they now have an investment which, if it ever pays them any cash back, will be unlikely to do so until the mid-2020s. Overall we feel that the investors have been significantly let down".

Mr Wilson's report concludes that the fund's failure was principally due to:
*A collective failure to objectively manage the plantation assets due to a combination of over reliance on Eco Bamboo Group and Mr Wiseman, to Mr Wiseman's degree of control over Eco Bamboo Isle of Man and failures to avoid conflicts of interest.
*An overly complex structure with a catastrophic mismatch between liquidity terms offered to investors versus the liquidity associated with the underlying asset class.
*Restrictions on information flows and their subsequent impact on objective decision making.
*Financial mismanagement, in particular the consequences of the redemptions paid to Eco Bamboo Group.
"These failures were then compounded by Mr [Michael] Richardson (a director of Premier Group Isle of Man, now in liquidation) and Mr Wiseman becoming personally invested in SAL (Sustainable Asset Lending, a US-based finance company which, appears to own the plantations) and the resultant conflict of interest which that caused them both".

FURTHER COVERAGE OF THE SAGA TO FOLLOW....

Saturday, 22 April 2017

Shady goings-on in the bamboo plantations!

DOUGLAS SHEPHERD reports

One of two bankrupt investment funds whose bosses were involved in a disastrous waste management contract in the Scottish Borders, is now mired in allegations of mismanagement, potentially disturbing conflicts of interest, and stands accused of "significantly letting down investors".

A hard-hitting report from the provisional liquidator of the Isle of Man-based Eco Resources Fund (ERF), which collapsed last year with debts estimated at £2.8 million and which left shareholders with nothing, includes new information concerning the demise of the ERF which 'invested' in bamboo plantations in Nicaragua and South Africa.

A similar investigation - said to be extremely complex - is continuing into the affairs of the equally bankrupt New Earth Recycling & Renewables [Infrastructure] fund (NERR) which also recorded financial deficits running into millions of pounds.

Both funds were managed and controlled by Premier Group (IOM) Ltd.,which also happens to have gone 'belly-up'. Full reasons for NERR's failure are not expected to emerge before September at the earliest. This was the investment vehicle which was meant to fund a £21 million waste management facility for Scottish Borders Council, and the failure to deliver the project left local taxpayers with a bill of at least £2.4 million.

Meanwhile, back in "bamboo-land" the ERF, like NERR, cannot even afford to pay for its own liquidation. The fees of the insolvency specialists now probing the useless fund will be met by the Manx Financial Services Authority. Some creditors, investors and shareholders believe there should be a criminal investigation into the running of the two funds.

So far as ERF is concerned, liquidator Gordon Wilson - he was previously an adviser to the fund - has already submitted a number of confidential reports to the authorities, and extracts from those documents have now been made public.

Mr Wilson explains: "We submitted a preliminary report as adviser in July 2016. In short, we reported that the fund was at the top of a complex structure, arguably an overly complex structure, the entirety of which had been in financial difficulties for some time. We concluded that it was desirable, and seemingly in the interests of all concerned, to undertake a restructure."

At that juncture Mr Wilson's appointment was upgraded to controller of the fund with the aim of putting the new structure in place along the lines of his suggestion by negotiating with all of those who had an apparent financial interest in the underlying assets.

However, the report reveals: "That was not possible for a variety of reasons and having concluded we could not, as controller, materially improve the situation for the fund's investors, we reported our findings to the authority in August 2016. Our controller position was then terminated and we were re-appointed adviser. Control of the fund passed back to the board."

Three months later ERF's directors reached the conclusion that the fund could no longer continue "by reason of an excess of liabilities over assets",

Mr Wilson reports on a meeting of the fund's investors in December at which a resolution for Eco's liquidation was put to a vote. The resolution failed because a majority of investors who voted were against liquidation.

The liquidation report states: "There are around 33.7 million Eco shares in issue and votes were received from holders of 16.8 million of them; i.e. around 50% of investors voted. That was enough to make the meeting quorate. However, we feel that it is nonetheless significant that half of the investors in the fund did not vote.

Of the 14.6 million votes against liquidation, 9.577 million were associated with Troy Wiseman's Eco Bamboo Group. Mr Wiseman, described as an American entrepreneur, runs the businesses which manage the bamboo plantations.

A further 1.41 million votes were associated with an individual named Paul Feldman. Mr Wilson explains that both men are associated with a US company called Sustainable Asset Lending (SAL) which is understood to effectively own the plantation assets after making finance available.

"Of the 3.16 million ex Wiseman/Feldman votes against [liquidation], some 2.736 million were from one shareholder, a Mauritius-based insurance company", says the report. "We have recently spoken to that investor who explained to us that they had not apparently seen the investor communications nor had they any appreciation of the fund's financial difficulties.

"Rather they had approached Mr Wiseman who had shared a 'favourable financial projection' with them. On that basis, they voted against liquidation thinking a better outcome would be achieved. It is therefore apparent that the votes cast by and the related actions of Messrs Feldman and Wiseman, two individuals with a vested interest in SAL (therefore an arguable vested interest in the fund not succeeding in any action against SAL) have significantly swayed the liquidation vote.

"We believe that this calls into question the legitimacy of the vote outcome as a proxy for the views of the wider investor group".

MORE ON THIS STORY TO FOLLOW....

Meanwhile you can read a comprehensive analysis of the trials and tribulations of ERF and the Eco Bamboo 'empire' on the Redd Monitor website at http://www.redd-monitor.org/



Wednesday, 19 April 2017

May sparks Teri wrath

EXCLUSIVE by MAILY DAIL POLITICAL STAFF

There was outrage in the Scottish Borders burgh of Hawick last night after UK Premier Theresa May announced there was to be a General Election during the town's Common Riding week.

For the uninitiated, Hawick Common Riding - dubbed Hogmanay on Horseback by non-followers - is the most important date on the local calendar. The centuries old commemorations, traditions and celebrations preserve the 'Aye Been' attitude of many Teries, the name given to residents of the town.

This latest run-in with a woman will revive bitter memories of the conflict which broke out over twenty years ago when ladies attempted to take part in the mounted ceremonials for the first time.

The would-be female participants were sworn at and spat on by fanatical supporters of the all male ride-outs which mark ancient battles and the odd skirmish with the English. It makes this unwanted interference by an English Tory PM all the more remarkable and unacceptable locally.

So keen was the Hawick Common Riding Committee to prevent the lassies from joining the cavalcades they commissioned an advocate by the name of Crispin Agnew to represent them in an infamous court case which sought to ban the women from rides to far flung places such as Mosspaul.

But the case was lost when a grumpy judge called Paterson threw out the plea, and the row was reported around the world, leaving the town with a somewhat tarnished reputation.

According to Maily Dail sources a group of unnamed hardliners are attempting to secure financial backing for a sheriff court action to have the date of the June 8 election moved "to a more suitable day". They are determined to send Mrs May homeward to Maidstone to think again.

It was difficult to persuade townspeople to be quoted on the record last night when we asked for their views on the PM's announcement. Many simply said they were seething with rage while others revealed they expected to be too drunk to vote, and they would certainly get their priorities right on The Big Day.

One elderly gentleman was prepared to speak to us although we do not know whether he gave us his correct name. He claimed there was no point in candidates or canvassers bothering to enter Hawick while the hallowed events were taking place, especially if they happened to be of the non-male gender.

Ronny Judkin told us: "That wumman May better no show her face in Hawick otherwise she's liable to get a slap. You just dinna mess wi' Teries. I'd advise her to return to the kitchen and get on wi' making Mr May's sandwiches".

It seems certain the political activists will face a struggle to achieve even a reasonable turn-out of voters with the Common Riding revelries in full swing.

One local worthy declared: "Many Hawick electors will be downing glasses of rum and milk - the traditional tipple of participants - even before the polling stations open. And by nightfall a fair proportion will be too p*ss*d to even think about drawing an X in a small box."

A Downing Street spokesman said: "Where is Hawick exactly? Is it somewhere north of Watford. I can't imagine that nice Mrs May causing outrage anywhere".

We were then advised to contact Scottish Tory leader Ruth ("The Truth") Davidson for further comment. Unfortunately Ms Davidson could not be contacted. We were informed she was closeted with her legal team preparing a court action to head off something called INDYREF TWO.

The forthcoming clash between the 2017 General Election and the Hawick Common Riding chase and colour bussing had not yet appeared on her somewhat blinkered radar.



Tuesday, 18 April 2017

Council prepares to award itself planning permission!

by DOUG COLLIE

Proposals by Scottish Borders Council to develop a £6 million waste transfer station [WTS] on contaminated land at the outskirts of Galashiels seems certain to win approval despite the concerns of local residents who claim their lives will be ruined by scores of lorry movements on a C class road, and from odour, noise and emissions.

In effect the council's own planning authority is set to sanction measures submitted by another department within the same local authority as SBC pursues yet another strategy in a bid to solve its urgent waste disposal issues.

The waste transfer station will be used to store thousands of tonnes of garbage from Borders households until it can be transported by road to a destination outwith the region for treatment.

But the project would not have been required if local councillors and officials had not signed a useless £80 million contract with a firm of dud waste treatment 'specialists'. The partnership with New Earth Solutions collapsed in spectacular fashion in 2015 resulting in the abandonment of plans for a "state-of-the-art facility" on the site which will now accommodate the WTS.

Despite being labelled a major development, SBC appears to be able to process and decide on their own WTS application without it being called in for ministerial consideration at Scottish Government level. No doubt opponents will cry foul, but there is nothing they can do to prevent the scheme proceeding now if councillors nod it through.

The recommendation to approve the WTS - with conditions - has been made in a 20-page report from planning officers which has been published on the authority's website.

Four individual households and a local residents' association have lodged strong objections, citing a string of reasons for their opposition. These include:

*It is an unsuitable site on contaminated land.
*Extra volumes of lorries, including articulated trucks using the C77 route will bring traffic chaos and increase the likelihood of serious accidents.
*The council's transport assessment is one-sided in favour of planning permission being granted.
*There are concerns with the content and accuracy of documentation provided in support of the WTS with allegations of apparent omissions and alterations to predicted traffic flow figures since a public consultation last autumn..
*The conclusion by council officials that odour emissions will not be significant is not based on fact.
*Concerns regarding drainage provision and polluted leachate.

However, all of these issues are dismissed in the report from planning officers.

The document says: "In this case the development would principally involve storage and transfer of waste within a single building, with external works generally comprising access, parking, staff and ancillary infrastructure. It would be sited within the area of the well-established waste management site, using the same road infrastructure. It is not within an ecologically sensitive area or designated landscape.

"Though there are residential areas nearby, including the emerging development to the south, these are not directly adjacent. Ultimately, accounting for the existing land uses within the site and surrounding area; the existing landfill activity; the purpose and scale of the development; and the type of environmental impacts likely to arise, it was not considered that significant effects on the environment would occur such that these would need examined by way of EIA (Environmental Impact Assessment)."

On the traffic front, the council claims the WTS will only generate six extra vehicle movements per day, taking the total to 88. This statistic is hotly disputed by objectors, but the report states: "This increase in traffic is not considered to be significant".

Tuesday, 11 April 2017

Loss-making Great Tapestry heading for Borders

EWAN LAMB reports

The publication of a new set of accounts for The Great Scottish Tapestry charitable trust may reignite critics' doubts over the economic viability of a £6 million scheme to house the visitor attraction in Galashiels.

It has been revealed that both the trust and its associated trading company registered financial deficits in 2015/16 after results were posted on the website of the Scottish Charities Register and at Companies House respectively.

The figures may well be used to raise fresh concerns over the future commercial success of the planned tapestry museum to be funded jointly by Scottish Borders Council and the Scottish Government. The intention is to convert disused buildings in Galashiels town centre after proposals for a custom-built centre to accommodate the tapestry panels at Tweedbank were shown to be unworkable.

According to the trust's accounts, published by the charities regulator for the first time, income of £96,667 fell well short of expenditure (£114,669), resulting in an annual loss of £18,000.

In the previous 12-month period The Great Scottish Tapestry collected £89,156 and spent just £46,726. The 11-page document detailing the accounts claims last year's loss was mainly due to the payment of invoices from the previous financial year.

The net result is that the charity's reserves have fallen from £55,523 in 2015 to £37,521 last year.

It is disclosed in the report that the tapestry will not be exhibited anywhere between now and the completion of the Borders project which has yet to go out to tender. The delivery of the new museum could take several years.

Under the heading Achievements and Performance, the trustees state: "Having been created the tapestry has been on a series of exhibitions in whole or in part round Scotland to be displayed to the people of Scotland.

"In tandem with this much educational outreach work has been undertaken and a series of publications and other merchandise created. The Tapestry will shortly go into store in preparation for a move to a permanent home in the Borders."

It appears more than 27 per cent of expenditure incurred last year was accounted for by "Border Council costs" of £31,788. There is no explanation in the report of what those costs were although the local authority has already spent a significant sum on the aborted Tweedbank proposal, and on feasibility studies by consultants.

The charity has also made a loan of £24,388 to Tapestry Trading (Scotland) Ltd., whose three directors are also trustees of the charity. The exact relationship between the charity and the limited company has not been publicly explained.

Tapestry Trading, founded in 2013, saw its assets fall dramatically from £15,719 in 2015 to £7,691 in 2016. The company's accounts show that with amounts due to creditors within one year standing at £24,271, the business has liabilities of £16,580.

Scottish Borders Council's highly controversial decision to give a home to the tapestry panels, and to earmark around £2.5 million for the concept, has met with a strong mixture of opposition and support. Opponents have argued that the project will turn out to be an expensive white elephant for taxpayers and will be unable to attract sufficient numbers of people to make it pay.

But backers, including many individuals who stitched the panels depicting Scotland through the ages, claim the Galashiels centre will provide a major visitor attraction in association with the Borders Railway which will bring significant new trade for local shops and businesses in the tourist sector.


Thursday, 6 April 2017

Council's chosen fund can't even afford insolvency!

EXCLUSIVE by DOUG COLLIE

The bankrupt investment fund chosen by Borders councillors to bankroll a £21 million waste management project does not even have enough money to pay the liquidators who are investigating the activities and conduct of its managers, it has been revealed.

New Earth Recycling & Renewables [Infrastructure] Plc (NERR) was supposed to have been subjected to rigorous financial screening by Scottish Borders Council and its expensive advisers during the planning of a "state-of-the-art" biological and incineration plant as part of a £80 million contract signed with Dorset-based New Earth Solutions (NES) in 2011/12.

As Not Just Sheep & Rugby has pointed out, many of the elected members of Scottish Borders Council (SBC) who will be seeking re-election next month, sanctioned the useless deal which collapsed in disarray in 2015 after costing council taxpayers £2.4 million.

The local authority has repeatedly refused to divulge information about their dealings with NES and its Isle of Man investment "branch" NERR, citing commercial confidentiality even though all of the businesses involved in the useless contract are now insolvent with debts running into hundreds of millions of pounds.

Various firms of experts in the art of liquidation and administration have warned shareholders and investors in NES, NERR and the controlling Premier Group (Isle of Man) which has also gone belly-up that they are unlikely to get much if any of their money back. The NES dividend is forecast at between four and eight pence in the pound.

In an update on the "complex" winding up of NERR issued this week, Alex Adam, the fund's joint liquidator has told creditors that "due to the lack of readily available assets in the liquidation estate, the Isle of Man Financial Services Authority is providing funding by way of a loan to the joint liquidators to meet the costs of the liquidation".

Yet this is the fund which managed to string SBC along from 2011 to 2015, promising to pay for the waste management facility at Easter Langlee, Galashiels. NERR's controllers and promoters coined in lucrative 'management' fees while the investment entity did nothing to progress the Borders project.

The latest progress report from Mr Adam states: "As you are aware, this is a complex matter requiring information to be obtained from a variety of sources relating to a period of several years.

"Since our last update we have focussed on identifying specific issues which warrant further investigation with the objective of determining whether a claim could be brought against one or more third parties. Following that review and discussion with our legal advisers we are in the process of conducting a detailed assessment of one such issue.

"However, we do not wish to prejudice any potential claim by providing further detail at this stage. For the avoidance of doubt, this does not mean that other possible claims have been discounted but only that we are focussing on what we consider currently to be the issue with the greatest prospect of success, that is, cash receipts into the Company".

Mr Adam warns that the funding arrangement for the liquidation with the Manx FSA is subject to continuous review and can potentially be withdrawn at short notice.

He adds: "However, we have maintained dialogue with the FSA throughout the period with respect to the progress of and strategy for the liquidation and, for the time being, the funding arrangement remains in place to allow the investigations to continue".

Mr Adam anticipates providing a further update for investors and creditors in September.

Not Just Sheep & Rugby feels justified in asking yet again for details of due diligence and solvency checks conducted by SBC and by the firms of specialist lawyers and financial experts they commissioned before deciding NES and NERR were the answers to their environmental prayers.

Our view is that a firm which cannot even afford to pay for going bust should never have been allowed anywhere near a £80 million roast dripping with public money. It troubles us deeply that an investigation has not been held into the four-year relationship between SBC and a consortium of cash-strapped businesses incapable of delivering on promises made. Of course, it is never too late....


Tuesday, 28 March 2017

Desperate attempts to save bankrupt fund

DOUGLAS SHEPHERD reports

Last-ditch efforts seeking to prolong the life of a bankrupt investment fund which had committed multiple contraventions of financial regulations were rejected by an Isle of Man court, according to a newly published judgement which ordered the entity should be wound up and liquidated.

Not Just Sheep & Rugby has been following the (mis)fortunes of the Eco Resources Fund [ERF] and its stablemate New Earth Recycling & Renewables [NERR] since they encountered catastrophic financial difficulties last year. Both funds were run by Premier Group (Isle of Man) Ltd. (also in liquidation),which was a major player in the New Earth Solutions Group (NESG), now in the hands of administrators with debts running into tens of millions of pounds.

NESG and NERR were handed a £80 million contract by Scottish Borders councillors in 2010/11, including the development and funding of a major waste treatment plant and energy recovery facility at the site of the region's landfill tip on the outskirts of Galashiels. The venture was a complete failure and resulted in a £2.4 million loss for Borders council taxpayers.

Insolvency experts Deloitte's are currently investigating the collapse of the NERR fund; administrators are carrying out a similar exercise at NESG, a liquidator has been ordered to probe the affairs of ERF and the Premier Group has also ceased trading with a liquidator appointed too. A quadruple whammy representing huge losses for various groups of investors and shareholders.

The petition to wind up the ERF - it concentrated investing in bamboo plantations -  from the Isle of Man Financial Services Authority (IOMFSA) included claims that the Fund had been left with a management vacuum, exacerbated by the withdrawal of its directors, administrator, manager and custodian.

According to IOMFSA: "The defendant [ERF] has very considerable - apparently insurmountable - liquidity problems which has been the position for some time. Decisive action is required so as to protect the interests of third parties, investors and creditors."

The court was told in a report from one financial expert there had been a catastrophic mismatch between liquidity terms offered to investors versus the liquidity associated with the underlying assets class.

IOMFSA also pointed out that the Fund was in breach of the Companies Acts and in multiple breach of the Collective Investment Scheme Regulations, including the lack of audited accounts for the period since the end of 2014.All redemptions from the fund had been suspended since April 2015, added IOMFSA.

"There is confusion as to whether the defendant will be able to recover anything from its investments due to security having been apparently granted to a third party over the underlying bamboo plantation assets.

"It is desirable that insolvent companies be wound up in order that the causes of insolvency are determined. The circumstances which have caused or contributed to the defendant's present situation require investigation."

It has been revealed that the day before the court hearing an application was filed on behalf of Premier Group, a creditor of the ERF asking for the IOMFSA claim form to be adjourned for two months.

Deemster David Doyle, the judge in the case, heard that Premier's liquidator had recently been made aware of efforts dating back to December 2016 by John Bourbon (a Manx businessman whose interests included a directorship of Premier Group) to put together a rescue package for the ERF.

According to Deemster Doyle's written judgement: "There are some generalised references to a meeting in New York between Mr Bourbon and others for some long-term funding. There is also reference to a Mr Mike Richardson (also a Premier Group director) brokering an arrangement which sees a South African family office providing short-term finance of $1.9 million."

But Judge Doyle dismissed the application for an adjournment. He states: "There has been reasonable time for a rescue package to have been finalised. The position was covered in very vague, generalised and somewhat belated terms. There has been sufficient opportunity to put before the court detailed evidence in respect of any rescue package. I cannot allow the extremely unsatisfactory position in relation to this company to drag on any longer.

"The defendant has no officers. It has no directors. It has no secretary. It has no manager. It has no administrator. It has no custodian and it appears that a statutory demand in the region of some £2.4 million has not been paid. There are also serious concerns in respect of arrangements with Sustainable Assets Lending LLC (a US-based company) and how the defendant has arrived at the position it is now in.

"These important issues have been outstanding for some considerable time. The defendant cannot in the circumstances be permitted to continue in existence without the appointment of a liquidator to look after, and to look into, its affairs and to take any necessary action.".