Thursday, 19 October 2017

The file ignored by Audit Scotland, parliament and politicians [5]

2013’s NOTIFICATION OF A TWO-YEAR DELAY

The project had been beset by problems and issues from the very outset thanks to a combination of undeveloped technology and the absence of the £23 million to pay for it.

Among a collection of 80 reports, emails and other correspondence which SBC released in August 2017 on the SIC’s orders were details of yet another delay of two years of which notice was given by NES in late 2013. The NEAT trials in Canford were going extremely badly, and after a catalogue of excuses the contractors finally admitted there was no prospect of commissioning the Borders plant until July 2017 although even that date could prove to be ‘ambitious’.

Here’s how the council’s own consultants reacted to the news – although the council seemed content to allow matters to drift on.

SLR Consulting (technical experts) wrote: “In summary it is difficult for SLR to understand whether there is a reticence to try to develop because; data attained does not show the process favourably; if operational issues at Avonmouth are taking priority or are showing some fundamental issues with the technology; if the technical team are capable of addressing and managing the problems to an expedient solution.”

And financial advisers Nevin Associates were more forthright in their correspondence with SBC following the latest test failure at Canford: “This may have been the final incident that convinced NES to come clean and admit that there was no chance of implementing NEAT on a commercial scale in 2014.

“This could leave us hanging on the outcome of the Canford trials, over which we have no control, and if those were to fail or (more likely) take longer than anticipated to succeed, then we would still potentially be exposed to the risk of having no treatment solution in place for the Council’s residual waste.

“It is imperative that momentum is not lost and that NES show evidence of continued commitment to the project, otherwise we may have little option but to pursue a Plan B to avoid the risk that the Council fails to achieve ZWP regulatory requirements.”

NES had already been granted a so-called ‘contract moratorium’ giving them extra time to solve the various problems dogging Project Easter Langlee.

Surely council members should have stepped in and ordered an end to the fiasco in December 2013. That would have avoided a 15 month period up to February 2015 when tens if not hundreds of thousands of pounds of public money continued to be squandered without any progress being made. But yet again councillors appear to have been conspicuous by their absence.

CONCLUSION – Those who take the trouble to read this report are free to draw their own conclusions.
In my opinion Scottish Borders Council - at the very least - was grossly incompetent in its stewardship of substantial sums of public money. SBC was equally inept in the management and administration of a £23 million building contract, work on which had not even started after almost four years of dithering and interminable delays caused by a model of technology which had never been commercially proven, and by an inability to secure funding for construction.

The fact that no-one will be held to account for the entire debacle is regrettable and disgraceful.

That concludes our "serialisation" of the comprehensive document which our regulatory bodies and public representatives chose to ignore and refused to act upon. WHY? As we said at the outset your comments will be welcomed.

The file ignored by Audit Scotland, parliament and politicians [4]

MONITORING OF PROJECT BY ELECTED MEMBERS

 There is virtually no mention of councillor involvement in the Easter Langlee project in any of the documents SBC has volunteered to give me or in the many more released on the orders of the Scottish Information Commissioner.

Minutes of meetings should provide a full picture of the role played by our elected members, but incredibly, during my inquiries I have been told on more than one occasion that events were not formally recorded. Therefore written documents containing information about the ill-fated scheme do not, in many cases, exist on the council’s ‘New Earth Solutions’ file. I would submit that such an admission of sloppy record keeping should be worthy of investigation on its own.

A classic example of this cavalier approach towards the (non) minuting of meetings came to light after I submitted a FOI request seeking information about the council’s large delegation of elected members and officers who made a “fact-finding” trip to NESG headquarters at Avonmouth in October 2014, just four months before the Easter Langlee shipwreck had to be abandoned.

No fewer than 18 of the most powerful members and officials of SBC made the trip (including an overnight stay) at a total cost to taxpayers of £3,939.35. In public statements following their return to the Borders they made it clear they were pleased with what they had seen and were convinced SBC was “on the right track”.

When I requested a list of the questions asked and answers given at a briefing session this is what I was told: “There was then a question and answer session with NES so that Councillors could get a detailed understanding of the delivery strategy, technology development, permit and funding. No information is held on record in respect of the questions or answers provided. Only the presentations are held – which are commercially confidential, a redacted copy is attached.”

I went on to ask for copies of reports generated before and after the visit. Here’s the reply from SBC: “Subsequent project reports, minutes and emails make reference to the visit but were not generated specifically as a consequence of the visit. Again the content of these documents contains commercially confidential information and cannot be released.”

This repeated failure to maintain written records which appears to have permeated much of the four-year liaison between SBC and NESG may be a convenient way of avoiding public scrutiny. But it also runs totally counter to the local authority’s own Information Governance Policy.

That document states unequivocally: “Scottish Borders Council is committed to creating, managing and keeping records that document its principal activities. Information must be processed and protected diligently, lawfully and ethically through good data security, accurate information and informed openness.”

One can only assume those high-minded principles ‘went out of the window’ in the case of the Easter Langlee shambles. Or perhaps the failed Easter Langlee project is not regarded as one of SBC’s “principal activities”.

In fact the visit to the Avonmouth facility may well have been a complete waste of time and money. The misfiring steam technology there was different from the system which was to have been deployed in Galashiels. The 18-strong team carrying out ‘due diligence’ should, according to some experts, have been 67 miles from Avonmouth - in Canford - where NEAT was on trial.

Councillor David Parker, the local authority’s leader, told the Border Telegraph in October 2014 (following the visit) the Avonmouth trip had been “valuable and illuminating”.

“The integrated WTF is a really big deal for our council as it will transform the way we deal with our waste and help us comply with our zero waste obligations,” he told the newspaper.
“It also involves a major investment, in partnership with NES, which requires councillors to carry out due diligence and, in that respect, the trip was necessary. I am satisfied after our visit that we are on the right track and confident that the WTF will be up and running before the 2019 contract deadline, hopefully by mid-2017.”

Contrast that upbeat declaration with DUFF & PHELPS ADMINISTRATORS’ REPORT on New Earth Solutions Group July 2016:

Paragraph 2.8 – “In October 2014 (the same month in which the Borders delegation was briefed by NESG) the Group carried approximately £159 million of debt, with £37 million due to the Banking Group (Co-op) and £102 million to New Earth Recycling & Renewables [Infrastructure] PLC (NERR) which was subordinated to the Banking Group’s debt. A further £20 million was also owed to Macquarie Bank with a request for further funding. Funding from NERR was suspended in 2014 and Co-op was requested to step in to provide financing.”

In other words the due diligence carried out by Councillor Parker and his colleagues managed to miss the fact that NESG was completely insolvent long before the contract was terminated. The cash-strapped company was, to all intents and purposes, incapable of delivering the Easter Langlee project a year if not more prior to February 2015. Did anyone examine the company’s books? What information were the expensive financial consultants [hired at a cost of £146,000] giving SBC about their contractor’s economic well-being (or lack of it)?

COMING NEXT - 2013’s NOTIFICATION OF A TWO-YEAR DELAY

The file ignored by Audit Scotland, parliament and politicians [3]

REVELATIONS AND ISSUES THROWN UP BY THE INVESTIGATION

SBC undoubtedly wished to draw a line in the sand under the New Earth affair as soon as the highly embarrassing decision to terminate the useless contract was taken in February 2015. Their attitude towards my series of FOI requests proves that beyond any reasonable doubt.

But information they have been forced to give me on the instructions of the SIC has penetrated the wall of silence and has shed some light on many worrying aspects of the council’s dealings with a group of financially unstable companies and funds. However, it is impossible to complete the picture without full disclosure. Here are some of the points requiring full investigation:

1. NESG TRACK RECORD AND CONDUCT - NESG was a relatively inexperienced player in the waste management industry, and had little if any knowledge of environmental rules and regulations governing waste disposal in Scotland, including SEPA’s rigorous process before issuing operating certificates.
 Information I obtained showed how NESG became so frustrated over delays in the sanctioning of a permit for the ATT aspect of the Easter Langlee project that they suggested SBC and others should put pressure on the independent environmental watchdog to achieve the desired result. This surely amounted to totally unacceptable and unprofessional conduct.

2. SURETY FOR SEPA - In the very early stages of the contract SBC had to provide financial security in the sum of £315,000 to SEPA on behalf of New Earth Solutions (Scottish Borders) Ltd., the ‘ special vehicle’ set up to deliver the Borders project. The council refused to tell me why this was necessary on grounds of “commercial interests”.
The SIC disagreed and told SBC to give me the information I had asked for. It transpired that NES could not acquire £315,000 of insurance without incurring costs which would have had to be passed back to the council “nor can they afford to hold the capital aside to cover this requirement”. So a contractor involved in a multi-million pound scheme didn’t have £315,000 to spare. Surely alarm bells should have been ringing at SBC. Did anyone ask questions about such a worrying issue?


3. THE STATUS OF NERR & PGIOM - Information obtained during the course of my inquiries has confirmed that SBC were completely unaware of many complaints lodged by investors and shareholders in the NERR fund and against its parent company PGIOM. These businesses were crucial to the successful delivery of Easter Langlee, and SBC was told £6 million per month was pouring into NERR from eager ‘green’ investors.


The truth was that any money reaching NERR’s coffers was either being used to prop up NESG (£39 million in total) or being siphoned off by PGIOM managers and controllers in fees (£12.027 million in 2014 and £10.748 million in 2013 while the Borders contract was ‘live’). The impression is given that SBC accepted at face value what NESG and NERR were telling them. Even in the early years of the contract (2011) NESG was recording sizeable financial losses.

Liquidators Deloitte appointed to investigate NERR by the Isle of Man Financial Services Authority soon discovered almost 3,500 investors and shareholders in the fund would get none of their money back. Deloitte is currently considering the possibility of pursuing third parties in a bid to recoup cash and NERR has insufficient resources to even pay for its own liquidation. PGIOM is also in the process of being dissolved. How did SBC become involved with such unstable offshore entities?

4. DEED OF VARIATION – Perhaps the most important reason for the collapse of the project, and the most puzzling issue to emerge from SBC’s web of secrecy. Within a matter of months of the original contract being signed NESG was telling SBC the MBT plant was undeliverable because it could not attract bank funding as a stand-alone project. How much had changed in such a short period of time? Why were MBT facilities being developed elsewhere in the UK? Did anyone at SBC ask?
In October 2012 members of SBC decided (in private, naturally) to radically change the terms of their contract with NESG to include ATT using so-called NEAT Technology, NESG’s very own brand of gasification and pyrolysis to convert rubbish into electricity.

The councillors must have realised they were taking a huge gamble. Apparently they were labouring under the impression NEAT could install them as champions of the Scottish waste disposal league table. But in fact the technology had not even started its arduous journey through development trials at NESG’s R&D centre in Canford, Kent.

How was any financial institution likely to put up £23 million under those circumstances? What persuaded SBC’s elected members to sanction NEAT when the technology was not commercially proven and funding was not guaranteed? Each member who voted in favour of the DoV must be asked to explain their reasoning, and officers and members of the Project Team who recommended this risky course of action also need to provide a detailed public explanation.

In an interview published in the Journal of the Chartered Institute of Waste Management in October 2015 - AFTER the SBC/NESG contract was shredded, and THREE YEARS AFTER the DoV was rubber-stamped - Richard Brooke, the commercial director of NES, confirmed that the form of technology which had been planned for Easter Langlee was not commercially ready in late 2014. So why did SBC sign up for it in October 2012? Brooke’s reference to the Borders project reads as follows:

“The development in Scotland that would have been New Earth’s sixth facility did not come to fruition for a variety of reasons, most notably the drop-off in the quantity of residual waste requiring treatment; and the specific energy technology to be built and operated was not ready to bring on-line on a commercial scale.”

This amounts to a damning indictment of SBC’s decision making. In actual fact this form of ATT technology remains unproven in 2017 while a similar system installed at another NESG facility in Avonmouth, Bristol has proved so troublesome the entire plant has had to be closed down to allow radical remedial work to be undertaken. It is hoped to reopen the ATT there in 2018.

COMING NEXTMONITORING OF PROJECT BY ELECTED MEMBERS 

The file ignored by Audit Scotland, parliament and politicians [2]

FIGHTING THE COVER-UP

I was personally annoyed and dissatisfied that my local authority could treat its citizens in such a cavalier manner, and I was determined to investigate this disastrous chapter in the annals of Borders local government after being told SBC had decided to simply write off their losses and move on.

The only way to get at the facts would be via Freedom of Information (FOI) requests although I realised this avenue was bound to be littered with pitfalls and obstacles. Requests would have to be carefully worded to guarantee some chance of a worthwhile return. And questions to the council would have to be divided up into numerous sections to avoid refusal by breaching the £600 cost ceiling allowed for each request.


The first FOI was aimed at discovering the true scale of the financial loss to taxpayers as even this basic information remained a closely guarded secret. Surely details of what had been spent on the aborted contract should have been published as a matter of routine. Not in the secretive world of local government.

- My FOI 7651 received a response in April 2015. It claimed the costs involved during the lifetime of the contract totalled £1.968 million (exclusive of 20% VAT), most of the money having gone to highly paid consultants, most notably Edinburgh law firm Brodies who received £679,000 for specialist legal advice even though the project was a complete failure. In-house staffing costs were given as £356,400. There was to be additional costs associated with post-contract expenditure.

My own feeling is that the true losses linked to the NESG debacle were considerably higher than this but unfortunately I have to accept what SBC has told me.

The response from SBC contained the following sentences which indicated how they would resist further requests for information: “You suggest that ‘now that the contract and the project have been abandoned the issue of commercial confidentiality no longer applies.’ This is factually incorrect. The confidentiality clauses pertaining to the contract remain in place for six years after termination of the contract.” 

So I’d have to wait until 2021 for full disclosure!

However, the loss of a substantial sum approaching £2.5 million surely warranted further investigation. I half expected an announcement from Audit Scotland, the nation’s public spending watchdog, that it would be launching an enquiry into the affair. But announcement came there none, and my own repeated requests for their intervention have all been rebuffed.

I have copied Audit Scotland into correspondence throughout the investigation. Unfortunately their email to me dated May 26th 2017 illustrates their attitude towards SBC’s multi-million pound loss of public funds:
“Thank you for forwarding the decision by the Scottish Information Commissioner, regarding Scottish Borders Council and its waste management contract.

“This information has been shared with the external auditor of the council. After full consideration of the content of the decision, they are content that the audit work previously completed by the external auditor of the council showed that the council followed a reasonable process in the procurement of the waste management contract.

“We believe the key judgement for the council was whether continuing with the contract would have seen even more public money lost. It is our opinion that the council came to a reasonable judgement in terminating the contract when it did.

“We do not deny that a loss of £2.4m is a poor outcome for the council. Therefore as part on the 2016/17 annual audit of Scottish Borders Council we will be reviewing whether the council have identified any ‘lessons learned’ through their review of how the waste management contract was managed. Any significant findings will be reported to the council in our Annual Audit Report. This will be available on the Audit Scotland website by October 2017.

 “In your correspondence you state your view that the commissioner’s findings represents clear evidence of a deliberate cover up.  Although we do not agree with this view, we continue to encourage councils to be as open and transparent as possible with the information they hold.“

During the early stages of my own investigation I also attempted to enlist interest from Scottish politicians and from Scottish parliamentary committees. No luck there either. A £2.4 million gamble with public money did not merit anyone’s attention. Shining a spotlight on bungling councillors of virtually every political hue and holding the incompetents to account might be disadvantageous for all of the parties involved, so avoid such scrutiny like the plague appeared to be the stance taken.

It seemed all that was left would be a one-man campaign to uncover as much information as possible and have it published in a bid to at least embarrass those responsible for the losses. That’s pretty much how it has panned out.

The council started to reject my FOI requests in late 2015. In each of seven successive cases information was withheld on “commercially confidential” grounds and after subsequent requests for reviews of decisions I had to take each case individually to the Scottish Information Commissioner.

In the majority of applications for decisions the SIC found in my favour, and in at least a couple of the Commissioner’s reports the SBC arguments in favour of either keeping documents secret or redacting those they offered to release were demolished and heavily criticised.

It is worth reproducing just some of the findings outlined by Acting Scottish Information Commissioner Margaret Keyse in Decision Notice 100/2017 issued in June 2017 as they demonstrate how flimsy the council’s arguments in favour of secrecy really were.

The Commissioner's conclusions
“The Commissioner recognises that the Council made a significant investment in the integrated waste management project in the belief that it would resolve some of the waste disposal issues in the Scottish Borders Council area. The Council and NESG expended considerable effort, time and money to ensure the project was a success. If the project had completed successfully, it would have increased the Council's household recycling performance by an estimated 2.6%[15]. However, the contract was terminated on 19 February 2015, leading to the Council having to write off at least £2.4 million.

“The Commissioner accepts that there is significant public interest in understanding what steps the Council had taken to ensure that the project was robust. There is a strong public interest in understanding the measures that the Council had taken in order to limit its financial exposure in a project which had been on-going for four years and had involved substantial sums of public money.

“In the Commissioner's view, disclosure of the withheld information would serve the public interest in informing the public about the actions and decisions taken by the Council, the basis for those actions and decisions, and the reasons why the project failed. As noted above, the project had involved many years of work, and substantial sums of public money. The integrated waste management project would have had a direct effect on the residents in the Council area.

“The Commissioner has given weight to the particular circumstances of this case, which incurred the Council investing substantial time, money and resources, in a project that ultimately did not come to fruition. In these circumstances, the Commissioner finds it is legitimate for the public to seek to understand what happened, and in the public interest for this understanding to be as complete as possible.
“The Commissioner accepts that there will be cases in which it is in the public interest for post-contract discussions and project discussions to be kept confidential. However, in the circumstances of this case, the Commissioner considers that the public interest in understanding the Council's role in the project is stronger, for the reasons outlined above.

“Having considered all of the representations made by Mr Chisholm and the Council, the Commissioner has concluded that, even if she had found that disclosure of the information would, or would be likely to, prejudice substantially the confidentiality of commercial or industrial information in line with the exception in regulation 10(5)(e) of the EIRs, she would have found, in all the circumstances, that the public interest in making the information available outweighed that in maintaining the exception.”

All seven decision notices can be found on the Scottish Information Commissioner’s website, reference numbers as follows: 185/2015; 069/2016; 078/2016; 097/2016; 220/2016; 061/2017 and finally 100/2017.

So the process of forcing SBC to release documentation has taken well over two years because of the need to divide up requests which are all linked to the same subject but would not pass the FOI test on cost grounds. This has involved many hours of additional work preparing applications for the Commissioner and dealing with necessary requests from SIC for more evidence or clarification.

Meanwhile SBC staff and their legal experts must have devoted countless hours in dealing with seven separate SIC investigations as they sought to defend their corner and keep those sensitive reports out of sight. Perhaps a FOI request asking for details of costs incurred by SBC over the course of the seven cases might be justified!

At the end of the day with NESG bankrupt, NERR in liquidation and PGIOM in the process of being dissolved there can be no commercial confidentiality argument for a continuing cover-up of this tawdry affair. Every document on the SBC Waste Management Project file must be published.
However, that is clearly not how SBC sees it. The last of my successful applications to the SIC was concluded on June 28th 2017 when Ms Keyse issued her decision completely in my favour. The council was given until August 14th 2017 to comply – some six weeks. But they delayed releasing the documents they had withheld until August 11th, waiting until virtually the last day allowed before obeying the orders of the Commissioner.

An earlier release of the information would not have proved difficult. I originally requested the material in early 2016, and following their refusal to make copies available on two separate occasions my SIC application was lodged on August 5th 2016.

During that same month SBC was asked to send the SIC the withheld information – 86 documents among 200 relating to the case. So it is clear the council had sorted through and assembled the requested reports at least a year before they complied with Decision 100/2017. 

They could have been sent to me within days of the June 28th decision, but SBC – as they did on previous occasions – decided I could wait for the maximum period allowed under SIC rules. Little respect there for Freedom of Information.

COMING NEXTREVELATIONS AND ISSUES THROWN UP BY THE INVESTIGATION

The file ignored by Audit Scotland, parliament and politicians [1]

In a series of articles over the course of today, Not Just Sheep & Rugby will publish the complete text of the damning report into Scottish Borders Council's (mis)handling of its £65 million waste management contract with insolvent contractors New Earth Solutions (NES) and their penniless "funders" Premier New Earth Recycling & Renewables (NERR) fund.

Bill Chisholm, a retired journalist worked for The Scotsman for 38 years. He spent two and a half years from 2015 investigating the loss of at least £2.4 million of Borders council taxpayers money on a failed project which was supposed to provide the local authority with a state of the art waste treatment plant costing £23 million at Easter Langlee, Galashiels.

The one-man inquiry, dogged by concerted efforts on the part of the council to prevent the release of embarrassing evidence and a complete unwillingness by local politicians to get involved, eventually uncovered a number of disturbing elements of SBC's disastrous four-year liaison with NES.

But when he circulated his 42-page report to Scotland's 'guardian of the public pound' (Audit Scotland) and to Borders-based MSPs Mr Chisholm discovered there was no interest whatsoever in pursuing the issue in a bid to discover why so much public money was lost on a venture which left the Borders with nothing for its cash.

Audit Scotland indicated several times that it was satisfied with an examination of SBC's books by accountancy firm KPMG, commissioned by the watchdog and paid well over £200,000 by SBC for the exercise. And after receiving the report the watchdog made it clear it would not be responding to any further correspondence on the matter.

Meanwhile not a single MSP has offered a comment on the report's findings while SBC has maintained a stony silence when approached by the local press. 'Ignore it and it will go away' seems to be the attitude of anyone and everyone who should be concerned.

So now the public can judge for themselves whether there was or is a case to answer. Any reader who would like to pass comment is welcome to do so.

Here is the first section of the report reproduced without any alterations or editing.

A DISTURBING STORY OF COVER-UP AND INCOMPETENCE

How Scottish Borders Council (SBC) gambled with at least £2.4 million of taxpayers’ money, lost it, wrote it off, then mounted a concerted campaign to conceal hundreds of documents, emails and letters linked to the financially disastrous episode from public scrutiny.

EXECUTIVE SUMMARY

NOTE: The vast majority of this information has been assembled in the course of a two and a half year investigation which SBC has consistently tried to frustrate and hamper.

From 2008 onward Scottish Borders Council was faced with an urgent environmental/financial issue. Time was beginning to run out on their practice of land-filling the vast majority of some 40,000 tonnes of waste per annum generated by households across the local authority’s territory.

Previous attempts (well documented) to devise a credible waste management strategy for the Scottish Borders had failed, and in 2008/9 elected members of SBC were being told by senior officers that to ‘do nothing’ and continue to landfill rubbish at the Easter Langlee disposal site on the outskirts of Galashiels was no longer an option: rapid, and potentially expensive action was required.

It was decided to award a 24-year waste management contract, valued at between £65 million and £80 million to a firm of specialists which would include the development and construction of a “cutting edge” treatment facility at Easter Langlee at an estimated cost of up to £23 million, depending on the specifications.

The plant was to be built in two stages over seven years. A conventional Mechanical Biological Treatment [MBT] centre would divert up to 80% of Borders rubbish from landfill. Then, at a later date once technological processes had proven themselves to be commercially viable an Advanced Thermal Treatment [ATT] facility would be added. This would have the capability of converting waste into energy to power local homes, factories and public buildings with surplus electricity being sold off to the National Grid. SBC would receive some of the profits.

A team of environmental, financial and legal consultants was assembled to advise SBC. Following a lengthy procurement process it was announced in March/April 2011 that the contract had been awarded to Dorset-based New Earth Solutions Group (NESG), a company which had never worked on a project in Scotland before. The losing competitor was Shanks, a business with vast experience in the field of waste management throughout the UK.

But the release of highly confidential documents during the course of 2016/17 following SEVEN separate applications to the Scottish Information Commissioner to overturn refused Freedom of Information requests, shows the project had hit funding and technological problems by January 2012, only nine months after the contract was handed to NESG. These issues proved insurmountable, but the council granted NESG generous contract moratoriums which allowed the undeliverable project to squander hundreds of thousands of pounds of public money until it had to be abandoned in February 2015.

Letters from NESG to SBC in January 2012 claimed the stand alone MBT could no longer attract bank funding. Money for the Easter Langlee scheme was supposed to come from either the Co-op Bank or from NESG’s partner, the Isle of Man-based New Earth Recycling & Renewables [Infrastructure] Fund [NERR].

But changes in the Scottish Government’s waste disposal policies were allegedly proving tricky and unattractive to financiers, according to NESG, and an alternative way of delivering the Borders project would have to be identified.

Following months of unsuccessful negotiations between NESG and the council’s Project Team it was finally decided to recommend a very major alteration to the contract to combine the MBT and ATT in a single phase development.

This has to be viewed as an extremely high risk strategy for one simple reason. NESG’s brand of ATT – named NEAT Technology – was completely untried and untested in 2012. For the record it remains problematical and unproven in 2017. And the release of sensitive documents dating from 2012 shows the NEAT system had not even completed its journey through research & development testing in October 2012 when members of SBC sanctioned the so called Deed of Variation [DoV] at a private meeting even though this could have been construed as commercially unfair to rival bidders Shanks.

The DoV was to make little difference. NESG was heavily in debt to banks and to NERR whose directors had a major stake in NESG and were basically keeping New Earth Solutions afloat by providing a total of £39 million to that company. This arrangement/mortgage was concluded in September 2011, and the paperwork is available for public scrutiny at Companies House.

 At the same time NERR’s parent company Premier Group (Isle of Man) Ltd [PGIOM] was picking up millions of pounds each year in fees for managing and promoting NERR to 3,500 unwitting investors and shareholders. The managing shareholders of Premier Group were entities based in the offshore tax haven of British Virgin Islands.

SBC appears to have been completely unaware of the complex financial arrangements involving NESG, NERR and PGIOM. The council has also confirmed it was unaware of many alleged complaints made about the conduct of Premier’s array of investment funds, including NERR, to the Manx regulatory authorities, and to the UK Financial Services Ombudsman from 2004 onwards.

The problems and apparently insurmountable technological and financial issues facing NESG and SBC dragged on through 2013 and 2014 without a brick being laid at Easter Langlee. A selection of documents, many of them heavily censored by SBC before release, give a patchy view of what was happening on a month to month basis as the project staggered on.

Details of a high powered visit by a large delegation of Borders councillors and officers to NESG headquarters in Avonmouth, near Bristol in October 2014 are extremely sketchy as SBC claimed when asked for reports on the trip that nothing had been written down. But representatives of the Borders press were given the impression the visit had been extremely worthwhile from a “due diligence” point of view, and the elected members had been impressed by what they had been shown. SBC firmly believed it was on the right track to become Scotland’s leading waste management authority.

Unfortunately there was a different behind-the-scenes scenario which suggests Borders councillors were completely deluded. By now NESG was virtually insolvent; the NEAT technology continued to misfire, NERR had still not come up with the £23 million needed to build the Borders project, and Scotland’s environmental watchdog SEPA (Scottish Environment Protection Agency) was still refusing to sanction an operating permit for the combined MBT and ATT because of unresolved issues.

Four months after the expensive trip to south-west England a press release issued by SBC in February 2015 contained the shattering news of the contract’s complete collapse.
The statement declared: “Since the contract was signed in April 2011 there have been significant changes with regard to Scottish waste policy and regulation, and project-specific issues in terms of technology and funding.”

No further details were given despite the complete failure to deliver a crucial facility, and the squandering of millions of pounds of public and private money over four years. On top of that SBC’s waste management strategy was in tatters yet again with landfill deadline day looming.

From the publication of the press release on February 19th 2015 SBC was determined to pull down the shutters on Project Easter Langlee to cover their own backs and to prevent anyone from exposing their sheer incompetence and risky decision making. The Borders public deserved better.

COMING NEXT - FIGHTING THE COVER UP

Tuesday, 17 October 2017

Lib Dem spending collapse in race for Borders votes

EXCLUSIVE REPORT ON ELECTION EXPENDITURE
by EWAN LAMB

For a generation prior to 2015 the Liberal Democrats dominated the Borders political scene with distinguished MPs David Steel, Archy Kirkwood and Michael Moore representing the area from the 1960s onward.

But in the wake of Nick Clegg's disastrous decision to prop up David Cameron following the 2010 General Election many a Lib Dem MP, including Mr Moore, paid a heavy price for that collaboration.

Thousands of Borders electors who had voted consistently for Moore and his predecessors to keep the Tories out deserted the Lib Dems in droves in 2015 leaving the party's highly respected candidate trailing both SNP and Conservative representatives by 10,000 votes.

Theresa May's completely daft decision to hold a snap election earlier this year at least afforded the Borders Lib Dems the chance to stage a recovery. But far from halting the slide in their share of the vote in Westminster's Berwickshire, Roxburgh and Selkirk constituency, the activists must have been near to tears when the June 2017 result was declared.

Mr Moore's reasonably respectable third place of 2015 with 10,294 votes (19%) was replaced by a rock bottom finish - a mere 2,482 votes (4.7%) for candidate Caroline Burgess. And Calum Kerr's briefest of tenures for the SNP was ended by a Tory tidal wave which swept John Lamont into Westminster at the fourth attempt.

Details of the money spent by the candidates at the General Election, and at the Holyrood by-election for the Ettrick Roxburghshire and Berwickshire seat on the same day have been obtained by Not Just Sheep & Rugby.

The figures show how the Lib Dems spent virtually nothing on Ms Burgess's campaign although a more ambitious effort appears to have been made on the spending front in support of by-election candidate Catriona Bhatia, the daughter of David Steel..

The so-called short campaign of 2017 set a spending limit of £15,287 for each of the Westminster contestants. But while Michael Moore's campaign in 2015 required £14,014, Caroline Burgess had a paltry £1,932 to spend, including donations of £1,862. It appears the Lib Dems had given up the ghost long before polling day.

So how much money did others have at their disposal? The big difference in 2017 was the absence of a long campaign which the parties used from December 2014 until candidates were adopted for the 2015 fight.

That long campaign of 2014/15 saw Mr Lamont's supporters throw £35,000 at the seat with a further £13,989 available for the short campaign. The comparable sums for Mr Moore were £33,908 and £14,014 while Mr Kerr's more modest expenditure resulted in just £4,751 being devoted to the long campaign plus £14,836 for the short campaign.

It is worth recording that Independent Jesse Rae did not spend a penny on either the long or the short haul...a record of some sort in the annals of election expenditure.

The Tories were the top spenders in 2017 with Mr Lamont using £14,286 to woo the voters - £8,828 for "unsolicited material to electors" (leaflets) and £3,000 for "accommodation and administration".

Mr Kerr's team spent £14,086 - £10,473 of it for leafleting. The SNP campaign collected £13,925 in donations compared to £14,286 by the Conservatives. Labour's Ian Davidson's total spending came to £2,246 with £1,986 for electoral literature.

Turning to the by-election the figures on spending were as follows:

Successful Tory candidate Rachael Hamilton £9,346, including £5,374 on unsolicited material and £2,397 for accommodation and administration; runner up Gail Hendry £12,097 including £9,547 on leaflets; Sally Prentice (Labour) £1,187 - all of it on leaflets; and Catriona Bhatia (Lib Dem) £6,414 with £5,863 devoted to unsolicited material for electors.

The by-election result - Hamilton 20,658; Hendry 11,320; Prentice 3,406; Bhatia 3,196.








Wednesday, 11 October 2017

Round and round and round again!

Guest blogger BILL CHISHOLM M.B.E. on the attitude of the "regulators" towards a multi-million pound loss of public funds

It came as no surprise when I received an email from Audit Scotland last week basically telling me to abandon my two year campaign which had been attempting to get the so called public spending watchdog to do its job.

A very detailed investigation into Scottish Borders Council's disastrous mismanagement of its £65 million contract with New Earth Solutions and the resultant loss of £2.4 million of OUR money for absolutely no return had produced reams of hard, factual evidence in support of the case for an investigation into what appeared to be a clear case of maladministration.

Much of that evidence has been laid before the public thanks to space in the columns of Not Just Sheep & Rugby, and I have had praiseworthy comments along with expressions of concern from a host of individuals, including experts in waste management and public procurement after sending them a copy of my findings.

I also owe a great debt of gratitude to our local newspapers - Border Telegraph and Southern Reporter - for the series of news stories they have published into the fiasco. It is extremely telling that the council has maintained a stony silence when asked for comment by both papers. What is there to hide if there hasn't been a massive cock-up?

However, there's been no interest in the affair from Audit Scotland, the country's Ombudsman or from politicians who have so far failed to offer me a comment (good or bad) on the contents of the 40-odd page 'dossier' which was compiled with a great deal of effort and in the face of consistent opposition from SBC.

Throughout the exercise I kept Audit Scotland copied into the correspondence, and asked them to investigate on several occasions.

Unfortunately, by the time my inquiries were completed SBC had paid accountants KPMG well over £200,000 to examine their books on behalf of Audit Scotland in 2015/16 with another audit fee of the same magnitude handed over - this time to the watchdog itself - to cover the 2016/17 audit. On both occasions SBC received pass marks for its handling of the New Earth Solutions disaster.

In one of their letters Audit Scotland actually admitted the abandoned contract represented "a poor outcome" for SBC. But as I pointed out that was not true. The council merely wrote off the losses and moved on. It was, in fact, a poor outcome for council taxpayers.

Undeterred by their negative response, I provided them with a copy of my final report into the Easter Langlee debacle. I had been advised to do so by the Scottish Public Services Ombudsman (SPSO) whose staff made it pretty clear they would not be intervening either.

According to SPSO they are not 'regulators' and it was extremely unlikely that they would look into the Borders case unless Audit Scotland had acted incorrectly. And anyway, the Ombudsman could not become involved until I'd been through the council's own complaints procedure. Yes, dear reader, that is exactly what SPSO told me.

When Audit Scotland's response to the 'dossier' arrived I was told in no uncertain manner that from now on they would not be responding to my messages in future.

Here's how they broke the news: "Due to the detailed correspondence we have had with you on this issue, we feel our assessment of this matter has been concluded. Unless there are significant new areas of concern, we will not respond to any further communication regarding the waste management contract at the council. "

Audit Scotland has maintained throughout that SBC was right to shut down the contract in February 2015. I have never disputed that move. It was the decisions taken by elected members on the advice of leading officials in the five years before that which cost the public purse so much. And my report was stuffed with 'new' information.

Now, despite the intransigence of the totally ineffectual national 'regulators' I have managed to secure an investigation.

Acting on that steer from SPSO I lodged a complaint against SBC with er, SBC in the following terms:

"That Scottish Borders Council was guilty of maladministration and
mismanagement of at least £2.4 million of public money in its decision
making and general conduct while dealing with its £65 million waste
management contract with New Earth Solutions Group between March 2011 and
February 2015, particularly its handling of the proposed £23 million waste
treatment facility planned for Easter Langlee, Galashiels but which was
never even started.

I wish my complaint to be investigated and those responsible for the loss of
millions of pounds of taxpayers' money together with the failure to deliver
the waste treatment plant to be identified and held to account. All
information held by the council to be released for public scrutiny following
Audit Scotland's conclusion that SBC is "open and transparent" in conducting
its business."


The council investigation into my complaint is ongoing.

I conclude that my experience vividly illustrates the shortcomings in Scotland's arrangements for dealing with alleged mismanagement of public funds. Disgruntled members of the public receive no assistance whatsoever and find themselves on a pointless journey of discovery on a merry-go-round powered by perpetual motion.

Audit Scotland is beyond reproach and cannot be challenged. Once the watchdog is satisfied the loss of £2.4 million is acceptable that appears to be that. And apart from ordering public authorities to apologise to dissatisfied service users the SPSO has no sanctions at its disposal.

Saturday, 30 September 2017

No expense spared when democracy's at stake

EWAN LAMB brings you the latest allowances paid to local parliamentarians

Readers of the Scottish Daily Mail would no doubt be outraged (aren't they always?) this week to be told in a front page banner headline that South of Scotland Labour Member of the Scottish Parliament (MSP) Claudia Beamish was charging taxpayers 60 pence for cycling to and from Holyrood.

In its usual fair and balanced coverage of all things political in Scotland, the Mail went to town on Ms Beamish for legitimately claiming 20 pence a mile for biking to work. The money would just about cover the cost of oiling the chain of her bicycle and having the machine regularly checked by a reputable dealership.

So how did the elected members with offices in the Scottish Borders fare in the allowances stakes during 2016/17.

Not Just Sheep & Rugby decided to publish the statistics without 'slamming' or praising anyone. The residents of the South of Scotland can comment if they wish, but we will leave the editorial expressions of outrage and anger to the Mail, which does, after all, pride itself on its standards of journalism.

Here are the claims made by Borders representatives during the last financial year. The data covers a period before John Lamont decided to resign his Holyrood seat and stand (successfully) for a Westminster constituency.

John Lamont (Conservative)– office in Hawick - 2016/17 total £34,217 for 436 separate claims. Main headings: Edinburgh hotels £4,111 (35 claims); member’s travel £6,845 (224); office provision £17,775 (108); staff travel £1,627 (37); telecommunications £1,337 (14); surgery advertising £2,489 (16).
 
Previous years totals: 2015/16 £33,896; 2014/15 £36,785; 2013/14 £33,561; 2012/13 £30,385. FIVE YEAR TOTAL - £168,844
 
Christine Grahame (Scottish National Party) –  office in Galashiels - 2016/17 total £19,241 for 176 claims. Edinburgh hotels 0; member’s travel £972.90 (75); office provision £16,458 (75); staff travel £220.75 (9); telecomms £688.38 (10); surgery advertising £813.25 (3).
 
Previous years totals: 2015/16 £19,358; 2014/15 £21,361; 2013/14 £19,997; 2012/13 £18,873. FIVE YEAR TOTAL - £98,830.
 
Paul Wheelhouse (Scottish National Party) – office in Hawick -  2016/17 total £16,169 for 96 claims. Edinburgh accommodation £5,933 (30); member’s travel £375 (12); office provision £9,246 (40); staff travel 0; telecomms £555.24 (13); surgery advertising 0.
 

Previous years totals: 2015/16 £13,332; 2014/15 £16,903; 2013/14 £18,368; 2012/13 £21,190. FIVE YEAR TOTAL - £85,962.

One other Borders politician is included in our list. Rachael Hamilton (Conservative) was elected as a list MSP for the South of Scotland in May 2016 which means her allowance claims cover a 10 month period up to March 2017.

Mrs Hamilton subsequently resigned her list seat and replaced Mr Lamont as a constituency MSP in June this year. During the period covered by the 2016/17 figures on allowances she did not have an office in the Scottish Borders.

During 2016/17 Mrs Hamilton received £13,962 for 118 separate claims.

These included Edinburgh hotels and accommodation £11,034 (17), member’s travel £1,735 (70). office costs £761 (13) for advertising, hall hire for surgeries, printing and photocopying and staff travel £78.60 (12).
 


Tuesday, 26 September 2017

Borders waste strategy needed urgently

by DOUG COLLIE

A new set of environmental data for 2016 shows Scottish Borders Council sent an extra 347 tonnes of household waste to landfill last year, and local recycling achievements lagged far behind most of the rest of Scotland.

The official statistics released by the Scottish Environment Protection Agency [SEPA] places the Borders in the bottom four of 32 Scottish local authorities when it comes to the percentage of waste buried in the ground.

It means there is no sign that the local landfill tax bill, currently running at £2.50 million per year, will be reduced any time soon. And SBC appears to be failing to persuade its citizens to generate less garbage with the overall total for 2016 up by more than 2,000 tonnes.

Borders consumers of local government services were promised a fit for purpose waste management strategy in 2015 after the catastrophic collapse of a £23 million project to develop a treatment facility at Easter Langlee, Galashiels. The latest wheeze is to take the refuse away in fleets of lorries for treatment elsewhere - a seemingly desperate ploy to beat landfill deadlines at a cost of more than £1 million annually in expenditure on road haulage.

Had elected members stuck with proposals to have a Mechanical Biological Treatment (MBT) plant up and running at Easter Langlee by late 2013 then the drain on landfill tax could well have been cut by £2 million per annum.

But instead they decided to gamble by incorporating a useless form of incineration into the scheme to convert rubbish into electricity. After four years of delays and major technical hitches the entire waste treatment project was abandoned with taxpayers picking up a £2.4 million bill for absolutely no return.

According to SEPA's statistical tables Scottish Borders generated 51,921 tonnes of waste last year compared to 49,848 tonnes in 2015. The volume sent to landfill (30,702) represented 59.13% of the total. The equivalent figures for 2015 were 30,355 tonnes and 60.9%.

The only three authorities with a higher percentage of rubbish being buried were Glasgow City, Western Isles and Aberdeen City. To demonstrate what SBC might/should be achieving, Dundee City landfilled a mere 6.82%, Renfrewshire 24.2% and Angus 25.5%. The Scottish average - like the average recycling rate - was 45.2%.

It is worth noting just how far Borders is behind targets for recycling which were set by the Scottish Government at the beginning of the present decade. By 2012 authorities were meant to be recycling 50% of waste with that proportion meant to escalate to 70% by 2025. SBC has just recorded  a 39.03% recycling rate for 2016, up from 37.3% in 2015.



Monday, 25 September 2017

Will council sanction copycat application?

DOUGLAS SHEPHERD contemplates a planning dilemma

Councillors in the Scottish Borders who rejected proposals for a £4 million waste transfer station in April on the back of six written objections will soon consider a "revised" planning application which opponents claim is virtually identical and which has attracted 19 objections.

The WTS at Easter Langlee at the site of the region's only public landfill facility is urgently needed following Scottish Borders Council's failure to commission and deliver a suitable waste treatment plant. And attempts to assemble a credible waste management strategy have repeatedly ended unsuccessfully over the last 15 years.

It may seem strange to the layman, but SBC has had to submit two separate requests for planning consent to themselves as planning authority for the area. The WTS would be home to thousands of tonnes of household refuse until it was shipped out by road for treatment at an established facility some distance from Galashiels.

According to waste management experts the cost of this distinctly environmentally unfriendly solution to the council's waste management woes was estimated at more than £1 million a year back in 2009. So the likely price for road haulage thanks to the inability to fund and build a conventional MBT [Mechanical Biological Treatment] plant seems certain to be considerably more in 2017/18.

Opponents of the WTS argue the C class road leading to the Easter Langlee site is totally inadequate for the volume of heavy traffic the development would generate. It is difficult to see what has changed since April when elected members threw out a recommendation from their own staff to give the WTS the go-ahead.

Cynics have commented that the councillors were 'grandstanding' just a few short weeks before the local government elections. But others were convinced planning committee members had listened to the serious concerns of local residents.

So it will be interesting to see whether the second attempt to secure the WTS also ends in failure. It is a potential setback the local authority can ill afford with landfill deadline day looming large in its wing mirrors. Had the MBT been delivered on time in 2013 some 80% of Borders rubbish would have been diverted from landfill and there would have been no requirement for a giant garbage store.

This time round Galashiels Community Council has added its voice to the dissenters. Like other opponents it sees merit in finding a "more suitable" location close to a main route and away from the
hazardous network of country lanes close to Easter Langlee.

In their written submission, the community council state: "The Community Council after hearing all points made wishes to object to this planning application as we do not feel that the conclusions made in the Transport Report are valid.

"Photographs were produced by residents of accidents on the C77 which refute the points made in the report that it can be made safer with lighting; widening at specific areas; implementing a speed limit and erecting various signage.
The size and regularity of large vehicles on this road are a danger to people and children; cyclists and horses. The number of houses adjacent to the C77 has increased over the years, especially the Melrose Gait development (not yet complete, with another phase still to be built."
Comments were raised about the unsuitability of the Lowood Bridge for heavy vehicles but the SBC representatives advised that the bridge repairs and upgrading would accommodate this.

In conclusion the community council claims: "In essence, the view is that the waste transfer station application is flawed, particularly the Transport Report and we object to this and also suggest that the Council should be looking for another location."


Thursday, 21 September 2017

Incredible accolade from Audit Scotland

by EWAN LAMB

The Scottish local authority which repeatedly refused to release information about its failed waste management contract and had to be ordered to make top secret documents public on several occasions by the information commissioner has just been described as "open and transparent" by spending watchdog Audit Scotland.

This unlikely and frankly incredible conclusion is reached in Audit Scotland's annual audit report on Scottish Borders Council's accounts for 2016/17 which will be presented to a council committee next week. The finding is about as plausible as the outcome of the audit into the waste contract itself which provided SBC with a clean bill of health despite losing millions of pounds of taxpayers' money.

According to the audit report, beneath a heading Governance and transparency it states:"The Council has appropriate governance arrangements in place that support the scrutiny of decisions made by the Council. The Council is open and transparent in the way it conducts it business and the public can attend meetings of the Council and its standing committees."

But the fact is SBC's own Scrutiny Committee was not allowed to examine the four year fiasco which resulted from the decision to hook up with insolvent contractors New Earth Solutions. And members of the public have been able to attend ALL council committee meetings in Scotland since the 1975 reform of local government. At the same time councillors can decide to hold sections of meetings in private whenever they wish.

Later on, five whole paragraphs are devoted to the council's superb transparency arrangements. In the interests of accuracy and fairness we have decided to quote paragraphs 78-82 of the report verbatim:

78. Transparency means that the public, in particular local residents, have access to understandable, relevant and timely information about how the Council is taking decisions and how it is using resources such as money, people and assets.
 
79. There is evidence from a number of sources which demonstrate the Council's commitment to transparency. Members of the public can attend meetings of the full Council, executive and other committees. Minutes of these committee meetings and supporting papers are readily available on the Council’s website.
 
80. The Council’s website allows the public to access a wide range of information including the register of members’ interests, current consultations and surveys and how to make a complaint.
 
81. The Council makes its annual accounts available on its website. These include a management commentary which provides details of performance against budget, information on the use of reserves and risks and uncertainties facing the Council.
 

82. Overall, we concluded that the Council conducts its business in an open and transparent manner.

On reading this glowing testament to openness, a former councillor told us: "What a lot of claptrap, This stuff is just padding and alluding to what every council is obliged to do.   What's great about public attending meetings or having access to accounts? Who are Audit Scotland trying to fool?"

The very next section of the document deals with SBC's Freedom of Information handling. And here again, despite recent events which saw the council lambasted (twice) for wrongly withholding information it did not want the public to see, Audit Scotland claims everything in SBC's information garden is rosy!

This is what the report says:

83. During 2017 the Scottish Information Commissioner has issued two rulings against the Council regarding its handling of a Freedom of Information (FoI) request from a member of the public. These decisions found that the Council had not complied with the requirements of the FoI legislation and had incorrectly withheld information.
 

84. As part of our audit work we held meetings with Council officers to discuss how the Council had responded to the FoI requests, and to determine whether the Council had identified any lessons to be learned from the handling of the request or any improvements to its process for dealing with requests. Based on the work carried out, we are satisfied that the Council has an appropriate system in place for responding to FoI requests and that improvements have been adopted.

So that's all right then!

Audit Scotland came up with a similar 'lessons learned' conclusion following the failed £23 million project to provide the Borders with a suitable waste treatment facility. It described the massive loss of public funds as "a poor outcome" but maintained SBC followed correct procedures in ditching their useless contractors in 2015.

Unfortunately that audit did not come up with an explanation for the huge gamble taken by elected members in sanctioning a form of rubbish incineration which had never been tested and could not be made to function. An investigation into that aspect of the debacle, and perhaps the role of Audit Scotland in the affair, is still required.

Wednesday, 13 September 2017

Chuffin' heck: where's the boom?

by DOUGLAS SHEPHERD

A decision by Scottish Borders Council to borrow £7.7 million and settle their share of the Waverley Railway (north section) reinstatement, then use house builders' development contributions to pay off the loan over ten years may turn out to have been a bit risky.

Despite upbeat predictions a decade ago by politicians and estate agents that the second coming of trains in 2015 would spark a house construction boom in Midlothian and the Central Borders, thereby generating large sums of dosh for the two local authorities, there is no sign of a building bonanza in and around Galashiels.

On the other hand new figures published this week by the Scottish Government show house start-ups and completions by the private sector in Midlothian are at record levels. At the same time building industry activity in the Borders has slumped to an all time low.

The housing demand near the northern stretches of the railway line may or may not be directly attributable to the return of the Iron Horse after a gap of 46 years. But the sharp contrast in house building rates in neighbouring council areas is distinctly puzzling.

Here are the statistics which should give local economists, councillors and other stakeholders considerable food for thought. In the Borders case the completions and starts are for the whole region rather than for the narrow corridor where developer contributions are levied. The Scottish Government tables show:

Private Sector housing starts for Midlothian & Scottish Borders:
BORDERS – 2016: 211; 2015: 272; 2010: 215; 2006: 692; 1996: 254. Note: The 2016 figure of 211 is the lowest since 1998 (197).
MIDLOTHIAN – 2016: 847; 2015: 593; 2010: 205; 2006: 309; 1996: 306. Note: 2016 figure of 847 is highest since records began (1996)
Private Sector housing completions for Midlothian & Scottish Borders:
BORDERS – 2016: 235; 2015: 347; 2010: 429; 2006: 618; 1996: 523.

MIDLOTHIAN – 2016: 642; 2015: 583; 2010: 266; 2006: 169; 1996: 209. Note: 2016 figure of 642 highest since records began (1996).

Figures for house completions in the Waverley Developer Contribution area (includes Lauder, Galashiels, Melrose and Selkirk) in the five financial years to 2015/16 can be found in the Scottish Borders Council Housing Land Audit 2016.
The numbers are - 2011/12 89; 2012/13 101; 2013/14 110; 2014/15 91; 2015/16 118.
According to the audit, approximately 32% of all Borders completions fell within the Waverley Developer Contribution area. The report does not specify whether these statistics are for all completions or just the private sector.

But what is clear from both sets of data is that so far the Borders Railway has not kick-started a housing boom in communities bordering the southern sections of track.

It is to be hoped the council attracts enough contributions from house builders to meet the cost of the £8 million loan they took from the Public Works Loan Board [PWLB] in February with an interest rate of 2.05%. This advance is repayable over 10 years.

In April, SBC borrowed a further £10 million from PWLB in April at 1.90%, also over 10 years. Information posted on the PWLB website does not specify what each loan would be used for.

Borders councillors were told at the beginning of this year that by repaying their 'bill' for the railway upfront after borrowing the cash rather than meeting their commitments in instalments through to 2038 by handing over developer contributions they could expect to save around £4 million of public money.

A Freedom of Information request submitted to SBC in June 2014 asked for the total number of development contributions obtained for the railway project so far (2004 to 2014). The council reply showed there had been 241 developer contributions valued in total at £743,127 - far less than the number required to keep up the council's payments. 


Sunday, 10 September 2017

Mystery solved by liquidator's report

EXCLUSIVE by EWAN LAMB

The latest revelations from liquidators who are investigating an insolvent offshore investment company have helped to explain why there was no mention of the fund in a series of monthly reports to Scottish Borders Council by contractors commissioned to build a waste treatment facility for the region.

As we reported over the course of the weekend, Deloitte's, the liquidators for New Earth Renewables & Recycling [Infrastructure] PLC (NERR) has told creditors, investors and shareholders in the fund that while £40 million was being paid out to "service providers", there were no subscriptions from investors from January 2014 onwards.

NERR was supposed to bankroll the £23 million waste treatment plant planned at Easter Langlee, Galashiels by contractors New Earth Solutions (NES). But the local authority was fobbed off with one excuse after another between 2012 and early 2015 as the waste management firm and its "funders" failed to put up the cash for the 'cutting edge' project.

Not Just Sheep & Rugby has now taken a fresh look at the monthly "progress" reports which NES sent to SBC throughout 2013 and 2014. These highly sensitive documents were finally released by the council last month on the orders of the Scottish Information Commissioner.

Each report up to February 2014 carries so-called updates on further funding arrangements with regular mentions for the future role of NERR in delivering the much needed Borders facility.

But following the block on new subscriptions into NERR there is a complete absence of funding updates for seven months. And during that time the crucially important development of the closure of subscriptions is not mentioned.

It is only after an inquiry is made about funding by SBC that NES offers this response: "Action is being taken to raise funds to invest in new projects. A senior debt provider is expected to complete arrangements by the end of August with funds being available in September. This will provide a significant sum of money of which the majority will be returned to NERR".

The following month's update includes yet another carrot: "The visit from the New York based fund that may sit alongside NERR went well. They have said that they now wish to explore with NERR how they can provide money both at a NERR shareholder level and directly into projects.

"Scottish Borders was prominent in the discussion. There will however now be a lengthy due diligence programme to establish the means and timing of any investments".

In a telling comment written in the margin of this report a project team member asks 'Is this a six-month process or a six-year process'.

The truth is that by this time NERR had no income but was ploughing millions of pounds of investors' cash - £24 million in total - into the floundering New Earth Solutions companies. The fund was incapable of financing Project Easter Langlee but SBC was still being told NERR had a role to play.

So did an apparent lack of scrutiny and involvement by elected councillors fail to detect the contract was in critical difficulties long before its abandonment in February 2015?

Perhaps an Audit Scotland report on capital projects by local authorities which was published in 2016 contains some telling passages.

It concluded: "Elected members are not able to scrutinise the performance of capital programmes effectively because they are not receiving adequate information on capital investment. The majority of councils' progress reports to elected members on major capital projects focus on reporting capital spending in the current financial year. Some councils do not report cumulative capital spending, covering several years, against the total capital budget for individual projects.

In a specific reference to the failed Borders project the report says:
"Waste Treatment facility
The Scottish Borders Council cancelled the project due to project-specific issues. In particular, the council failed to demonstrate the project's technical viability and was therefore unable to secure funding for the project. External auditors are satisfied that it followed appropriate procedures in relation to this decision."

Friday, 8 September 2017

Fees of £40 million taken from bankrupt fund

EXCLUSIVE by DOUG COLLIE

An investigation by insolvency experts has discovered that a staggering £40 million worth of fees were dispensed by the directors of the 'green' investment fund which was meant to pay for a planned waste treatment plant to serve the Scottish Borders.

The money removed from the Manx-based New Earth Renewables & Recycling [Infrastructure] fund (NERR) to pay controllers, managers, custodians and promoters far exceeded the £23 million required to cover the cost of Scottish Borders Council's proposed treatment facility at Easter Langlee, Galashiels.

Yet NERR could never come up with the resources for the Borders plant in the four years before the local authority's deal with contractors New Earth Solutions (NES) was abandoned in February 2015. By that time SBC had spent £2.4 million preparing a project which never got off the ground.

A newly published report to creditors and shareholders by NERR liquidators Deloitte has also revealed that the fund never received any subscriptions from investors after January 2014, long before Project Easter Langlee had to be scrapped. But it continued ploughing money into the loss making NES companies, providing loans in excess of £24 million.

The report explains: "The Company (NERR) had provided significant finance to support and back the start-up and expansion of the UK Trading Companies (NES) over a number of years. These investments were made into loss making activities and the development of operations which ultimately proved to be unsuccessful."

New Earth Solutions also suffered a financial collapse last year when accountancy firm Duff & Phelps were appointed joint administrators.

Deloitte's state: "The Joint Liquidators (of NERR) have not entered into any form of settlement with the Administrators and retain an open mind in relation to what steps should now be taken. One option available to the Company (as an unsecured creditor) and one which we are presently considering, would be to seek the appointment of a liquidator over NESGL and/or NESFM to investigate the affairs of those companies (including during the period of Administration)."

Shareholders of NERR are told that given the insolvent position of the Company’s investments, the joint liquidators are continuing to investigate the potential for recovery from other sources.

"We have actively been progressing our enquiries into the failure of the Company and, with the assistance of legal counsel in the Isle of Man and the United Kingdom, have focused on specific issues that, based on our and their experience, we consider have the best chance of securing a valuable return to the shareholders and creditors of the Company."

In what is probably the most disturbing section of the report Deloitte's write: "Given that the UK trading companies performed poorly and ultimately failed, our investigations have focused on the actual causes of loss to the Company. 

"As well as the money that was lost in the investments in the UK Trading Companies, large sums of money (in excess of £40 million) were paid out to service providers. Many of these fees were based on the NAV (Net Asset Value) of the fund, which showed significant increases despite the underlying businesses’ failure. Amongst other things, we are focusing on the basis for the valuation of the Company’s assets and the continued investment of investors’ money into failing businesses."

More than 3,000 investors in NERR had been told there was little or no chance of recovering any of their lost cash. But the new report appears to offer a small glimmer of hope.

It says: "As previously stated in our reports, we are limited in what information we can share with you so that we do not prejudice any potential claims. Further, due to the complex nature of the investigations and voluminous documentation, it may be some time before we can provide you with the final results of our enquiries.

"However, based on the enquiries made and legal advice received so far, we are reasonably confident that our investigation will support the making of potential claims for the benefit of creditors and/or shareholders in due course."

But no story about NERR and NES would be complete without a bizarre twist, and this particular tale of woe is no exception.

The assets of NES may have been sold off by Duff & Phelps for a little over £5 million, and the ownership of those subsidiary companies now rests with Irish-based PandaGreen.

But it seems a consortium headed by waste management company Global Gateways together with a group of financial advisors are attempting to put together a bid to take over the assets.

Deloitte's report sets the scene. "Investors may be aware that we have received an informal approach from Ms Jane Sanders, acting on behalf of Global Gateways and a group of Independent Financial Advisors, mooting a scheme whereby Global Gateways would bring some kind of legal claim in an attempt (as previously attempted without success) to gain control of some of the former assets of the UK Trading Companies on terms and for consideration to the Company and its creditors and shareholders which have not been specified. 

"We have sought to obtain further information and supporting evidence from Ms Sanders to enable us to assess whether such a scheme and the legal claim (apparently directed against the Administrators) has any merit or is likely to benefit creditors and shareholders.

"At the date of this report, we have not received any answers or supporting evidence in response to our requests, either from Ms Sanders or Global Gateways. In the absence of such supporting evidence and having obtained specialist legal advice in the Isle of Man and United Kingdom, we are not presently convinced that there is any basis to undo the transactions with third parties who now own former assets of the UK Trading Companies or that there would be a benefit to the creditors and/or shareholders in doing so."

One financial expert commented after reading Deloitte's report: "The scale of fees being creamed off by those in charge of NERR is quite unbelievable. It is becoming abundantly clear that the contract NES had with Scottish Borders Council gave the NERR fund kudos and credibility with potential investors over a four year period. 

"Unfortunately NERR was never in a position to deliver the Borders waste treatment plant, and SBC were kept onside by a string of plausible but worthless excuses. I'd say they were taken for a ride".




Tuesday, 5 September 2017

Fresh calls for "waste fiasco" inquiry

by EWAN LAMB

There have been renewed calls for some kind of official inquiry into the loss of £2.4 million of public money by Scottish Borders Council following publication of a damning 42-page report into the Easter Langlee waste treatment "affair".

An investigation which took more than two years to complete thanks to the council's refusal to release hundreds of documents linked to the abandoned contract has produced damning evidence and allegations that SBC mismanaged funds by failing to deliver a £23 million facility to deal with the region's 40,000 tonnes of household rubbish.

The catalogue of factual evidence which had to be dragged from the council with the assistance of the Scottish Information Commissioner has been handed to local politicians and media representatives in a bid to have the issue taken further.

Unfortunately Audit Scotland, the organisation normally tasked with such an investigation has shown no appetite to get involved.

And the Scottish Public Services Ombudsman [SPSO] - when supplied with a copy of the report together with a request for advice - recommended passing the document to....Audit Scotland. It would appear that Scotland's regulatory system for public authorities resembles a version of the Magic Roundabout.

But if the regulators see nothing amiss with the loss of £2.4 million together with many millions more which had been invested in New Earth Solutions and its offshore partner New Earth Recycling & Renewables (NERR) fund there has been some strong reaction from experts and others who have read the report.

One of the key findings from the investigation was that councillors in the Borders should have pulled the plug on NES and NERR long before February 2015 when the waste treatment project was finally abandoned for "technical and financial reasons".

An experienced and respected member of the waste management industry told us: "When you look at this in summary it is shocking. How they allowed so much to go on without hitting the stop button beggars belief. What is shocking to me is they had Shanks as a reserve bidder that they could have called when things started to go wrong so quickly". 

He claimed those in charge should have considered "a couple of options", namely:

  1. force NES to build the conventional Mechanical Biological Treatment (MBT) plant as per the contract and set aside the Advanced Thermal Treatment (ATT) facility to be built as phase 2 (as per the original contract.
  2. terminate the contract and award to Shanks. At least Borders would have had a treatment facility
The industry expert commented: "It is to be hoped there is a public enquiry of sorts and a number of people are brought to account. The handling of this was nothing short of shocking. I would also question some of the advisers as to why they did not impress on SBC the need to consider termination much earlier."

There seems little doubt that electyed members at SBC took a huge gamble in 2012 when they sanctioned the inclusion of Advanced Thermal Treatment (ATT) in the Easter Langlee project. This decision was taken even though councillors were aware the ATT technology had not even been through research and development trials.

An anti-ATT campaigner said: "There are important lessons to be learned [from the Borders investigation], not least for those councils where history is repeating itself and for other authorities who should be publicly ruling out gasification..

"This document has provided an invaluable service to the whole movement by giving us a rare glimpse behind the curtain of secrecy that usually hides what really goes on between waste companies and waste authorities. Councillors clearly need educating."

And a former councillor who was once in charge of important local government portfolios told us: 
"There is absolutely no doubt that this is an Audit Scotland matter right enough but it appears that they are happy to go along  with the work they commission from private accounting firms acting as external auditors.

"After all it is Audit Scotland that has set out the guidelines for elected member responsibilities for ensuring best value when it comes to spending the 'Public Pound'  due diligence etc."

One local taxpayer merely said he was 'sad and depressed at the sheer incompetence of councillors and officials at SBC' while a number of others claimed it was "criminal" that no-one had shouldered the blame or been held to account for the loss of such a vast sum of public cash.