Sunday, 19 March 2017

Fund promising 895% return for investors is wound up


The spectacular failure of the bamboo-based Eco-Resources Fund [ERF] is to be investigated by a liquidator following confirmation that lenders have foreclosed on plantation assets in Nicaragua and South Africa.

An Order to wind up the ERF - closely allied to another bankrupt outfit chosen by Scottish Borders councillors to fund a £21 million waste management project - was issued by an Isle of Man judge last week on receipt of an application from financial services regulators.

The various 'investment' entities which seem likely to deprive thousands of investors of many millions of pounds were all under the control and direction of Premier Group (Isle of Man), itself penniless and in the process of being dissolved by insolvency experts. It is unclear whether Premier's links to at least three intermediary companies based in the tax haven of British Virgin Islands will feature in any of the ongoing enquiries.

Court papers from the Manx authorities show that two individuals appeared at Thursday's hearing to oppose an application to wind up the ERF which had been tabled by the Isle of Man Financial Services Authority (IOMFSA). They are named as Ray Withers and Patrick Barker. But the Order was granted with Gordon Wilson named as official receiver.

Mr Withers is the Chief Executive and co-founder of a property investment company called Property Frontiers.

According to the excellent Redd-Monitor website, which has investigated and exposed a clutch of global environmental investment scandals, Property Frontiers organised an investment seminar in London in 2011. Flyers prepared for the event held out the prospect of 895% returns for investors in the bamboo plantations.

A year later Troy Wiseman, the man in charge of Eco-Planet Bamboo - ERF was part of the set-up - quoted potential 500% returns over a 15-year period on an investment of $50,000.

Now, Mr Wiseman has advised that US-based Sustainable Asset Lending has foreclosed on the plantation assets, "therefore any recovery appears unlikely".

IOMFSA warns: "At this stage it is not possible to estimate the amount of any recovery on the investments made by Eco. The financial distress of the underlying companies and the apparent foreclosure does however mean that substantial recovery of value from the plantations may be unlikely".It seems 190 investors stand to lose up to $61 million.

Meanwhile, over at the insolvent New Earth Recycling & Renewables [Infrastructure] PLC fund (NERR) thousands of stakeholders are anxiously awaiting an update from liquidators Deloitte. In a virtually identical financial disaster to that of ERF, those who invested money in NERR have been told they are unlikely to get their cash back.

NERR's inability to provide the resources for the Borders waste treatment incinerator at Galashiels left Scottish Borders Council years behind in the race to eliminate landfill and boost recycling levels. The council's decision to place their trust in NERR cost taxpayers at least £2.4 million, and on top of that the local authority is having to develop a £6 million waste transfer station on the site of the proposed treatment plant as it ponders an alternative waste strategy.

The nature of ERF's collapse is almost as complicated as the network of organisations which made up its structure. Premier Group resigned as the fund's manager in December 2016, the administrator's tenure was terminated and fund custodian (Kleinwort Benson Channel Islands) has given notice that it is withdrawing its services.

A detailed news release from IOMFSA explains: "The Company Secretary resigned with effect from March 9 2017, leaving the fund with no functionaries. The fund is unable to pay its debts as they fall due."

The Official Receiver will now hold separate meetings of the creditors and sharefolders of ERF. After those meetings, Eco will then be under the control of a liquidator.

"As part of the assessment the liquidator will need to investigate the circumstances which led to the failure of Eco", adds the press statement.

Sunday, 12 March 2017

Death throes of council's invisible funders


The "last knockings" of yet another failed investment fund in the Premier Group stable will be played out in an Isle of Man court this week when finance regulators move to have the fund wound up.

It seems $61 million which had been placed in the trust of the Eco Resources Fund by 189 unsuspecting investors has all but disappeared with a paltry £12,500 left in the coffers.

Our readers will be aware that Premier Group (Isle of Man) which is in the process of being liquidated, was also responsible for another worthless fund which was supposed to pay for a £21 million waste management facility for the Scottish Borders at Easter Langlee, Galashiels.

Critics argue that inadequate scrutiny by Borders councillors who sanctioned a £80 million contract with (now bankrupt) New Earth Solutions Group resulted in the loss of £2.4 million of council taxpayers' cash when the deal had to be cancelled in 2015.

 New Earth Recycling and Renewables [Infrastructure] Fund was the approved 'funder' for the Borders project, but could not come up with the money. The untried and unproven form of technology chosen by Scottish Borders Council's senior officers and elected members for the Galashiels facility also turned out to be a complete dud.

It is to be hoped that the various investigations by financial experts into the activities of Premier Group and its subsidiaries will get to the bottom of the catastrophes which have left thousands of investors and shareholders in dozens of countries out of pocket.

While the range of Premier funds were functioning the Group's directors trousered millions of pounds in management and promotional fees.

And as Not Just Sheep & Rugby revealed last year, the company had business links to the offshore tax haven of British Virgin Islands. A number of individuals involved in Premier Group had stakes in BVI based entities.

The Isle of Man Financial Services Authority's [IOMFSA] claim to have the Eco Resources Fund consigned to the dustbin will be heard in the island's High Court of Justice on March 16.

This particular Premier failure was founded as a joint venture with EcoPlanet Bamboo Group to invest in bamboo plantations in Nicaragua and South Africa. It had been promoted as 'a truly green fund' with the promise of handsome double-figure percentages for investors.

It became clear three months ago that the Fund was in serious difficulties when IOMFSA applied for a court order to appoint an inspector to investigate the fund's activities.

Around the same time Eco-Resources directors decided to place the fund in voluntary liquidation as they were convinced it was insolvent. The "balance sheet" showed assets of £12,545 and debts of £2.7 million.

The position worsened when Premier Group's joint liquidators made a demand for fees totalling £2.3 million which the bamboo fund could not meet. When shareholders voted against dissolving the fund its three directors regarded that as a vote of no confidence and resigned on the spot.

But there was an immediate move to keep the fund going when three individuals put their names forward to become directors of the stricken fund. They included Troy Wiseman, head of EcoPlanet Bamboo and John Bourbon, a Premier Group board member and a former head of supervision of the Isle of Man's Financial Supervision Commission.

However, according to a report published by Isle of Man Today, on the morning of a special meeting called in January "the three proposed new directors gave notice that they were no longer prepared to stand".

As Isle of Man Today explains IOMFSA had sought the liquidation of Premier Group (IOM) to be carried out under the supervision of the court. However, a consent order has been agreed to proceed with a creditors' voluntary liquidation.

Premier Group also managed the New Earth group of funds, which went into liquidation last June, and an official receiver was appointed following an application by the regulator. These funds had a paper valuation of $292 million and a total of 3,249 investors who are unlikely to get their money back.

Meanwhile, back in the UK, the New Earth Solutions Group, selected by SBC to build the region's waste treatment facility is being dissolved with dets of more than £50 million. Unsecured creditors may receive between four pence and eight pence in the pound.

Voters in the Borders should remember that a fair number of the councillors who were directly involved with New Earth Solutions and its offshore partners between 2011 and 2015 - at great cost to the council's 'clients' - will be seeking re-election at the local government polls in May.

It might be worth asking them for an explanation as to why they ever became involved with any of the organisations named above. At best they certainly fell well short in the due diligence stakes!

Sunday, 5 March 2017

£6 million waste station encounters objections


A replacement strategy for dealing with tens of thousands of tonnes of domestic rubbish generated by households in the Scottish Borders is encountering resistance at the planning stage with objectors claiming statistics have been changed to ensure approval for the project.

Local residents living close to the site of the proposed £6 million waste transfer station at Easter Langlee on the outskirts of Galashiels say they were told at a public meeting last autumn the number of trips to and from the station by articulated lorries would double or even treble once the facility was up and running.

But now a revised transport report prepared by consultants commissioned by Scottish Borders Council has concluded: "There are no transport related issues preventing the award of planning consent".

The report claims the overall daily increase in traffic will be 'just three vehicles' of which two will be articulated lorries, giving rise to an additional six vehicle trips per day.

Nevertheless it means the C class road leading to and from the tip will have to cope with 27,250 vehicle loads per annum (105 per day) generating 54,500 vehicle movements annually or 210 each day.

According to one objector: "Having read the revised transport statement I could not believe my eyes. This report is very much one-sided to enable planning permission to be granted".

A second objector comments: "In our opinion the revised transport statement is painting a picture of how everything is rosy on the C77 road. We feel this is only in order that the new centre gains planning permission. No consideration has been given as to how a large volume of artics will impact on us as residents."

Scotland's environmental watchdog SEPA has also expressed concerns about several aspects of the planning application for the transfer station which has, of course, been submitted to the council planning authority by one of its own departments.

A previous attempt by Borders councillors to solve the region's waste disposal issues collapsed in disarray two years ago at a cost to local taxpayers of at least £2.4 million. The intention was to construct a £21 million disposal centre at Easter Langlee which is currently used as an environmentally unfriendly landfill site.

But following a disastrous four-year liaison with waste treatment "experts" New Earth Solutions and offshore investment fund New Earth Recycling & Renewables [Infrastructure] PLC the entire venture based on a £80 million contract turned out to be a costly shambles. The facility was never started and the contract was torn up in 2015.

Now all of the Borders' waste will have to be carted out of the area by road to be treated in other local government territories. The landfill site is due to close by 2018 at the latest.

SEPA [Scottish Environment Protection Agency] has lodged a formal objection to the council's application despite several preliminary meetings aimed at resolving planning issues.

The opposition by SEPA to the application as it stands is based on grounds of lack of information. The agency has offered to review its stance if several issues are addressed.

They have advised the applicants to provide additional information to demonstrate that the site is free of flood risk and that developing this site, as proposed, will not lead to increased flood risk elsewhere.

SEPA concedes many of the issues discussed at pre-meetings have been incorporated in the application. However, they add: "The proposed drainage arrangements are not in line either with discussions between the applicants and SEPA or acceptable practice.

"Foul effluent should not be discharged into the SUDs system. Foul effluent should be taken directly to a soakaway system via a solid pipe". SUDs is an abbreviation for Sustainable Drainage System which is designed to reduce the impact of new and existing developments.

SEPA's submission also calls into questions some of the content of the transport report which appears to have miscalculated the distance from the proposed waste station to the nearest residential properties.

"We note in the transport report that the distances from Coopersknowe Crescent and Melrose Gait are given as 500 metres and 800 metres respectively. We believe that this is incorrect and the distances are actually 310 metres and 250 metres respectively". A sizeable disparity, it would seem.

Commenting on other issues, SEPA point out: "The noise assessment does not appear to have taken into account the noise from reversing lorries (i.e. reversing beepers). The noise assessment must be revised to take this into account.

"We consider the odour assessment should focus on the abatement and reduction of odour emissions rather than focus on modelling which is very uncertain due to its subjective nature. We have seen cases where odour modelling has predicted no odour nuisance where, in reality, there has been an odour nuisance".

Monday, 6 February 2017

Only crumbs for struggling Borders towns

DOUGLAS SHEPHERD argues that a 10-year capital investment programme seems to be out of step with a Borders town centre index.

Galashiels and its immediate hinterland is set to receive the lion's share of capital investment by Scottish Borders Council over the next ten years while other towns with serious economic issues and poor retail activity seem unlikely to benefit much from a newly published expenditure programme.

Many of the projects and items included in a £217 million draft capital financial plan covering the period between 2017 and 2027 are not specific to individual population centres. But those schemes which are earmarked for particular towns demonstrate an extremely heavy concentration of resources in and around the railway communities of Galashiels and Tweedbank.

Yet only a week ago councillors were presented with worrying data in the form of a so-called Borders Town Matrix/index which shows how far Jedburgh and Hawick are lagging behind neighbouring settlements when it comes to economic prosperity.

A list of 17 measures including town centre footfall, vacant retail units and various other factors provided scope for a score of up to 170 for each of the region's centres of population. It was Hawick and Jedburgh which shared the lowest mark of 56, classifying the two towns with a rank of 1, indicating the greatest potential need for attention. Prosperous Peebles with a score of 133 stands at the other end of the spectrum, enjoying a ranking of 10.

According to the matrix, Hawick suffered a 42% drop in footfall between 2012 and 2015. This meant the average number of people in the town centre on particular days when counts were made fell from 7,480 to 4,360. In the same time frame Jedburgh's footfall reduced from 2,900 to 2,460 (15%).

Meanwhile Galashiels experienced a modest two per cent reduction from 8,380 to 8,180, a loss which may well have been reversed in 2016 following the return of the Borders railway in September 2015. Kelso clocked up a 27% rise in footfall from 2012 to 2015, up from 4,360 to 5,550.

The data would suggest a sizeable increase in capital investment should be on the cards for Hawick and Jedburgh. But the council's capital plan offers few crumbs of comfort for these two economically beleaguered places.

The only specific mention for Jedburgh is for a proposed synthetic sports pitch costing an estimated £1.28 million. There does not appear to be any significant spend planned for economic expansion or regeneration. And critics of the "less than fit for purpose" Jedburgh secondary school buildings will be disappointed not to see a replacement school included in the 10-year plan.

Perhaps the same could be said for Hawick where the council's £7.73 million flood protection scheme for the town together with a final £101,000 for the redevelopment of Wilton Lodge Park provide the only local entries in the lengthy ledger of expenditure plans.

At the same time it is possible to identify some £29 million of new money for Galashiels and its satellite of Tweedbank. The programme includes £7.95 million for inner relief road phases, £5.7 million for a waste transfer station (which will provide or safeguard jobs) at Easter Langlee, a new Langlee Primary School (£2.93 million), the proposed Great Tapestry of Scotland museum (£6.56 million including the council's contribution of £3.36 million) and a Central Borders Business Park at Tweedbank costing £6 million.

There is a widely held view among Jedburgh and Hawick residents that their respective towns are not receiving a fair share of the local government financial cake. Whether that view is fair or misconceived is a matter for debate; but on all of the available evidence there is certainly a case to answer.

Tuesday, 31 January 2017

Investors call for inquiry into failed offshore funds

EWAN LAMB reports

Investors and shareholders caught up in the multi-million pound collapse of the Manx-based Premier Group and its associated funds are calling on the authorities on both sides of the Atlantic to mount a full scale investigation into the activities of the organisation's directors.

A number of inquiries by administrators and liquidators are already underway, including a probe into the affairs of the bankrupt New Earth Recycling & Renewables [Infrastructure] Fund or NERR which was hand picked by Scottish Borders Council to finance a £21 million waste treatment plant at Galashiels.

The NERR fund, managed, controlled and promoted by Premier Group, suffered a spectacular liquidation last year, leaving 3,250 investors in limbo. Insolvency experts have already warned there is unlikely to be any dividend for shareholders as they pick over the mess left by the 'death' of the Premier empire.

Not Just Sheep & Rugby investigations have uncovered several disturbing aspects of the fiasco which resulted in the cancellation of the Borders project and left local taxpayers at least £2.4 million out of pocket. Our efforts to get at the truth continue, but there is still no sign of any kind of official inquiry into the role played by elected councillors and local government officers with the financial losses written off in cavalier fashion.

Now SBC is having to embark on an alternative waste management solution involving the construction of a £6 million waste transfer station on the site of the planned New Earth Solutions (NES) scheme at Easter Langlee. Up to 50,000 tonnes of domestic rubbish will have to be hauled out of the region by road each year to be processed at sites in other parts of Scotland or beyond.

Today, for the first time, the Premier Group's demise and its ramifications have received extensive coverage in the Isle of Man media.

According to Isle of Man Today, a website which carries articles published in the Isle of Man Examiner, the losses sustained by investors in the various funds runs into tens of millions of dollars.

Beneath a headline which reads: SAVERS LOSE MILLIONS AS INVESTMENT FUNDS CRASH IOM Today details the various disasters which have hit Premier Group and its associated entities.

The article states: " Premier Group (Isle of Man) Ltd, based at Ridgeway Street, Douglas, was established in 2007 and latterly focused on renewable and green investments including recycling plants in the UK.

"But as far back as 2010 investors had been raising concerns about the fund group it succeeded, also named Premier Group IoM, which was launched in 2001 and had seen funds that it promoted grow to £500 m but closed to new investments in 2005.

"The Premier Shareholders Group accused the Manx government of failing to protect investors after a fund marketed as ‘low risk’ was subjected to a market value adjuster. That 2001 company was not regulated by the island’s Financial Services Authority (FSA)."

This early history of the Group is of particular relevance to SBC's involvement with the New Earth regime, a liaison which was not forged until 2011. So were Borders councillors made aware of these concerns before signing the paperwork on a £80 million contract which was subsequently ripped up and binned?

The IOM Today article continues: "NERR and its two feeder funds, had a valuation of $292.22 m and a total of 3,249 investors, the majority of whom are unlikely to get much of their money back.

"The higher risk nature of the funds was explained in the funds’ offering documents. ‘Substantial recovery of value from those investments may be unlikely,’ says the FSA. The FSA filed a claim to wind up the three funds after two other linked companies, New Earth Solutions Group and New Earth Solutions Facilities Management, in which NERR was the majority shareholder, were put into administration in the UK." 

An investor in one of the Premier funds declared: " the proper authorities need to investigate this fiasco both in the UK and the USA. Sadly this mess will be quite difficult to clear up given the overly complex structure of these businesses and funds. People investing in what they thought would be profitable, eco-friendly and socially responsible ventures are being swindled".

Wednesday, 18 January 2017

A four-penny one for NES creditors


Unsecured creditors of New Earth Solutions Group, the waste management company chosen by Borders councillors for a £65 million development at Galashiels, have been told they could end up with as little as 4p in the £ following the dramatic collapse of the business.

And a new report from joint administrators reveals that NES did not have sufficient cash to maintain and upgrade its existing equipment, so had the Easter Langlee treatment plant been delivered, the Group may have been unable to afford to operate it.

Scottish Borders Council has claimed on more than one occasion that it carried out proper checks on NES before and after awarding the contract which cost local taxpayers at least £2.5 million prior to the entire house of cards crashing down in disarray. No-one within the local authority has been held to account, and the losses were blithely written off without explanation or apology.

The gradual disclosure of the flawed decisions taken by elected members suggests their attempts at so-called due diligence fell way short of the required standard. Had losses of this magnitude been chalked up in the private sector then undoubtedly heads would have rolled.

The 32-page progress report on the administration of NES Group from insolvency specialists Duff & Phelps heralds extremely bad news for the scores of unsecured creditors who were owed an estimated £9.169 million. A maximum of only £600,000 is available to meet their claims.

In a section explaining why it was decided not to trade the business, the document states: "The Group generated insufficient cash to service its secured debt and was in default in respect of its lending facilities.

"The Group generated insufficient cash to invest in the desired level of Capital Expenditure required to maintain and upgrade the equipment held by the company and therefore the quality of its assets were deteriorating. No new borrowing was available due to the insolvent position of the Group balance sheet and the current lender's inability to invest due to its precarious financial position".

That 'current lender' just happened to be Manx-based New Earth Recycling & Renewables [Infrastructure] PLC - known as NERR - which had been nominated as funders for the Galashiels project after more due diligence by the local authority. NERR managed to string SBC along for three costly years without ever coming up with any cash.

NERR is now in the process of being liquidated on the Isle of Man with a forecast that investors and shareholders will get nothing back.

The report says NES Group also owed the Co-op Bank £41.8 million and NERR in excess of £39 million when administrators Duff & Phelps were appointed last June. Again, SBC appears to have been unaware that NES was teetering on the edge of insolvency while their vital waste management contract was still 'live', but going nowhere.

Administrators estimate outstanding creditors are likely to receive a dividend of "approximately 4p to 8p in the £".

The report adds: "The Joint Administrators have filed a report with DBEIS (Department for Business Energy and Industrial Strategy) concerning the conduct of all directors of the Group that served in the three year period prior to the administrator's appointment. The content of this report is confidential".

NES Group is expected to be dissolved once the administration is completed within the next six months.

FOOTNOTE - New Earth Solutions (Scottish Borders) Ltd., the NES subsidiary specially set up to deliver the Easter Langlee treatment facility is also expected to be consigned to the dustbin of industrial history within a matter of weeks.

Papers filed at the Register of Companies show all directors of the company have resigned, accounts which should have been lodged with the authorities by October 29th last year have never been submitted.

The Registrar has issued a warning notice indicating the company will be compulsorily struck off the Register. Perhaps a fitting end for such a disastrous liaison between council and contractor which has cost the Borders dear, both financially and environmentally, and has heaped opprobrium on the region's elected representatives.

Sunday, 15 January 2017

Express delivery threatens A68 'recovery'

research by guest writers MINNIE COOPER and AUSTIN CAMBRIDGE

Traffic volumes on the beautiful A68/A696 route between Jedburgh and Ponteland increased in 2015 despite the best efforts of England's transport authorities to sideline the road and condemn it to country lane status.

Vehicle numbers had been falling spectacularly for a decade following the ludicrous decision to de-trunk the Northumberland section of the A68 and hand over its maintenance needs to the county council, and to create a so-called strategic national corridor via the A1 from Newcastle to Edinburgh.

There was an angry reaction from the Jedburgh business community and promises of action by local politicians following Not Just Sheep & Rugby's expose of the statistics in March 2016. It showed car numbers had slumped by a massive 35% between 2004 and 2015 while total traffic was down by 28.7% in the same period. The deliberate downgrading of the A68 was having a devastating impact on the local economy.

The numbers of cars crossing one of the census points just south of Jedburgh on an average day declined from 4162 to 2701, and the count for all forms of transport dropped from 5103 to 3635.. At the same time the A1 counter at Berwick-on-Tweed experienced a 65% increase in car numbers from 5258 to 8775 with total traffic up from 7505 to 11,805.

Department of Transport data for 2015 shows there was a modest increase in A68/A696 traffic in 2015 at all census points although there was an even bigger rise on A1.

The Jedburgh counter, quoted above, registered an annual average daily flow (AADF) of 3722 vehicles (+87 on the 2014 figure of 3635) and car numbers increased by an average of 42 to 2743 (2701). HGV numbers rose by 10 per day from 244 to 254.

We also looked at figures for the counter north of Jedburgh covering the stretch of the A68 from the town to the Bonjedward junction with the A698. Statistics here were obviously boosted by local traffic travelling to Kelso, Galashiels and other Borders towns for work, shopping trips, or leisure pursuits.

Here the all vehicle count went up from 7978 to 8328 (+50), car numbers increased by 92 on an AADF basis.

In a bid to secure a truly accurate picture of trends we obtained figures for two other census points at Carter Bar on the England-Scotland border and for the A696 south of Otterburn. The Carter Bar figures for all traffic increased from 2911 in 2014 to 2971 in 2015, but were still well below the 3263 AADF statistics logged in 2005. Car numbers rose from 2260 to 2295.

On the A696 all vehicle numbers showed a healthy increase from 3503 to 3590, not far short of the 2005 number (4075). Car traffic was up from 2560 to 2600. And significantly, HGVs using the route were up from 247 to 259 per day despite advice from the London transport authorities that the A696/A68 is not really suitable for lorries and other large vehicles.

Turning to the A1 we examined the data for a different counter point in the Berwick vicinity this time. Here vehicle traffic was up by an average of 112 per day from 8042 in 2014 to 8513 in 2015. HGV numbers rose by 50 from 1186 to 1236.

Further north at the Cockburnspath census point close to the Borders regional boundary with East Lothian the all-traffic numbers shot up by 309 per day from 7417 to 7726 with HGVs up by 49 from 1,140 to 1,189.

Finally, the A68 north of Lauder saw vehicle numbers rise from 6,636 to 6,923 (2005 figure was 8,922). HGV numbers were up from 526 to 555 (2005 - 840).

So has the A68 from Jedburgh southwards turned the corner, so to speak? The latest statistics were being clocked up before the political outcry in 2016, and there has been little sign of action since. A suggestion for a Friends of the A68 with cross-border collaboration appears to have been kicked into the long grass while an improvement plan for the Scottish section of the route is supposed to be published by the end of this year.

Perhaps MPs, MSPs and councillors in the Scottish Borders would show more urgency by making themselves aware of the negative ramifications likely to flow from another development which could have a devastating impact on the A68's future use.

A section of Northumberland County Council's current Infrastructure Plan entitled 'Improving Northumberland's roads network' does not appear to contain any mention of major investment for the A696/A68. At the same time Highways England has allocated a £290 million package to upgrade the A1 in Northumberland still further.

It will facilitate additional stretches of dual carriageway, attracting an estimated additional £376 million to the local economy.

According to the literature accompanying the financial support for the Great North Road: "The long-term vision is to upgrade the full A1 route through Northumberland to Expressway Standard". This would transform the route into a mini-motorway modelled on European-style expressways.

Time, perhaps, for the Jedburgh area's representatives to get their skates on or at least move up through the gears!