Sunday, 14 May 2017

£23 million contract signed despite worldwide warnings


Councillors in the Scottish Borders sanctioned a £23 million project in 2012 to deal with the region's municipal waste several years after the publication of highly respected research which warned the technology was risky, potentially hazardous, and dangerous to health.

The Borders scheme, which was abandoned after at least £2.4 million of taxpayers' cash was lost, features in a recently completed research project by the Global Alliance for Incinerator Alternatives (GAIA) representing 800 grass roots groups in 90 countries.

It would appear members of Scottish Borders Council (SBC) either ignored separately produced strong criticisms of a process known as pyrolysis and gasification or were not made aware of the dangers before amending a deal with contractors New Earth Solutions to build a plant incorporating the technologies at Easter Langlee on the outskirts of Galashiels.

Lead authors of the GAIA report Neil Tangri and Monica Wilson conclude that even in 2017 "the potential returns on waste gasification are smaller and more uncertain, and the risks much higher, than proponents claim". It surely begs the question what were the potential returns five years ago when Borders signed on the dotted line.

The new research uncovered the fact that over $2 billion had been invested in the projects listed in their report alone, all of which closed or were cancelled before commencing operations.

It is not entirely clear why SBC, which signed up for the development of a conventional compost producing plant in 2011, 'upgraded' to the completely unproven pyrolysis model just a year later by way of a so-called contract variation.

The decision to change horses in mid-stream may or may not become known after the authority releases confidential information relating to the disastrous saga on the orders of the Scottish Information Commissioner.

GAIA point out that in 2008 - just as SBC was starting their procurement process - a US study for a government agency surveyed a large range of gasification technologies and found the processes were unproven on a commercial scale for treating municipal solid waste.

It also found that solid and liquid residuals might be hazardous, and furthermore, that the technologies required pre-treatment of waste and were more expensive than conventional incineration or landfilling.

The new report also points out that in 2006 the UK Government's Department for Environment began a new technologies demonstrator programme to overcome the perceived risks of implementing new technologies in England and to provide accurate and impartial technical, environmental and economic data.

The programme was meant to spend £32 million on 10 projects. Resulting projects were subsequently evaluated and found to be largely unsuccessful. All four pyrolysis and gasification projects hit major snags; two of them did not even proceed to operational status. A third was unable to run long enough to study the process and was closed down while the fourth has not yet been completed.

Then in 2010 a report by the German development agency on the subject concluded that severe challenges were unsolved, specifically "There is no reliable technology readily available. High costs for technical development, repair and maintenance make it unprofitable. Dangerous threats exist to the environment and health due to carcinogenic waste".

GAIA say in their report: "Existing data does show that dozens of projects have failed for a variety of technical and financial reasons. These failures highlight a widespread inability to meet projected energy generation and emission targets, or to simply maintain consistent operation.

The document catalogues notable failed projects in Canada, USA and Europe, including the UK.

A section dealing with New Earth Solutions, the company selected as waste management champions by Borders councillors,points out the now bankrupt business was associated with six failed or abandoned gasification projects.

In 2016 NES disclosed that it would be unable to pay £9 million to unsecured creditors. It also had bank debts of more than £50 million.

GAIA add: "Local governments were also impacted financially: the failure of one of the New Earth Solutions projects cost the Scottish Borders Council at least £2.4 million."

Tuesday, 9 May 2017

The egos have landed!

DOUGLAS SHEPHERD on the shake-up at Scottish Borders Council

Apparently there was more horse trading than you'd witness at the Doncaster Bloodstock Sales, but less than four days after the last local government result was announced in the counting hall at Kelso we have a brand new multi-coloured administration ready to take over the reins at Scottish Borders Council.

There seems to be fewer shades than last time when every political faction bar the Tory blue had a hand in running the multi-million pound budget which is supposed to deliver efficient, high quality local services. In fact the Conservatives did have strength in numbers after the 2013 polls but failed to seize power.

This time round their 15-strong group may have fallen short of an overall majority on the 34-member authority yet again. But the Independent Group - surely an oxymoron if ever there was one - has come riding to the rescue, ensuring decisions can be carried in the council chamber. More about the Independents later.

It must have come as a shock to many when it was announced that "rookie" councillor Shona Haslam (Con. East Tweeddale) would succeed David Parker (Ind. Melrose & District) as leader, Mr Parker had been at the helm for fourteen years, and after his re-election on Friday he made it pretty clear he was 'interested' in carrying on as SBC's top banana.

Instead, Councillor Parker is set to serve as Convener which commands a £25,000 salary and involves representing the authority at events and ceremonials. He will also be responsible for Health, according to a council statement.

Ms Haslam has succeeded to the leader's job - complete with £33,450 salary - even before dipping her toe into local government waters.

But the former national director of Asthma Scotland obviously has the support and confidence of her Conservative colleagues and those who prefer not to divulge their politics. She is certainly not afraid to speak her mind and express forthright views.

Following her resignation from her high profile role with the asthma charity because of 'interference from London' she told Third Force News: “Management (in England) think they know best and don’t listen to what’s happening in Scotland.
“It’s not so much they don’t understand devolution or how politics work north of the border; they don’t actually want to know. They believe Westminster is the pinnacle of politics and we should learn from them. They just totally miss the point.”
There had been speculation that members from the SNP, Liberal Democrat and Independent ranks might combine to keep the Tories at bay. But if there was such a plot then it must have fizzled out quite quickly.
Seven of the eight so-called Independents have decided to team up with the Tories, the exception being veteran Hawick member Davy Paterson, an executive member in the last set-up.
The presence of one of the newly elected Independents alongside the 15 Conservatives might raise a few eyebrows among local Labour supporters. Robin Tatler (Ind. Tweeddale East) stood as a Labour candidate in the same ward last time round, appearing at a campaign launch in 2012 with Scottish Labour leader Johann Lamont.
In 2017 he ran for election alongside, and presumably against, Ms Haslam, and both were successful. Before polling day he told a local newspaper: "Independent councillors have held the balance on SBC in the last two administrations and although being elected as an Independent I would work with all like-minded councillors to achieve the best for Tweeddale and the Borders".
As one observer commented: "In the Scottish Borders it wasn't only Labour voters who were zipping straight across to the Tory fold".

Saturday, 6 May 2017

FAKE NEWS - if only it wasn't

DOUG COLLIE indulges in some wishful thinking

Hundreds of new jobs will be created in Scotland following claims that the Scottish Government is to set up a Commissioner For Secrecy to force public bodies to become more transparent.

Under a reversal of the Freedom of Information system local councils, health boards, government departments and other agencies funded by taxpayers would have to apply to the Scottish Commissioner For Secrecy [SCFS] if they wanted to keep information from public consumption and scrutiny.

Details of this unusual initiative have been leaked to Not Just Sheep & Rugby by a reliable source who wished to remain anonymous. Ironically, had the new regime been in place he would have had to seek permission to conceal his identity.

It has been estimated there would be thousands if not tens of thousands of requests each year from the public sector to keep reports, minutes, records of private meetings and inter-departmental emails hidden away. That is why the SCFS will need to be a massive organisation with an army of staff and tens of millions of pounds at its disposal to process a flood of cases.

Our source told us: "Wouldn't it be great if the boot was on the other foot, and instead of having to request information, private citizens were entitled to it unless the organisation concerned applied for and received an exemption from the Commissioner?"

There have been examples since the FOI system was introduced of authorities withholding material from requesters when refusal to divulge could not be justified. Many cannot understand why information should not be on public display as a matter of course. Why should an organisation which gets its money from long suffering citizens have the power to conduct business in private at the drop of a hat?

Indeed, only recently we reported on the Scottish Information Commissioner's investigation into secrecy at Scottish Borders Council following the collapse of a £80 million waste management contract and the loss of millions of pounds, including £2.4 million from the public purse.

When asked for copies of documents held in its files, SBC refused on grounds of commercial confidentiality. They argued that releasing the information would damage their contractor's business. It did not matter that the company in question was a debt-ridden failure incapable of delivering the project on both financial and technical grounds.

But much of the stuff the council was unwilling to produce - according to the Commissioner - did not even relate to the contractor but concerned the local authority's own deliberations and decision making. An apparent cover up to protect those responsible for the waste contract disaster?

In other words the requested material should never have been withheld.

Nevertheless, in a bizarre and seemingly misleading statement after the decision was issued SBC certainly did not concede that it had flouted Freedom of Information regulations.

The statement claimed: "The determination that the relevant information is no longer confidential means the council can now release that information without breaching its contractual obligations".

Laughable and ridiculous is how that assertion has been described by a good few who have read it.

Perhaps all this kind of nonsense will end when the SCFS is launched some time soon .However it seems highly likely that squads of specialist lawyers will be engaged to fight each authority's corner, and that will be a considerable drain on resources.

A spokesman for the Association of Really Secretive Entities [ARSE] said in a confidential statement: "-------------!".

Friday, 5 May 2017

Borders spinning industry just grows and grows!

Guest columnist CHEVIOT CHARLEY with a message for the new administration at council HQ

Some of our readers may be old enough to remember the days when members of town and county councils in the Scottish Borders spoke for themselves, could be contacted at virtually any time of the day or night by journalists and members of the public, and were responsible for promoting a positive image for their local authority.

It meant each councillor could be judged on his or her contribution over four years. There was little opportunity to escape the wrath of the voters if they 'got it wrong', and there was no lucrative salary to persuade candidates to stand for election. They were in it for the love of the game, and maybe even to serve the public by improving local services in their communities.

A local councillor was very much on the front line. The likes of Roxburgh County Council or Hawick Town Council - plus the region's other three county councils and ten town councils - did not have a single press officer between them to shield their elected members from awkward questions. Yet quality of service was arguably superior to the level being delivered nowadays.

During those heady local government days of the 1960s and early 1970s when the bins were emptied every week the Borders economy leaned heavily on spinning and weaving for its well-being. A job at the local mill was a job for life even if the wages were low so that bosses could prosper.

The labour intensive yarn and cloth making businesses may have virtually disappeared from the Borders valleys, but a completely new version of spinning and weaving has developed in recent years.

Scottish Borders Council, which will soon be back in business following this week's municipal elections, can claim the credit for the growth of the reconstituted Borders spinning (or should that be spin doctor's) trade.

A recent Freedom of Information request produced a response which showed the authority's so-called communications and marketing department, which did not even exist a couple of decades ago, now has "14.43 Full Time Equivalent" members of staff and an annual budget of £505,000.

In its reply the council told the requester: "this includes Communications, Digital Media, Graphic Design and Print Service staff". A well-equipped unit capable of covering up the misdeeds and errors of its employers.

Some of the job descriptions outlined in the FOI might convince the public that their councillors are no longer required to sell their plans, ideas, or decisions to the voters. The work is done for them.

Listen to this.It is the remit of two Senior Communications and Marketing Officers:

"To manage and co-ordinate the effective operational delivery of a special customer-focused internal and external communications and marketing service which aims to actively promote a positive image of the Council, and the Scottish Borders region and the people and communities we serve. To co-ordinate the agreed programme of work in order to support Elected Members and Departments to deliver their corporate performance objectives."

Above those two members of staff sits one Corporate Communications and Marketing Manager. The job description "To lead and manage a corporate customer-focused external and internal communications function, including design, print, web and digital media services, that will enable the efficient and effective delivery of the Council's corporate and departmental public relations objectives.

"To work proactively in partnership with senior management and elected members to identify, plan and deliver professional communications solutions to meet business needs and to ensure that communications is fully integrated into Departmental business strategies".

If you're having difficulty in interpreting all of that, then join the club. It probably means that your local councillor had better not go off message by criticising a decision or challenging some dubious policy idea. We're all customers of a business nowadays. How sad.

There was certainly a distinct lack of meaningful opposition during the previous administration's reign. No-one seemed prepared to put their head above the parapet even if they disagreed with what was being done in the public's name.

Some may wonder where are the mavericks like Haig Douglas or Rory Hamilton who used to grace the Borders council chambers, getting under the skin of pompous conveners and provosts, and even challenging scowling town or county clerks? They certainly did not suffer fools gladly.

It is to be hoped our newly elected band of local representatives - unfortunately many of them will be hamstrung by their respective political party stances - are not finely tuned robots. May they have the guts to speak out when necessary and actually represent the views of taxpayers by sticking an arm up and voting against a silly notion. Mind you it might be difficult with both hands tied behind their backs.

If at least some of them can escape the clutches of the growing band of spin doctors working on those "fully integrated business strategies" and promote their own thoughts and ideas then perhaps the image of Borders local government will improve. But don't hold your breath!

Sunday, 30 April 2017

No justification for council cover up, Commissioner rules


Scottish Borders Council has been told in no uncertain terms there is strong public interest in understanding what steps it took to ensure its disastrous waste management contract which cost taxpayers at least £2.4 million was "robust".

Rosemary Agnew, the Scottish Information Commissioner (SIC), has handed down a wide ranging decision which instructs SBC to disclose the entire contents of five reports which they had been determined to keep secret or at least heavily censored.

The documentation had been requested under Freedom of Information, but the local authority repeatedly refused applications, claiming publication of financial and technological material about their contractors New Earth Solutions Group (NESG) would damage that company's commercial interests and hand advantages to its competitors.

However, following nine months of intensive investigations by Ms Agnew's staff, it was discovered that much of the information withheld from the five reports related not to NESG and its technological or financial assets, but to the council's own financial or administrative matters.

"That one paragraph in Ms Agnew's decision notice appears to point to a deliberate cover up by SBC over a considerable period of time", was how one local government expert summed up the situation for us.

And the council's stance must have been considerably weakened and made to look somewhat ridiculous when SIC's investigating officer found that some of the withheld information had been published on the internet.

In a submission to SIC, the council said the withheld information was "commercial or industrial in nature". It related to commercially sensitive issues, both in terms of financial arrangements and in respect of the technology which NESG intended to implement in its facility at Easter Langlee.

But in fact the inability to deliver both the technology and the hard cash to build the waste treatment plant were the reasons why the council's risky venture failed, and the project had to be abandoned. Yet SBC maintained its policy of strict secrecy even after NESG plunged into bankruptcy.

SBC's arguments on those grounds have been dismissed by the Commissioner. She says: "Having considered the information which the council has withheld in this case, the Commissioner is not persuaded that it is all covered by the confidentiality agreement in the contract.

"The council has not explained clearly why the information withheld from the five reports is covered by the confidentiality clause. It is not explained why the information is commercially sensitive, and has only provided general arguments in relation to the harm that would, or would be likely to be caused by disclosure".

SBC considered the withheld information to be of market value. It could, in its view, be used not only for the advancement and exploitation of the innovative technology, but for future contract bids within the waste industry. As soon as the information was placed in the public domain, it would strip the owner of the information of the benefit it is entitled to as owner..

"The council's arguments focus on the detriment which the successor company to NESG would suffer, if technological information was placed in the public domain, allowing competitors to benefit", states Ms Agnew. "It has not addressed the fact that most of the information withheld from the five reports does not consist of technical data. The council has not explained why information relating to its own matters is still sensitive".

In relation to the technological processes which NESG intended to implement at Easter Langlee, the Commissioner decided that there was 'far more information in the public domain than the council has acknowledged (or was perhaps aware of)'.

She said it was generally accepted that technology changed and developed over time and what was once considered innovative and secret often became standard and widely known as time passed.

"The Commissioner accepts that there is significant public interest in understanding what steps the council took to ensure the project was robust. There is strong public interest in understanding what 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 counci, 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".

Ms Agnew says the integrated waste management project would have had a direct effect on residents in the council area. She had given weight to the particular circumstances of the case, which incurred the council investing substantial time, money and resources, in a project that ultimately did not come to fruition.

In the circumstances, the Commissioner finds it legitimate for the public to seek to understand what happened, and in the public interest for this understanding to be as complete as possible.

Scottish Borders Council has been given until June 12th 2017 to release the information. The local authority has the right to appeal to the Court of Session on a point of law only.

"Risky" council loans under the spotlight


A collection of eleven so-called LOBO loans totalling £43 million which were taken out by Scottish Borders Council between 2002 and 2006 are now valued at £71 million, a research project by an independent organisation has revealed.

Figures obtained under Freedom of Information also show that the interest rates paid by SBC on the bank loans during 2016 exceeded the percentage charged by the Public Works Loans Board [PWLB] in every case.

And an attempt by Ludovica Rogers, a member of Debt Resistance UK [DRUK], to obtain copies of invoices for brokers' fees charged when the loans were arranged for SBC proved unsuccessful after the local authority told her the information was "no longer held".

The same reason was given for not supplying the requester with copies of contracts, invoices and tender documents for Treasury Management Advisers used to facilitate the eleven loans from Belgian, Irish and German banks and from Barclays. Again, the paperwork was said to be no longer retained on council files.

LOBO (Lender Option Borrower Option) loans are held by over 60% of UK local councils and housing associations who turned to them around the time of the global financial crash. But experts say LOBOs are "risky and toxic" with variable interest rates which increase repayments as time goes by.

Servicing loans is already a significant drain on resources at SBC, as it is on every public authority in the country. According to their latest audited accounts the Borders council forked out £12.32 million on "interest payable and similar charges" in 2015/16. The equivalent sum for 2014/15 was £11.806 million. These amounts far exceed the £8.9 million in savings which the council has been forced to make in its 2017/18 budget.

Total liabilities at SBC at fair value are quoted at £359.322 in 2015/16, up from £337.273 million in the previous financial year. This includes the portfolio of loans drawn down over many years from the PWLB, an executive arm of The Treasury which lends money to local authorities.

In 2016 the average interest rate charged by PWLB was 2.55% on the loans it issued. Interest paid by SBC on the eleven LOBO loans in its collection ranged from 2.87% to 4.2%.

Borders taxpayers will have to continue funding repayment of the LOBOS until 2065. Copies of the loan agreements supplied to Ms Rogers show they varied in length from 45 to 60 years.

DRUK claims on its website: "Debt affects all of us, whether it's personal, local council or national, we are implicated in the system which makes the majority poor and powerless and keeps the one per cent in power.

"Bankers, brokers and advisers have tricked councils into taking out expensive, risky loans, endangering our essential services. Taxpayers' money is being unnecessarily wasted while the private sector is making huge profits".

SBC has arranged two recent loans from the PWLB totalling £12 million.

Details published by the agency show that on February 24th 2017 the council was advanced £8 million over 10 years at 2.05%. And on September 29th 2016 a loan of £4 million was agreed, again over 10 years at 1.49%. The reasons for the loans being taken are not specified.

The LOBO portfolio obtained by Ms Rogers is published below.


BARCLAYS        £6,000,000                    2.87%                     £10,644,275             2005

DEXIA                £3,000,000                    3.70%                       £4,923,092              2004      

DEXIA                £3,000,000                    4.03%                       £4,923,092              2004

DEXIA                £3,000,000                    4.20%                       £4,923,095              2004

DEXIA                £5,000,000                    3.82%                       £7,925,583              2005

DEXIA                £5,000,000                    3.75%                       £7,805,971              2005

DEXIA                £5,000,000                    3.80%                       £7,885,250              2005

DRESDNER       £4,000,000                    2.95%                       £6,552,578              2004

DRESDNER       £4,000,000                    3.50%                       £6,552,578              2004

WEST LB           £3,000,000                    4.10%                       £5,866,924              2006

EUROHYPO      £2,000,000                     2.95%                      £3,013,545              2006

TOTALS           £43,000,000                                                     £71,015,983

Dexia Bank, a Belgian-based institution, which had to be bailed out in 2011. It is now known as Belfius Bank.

Dresdner Bank, a German fiunance house, was acquired by its rival Commerzbank in 2009. Commerzbank also owns Eurohypo. West LB is based in Dublin.

Saturday, 29 April 2017

Veil of secrecy ripped apart

DOUG COLLIE on a 'breakthrough' ruling by Scotland's Information Commissioner

Attempts by Scottish Borders Council to hide behind their own wall of silence for six years after a £80 million waste management contract went disastrously wrong have been scuppered by Scottish Information Commissioner Rosemary Agnew.

The bungling local authority, forced to abandon plans for a garbage disposal facility near Galashiels after squandering £2.4 million of taxpayers' money, has repeatedly withheld information linked to their contract with New Earth Solutions Group [NESG] on grounds of commercial confidentiality.

Freedom of Information (FOI) requests were refused amid claims by SBC that to divulge material they had considered in secret would be damaging to NESG's business and could benefit their competitors. The council even stuck to that line after NESG crashed into administration in 2016 with debts of over £50 million.

The limited information released by SBC officials and councillors who sit on a so-called FOI review group was consistently redacted with generous helpings of black ink used to obscure sensitive or embarrassing sections of the documents. It rendered the published material worthless and meaningless.

According to senior council staff the confidentiality clauses associated with the 24-year deal signed in 2011 would remain in place for at least six years after the contract ceased to exist in February 2015.

But following a nine month investigation by the Scottish Information Commissioner's (SIC) staff, the Borders local authority has been told their reasoning for confidentiality simply will not wash. The council has been instructed to provide unedited copies of the censored reports by June 12th.

Ms  Agnew concludes in a 17-page decision notice just issued: "The Commissioner notes again that much of the information withheld from the five reports relates not to NESG and its technological or financial assets, but to the council's own financial or administrative matters".

A Freedom of Information campaigner who has studied Ms Agnew's report, told us: "There is now strong evidence that SBC  mounted a smokescreen to cover for its mismanagement of its dealings with New Earth Solutions Group and their funding partners (New Earth Recycling & Renewables Fund) who were supposed to come up with £23 million to build the treatment plant for the Borders.

"Perhaps publication of the censored stuff will provide an indication of who was responsible for an extremely costly four-year saga which ended in failure. Having followed this story since the contract was abandoned I am amazed there has been no investigation into what went wrong. At least Ms Agnew and her staff have 'done their bit'".

The SIC decision states: "The Commissioner finds that Scottish Borders Council failed to comply with the Environmental Information (Scotland) Regulations 2004 (the EIRs) in responding to the information request.

"The Commissioner found that the council failed to comply with regulation 5 (1) of the EIRs, by failing to make available information which it later disclosed during the investigation; was not entitled to withhold information under regulation 10 (5) (e) of the EIRs; failed to comply with regulation 13 (b) and (c) of the EIRs, by failing to provide an explanation of its decision to rely on regulation 10 (5) (e) when refusing the request".


Thursday, 27 April 2017

Mystery surrounds bamboo plantations

EWAN LAMB concludes our trilogy on investors' lost millions

The liquidator of the bankrupt Eco Resources Fund, which has cost shareholders and creditors in faraway bamboo plantations many millions of pounds, has been told the US finance company which now owns the forests may be willing to sell the assets back to ERF for $10 million.

Unfortunately the Isle of Man-based fund has only £12,555 in its coffers, and according to liquidator Gordon Wilson no-one "will be likely to invest or lend $10 million to the fund in current circumstances".

Meanwhile, a report compiled by Mr Wilson suggests confusion reigns over who actually owns the plantations in Nicaragua and South Africa, which are part of an extremely complicated business set-up.

The Eco Fund was part of the Premier Group (Isle of Man) Ltd.'s empire which also included the worthless New Earth Recycling & Renewables [Infrastructure] Fund or NERR.

The NERR organisation, now also under investigation by a different team of insolvency experts, was meant to bankroll a £23 million waste treatment facility for the Scottish Borders before the deal was abandoned in 2015, leaving the local council's strategy for garbage disposal in complete disarray.

Details of a meeting involving Mr Wilson and American businessman Troy Wiseman, founder of EcoPlanet Bamboo, which operates the plantations, have been made public for the first time. Mr Wiseman had also been an investor in Sustainable Asset Lending (SAL), believed to be the current owners of the bamboo real estate. Premier directors John Bourbon and Jamie Sutton were also present.

The report from Mr Wilson to investors, shareholders and creditors says: "Mr Wiseman opened the meeting by saying that he was attending as an inverstor in the fund and that he had no remaining executive role in or control over SAL. This was disappointing as we had believed that Mr Wiseman had control over SAL and it was on that understanding that we agreed to meet.

"For the avoidance of doubt, we still believe (based on our assessment of his conduct) that Mr Wiseman is involved with SAL as an investor and as either a controller or manager or influencer. Mr Wiseman then informed us that SAL had foreclosed on the plantation companies' loans and that he had seen stock certificates in the plantation companies in SAL's name".

Mr Wiseman was then asked to provide evidence that the foreclosure had occurred, details as to who had done what, who knew what and when this all happened. "He agreed to provide these details and Mr Sutton has been following that up under our supervision.

"We don't believe that Eco Bamboo Isle of Man or ERF ever gave permission to the plantation companies to include their shares as security for the SAL debts. This could prove to be a pivotal point if the fund is to retain or regain any interest in these plantations going forward".

Since the meeting with Mr Wiseman in January, no information has been forthcoming from him or from SAL to demonstrate or explain what has happened to the plantations or shares in the various companies, wrote Mr Wilson.

"However, on a number of occasions since then, Mr Wiseman has indicated that SAL may be willing to sell the fund its plantations back for $10 million. Mr Wiseman knows all too well that the fund does not have $10 million. It is likely that as liquidator we will formally ask Mr Wiseman to provide evidence in order that we might better explain to you all what has happened".

The report warns there are insufficient remaining liquid funds in the structure to pay for the cost of liquidation and "there are more than ample grounds to doubt that there will ever be any recovery from the bamboo plantations. We think it is unlikely that there will be any return on investment for investors or any dividend for creditors".

The Isle of Man public purse will cover reasonable liquidation costs including costs to investigate and if necessary take action against those who may be accountable for the failure of the fund, said Mr Wilson.

Monday, 24 April 2017

Beyond the Bamboo Curtain - (Part Two)

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

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

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

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

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

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

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

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

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

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

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

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

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


Saturday, 22 April 2017

Shady goings-on in the bamboo plantations!


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


Meanwhile you can read a comprehensive analysis of the trials and tribulations of ERF and the Eco Bamboo 'empire' on the Redd Monitor website at

Wednesday, 19 April 2017

May sparks Teri wrath


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Tuesday, 18 April 2017

Council prepares to award itself planning permission!


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

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

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

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

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

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

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

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

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

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

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

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

Tuesday, 11 April 2017

Loss-making Great Tapestry heading for Borders

EWAN LAMB reports

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Thursday, 6 April 2017

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Tuesday, 28 March 2017

Desperate attempts to save bankrupt fund


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Sunday, 26 March 2017

Another fine Premier mess exposed


Correspondence and court papers concerning the financial collapse of the controversial Eco Resources Fund [ERF] have revealed that action could be taken against those involved in the affairs of an entity which will cost investors and shareholders many millions of dollars.

The bankrupt ERF was managed and promoted by the same Isle of Man group which controlled the equally useless fund chosen by councillors in the Scottish Borders to bankroll a £21 million waste treatment plant to handle the region's domestic rubbish.

Liquidators are currently picking their way through the wreckage of the New Earth Recycling & Renewables [Infrastructure] Fund (NERR) following its multi-million pound crash last year.

The failure of NERR to provide the money for the Borders waste treatment project meant the facility was never built and now tens of thousands of tonnes of garbage will have to be taken out of the region in lorries for treatment elsewhere.

NERR like ERF was a lucrative earner for the individuals who ran Premier Group (Isle of Man) Ltd., the investment business which is also in the hands of liquidators with its subsidiaries in complete disarray. The two funds provided millions of pounds in fees and commissions for Premier's directors.

The ERF fund encouraged investors to sink their cash into bamboo plantations in Nicaragua and South Africa with the promise of returns of between 500% and 850% from the 'green' environmentally friendly project.

But investigative work by Gordon Wilson, receiver and liquidator of ERF since the Isle of Man courts ordered the fund to be wound up, has confirmed the worst fears of the investors.

In a letter to shareholders, Mr Wilson says he recently met Troy Wiseman, the American businessman in charge of Eco Planet Bamboo - the organisation developing the plantations - who confirmed that US-based Sustainable Asset Lending [SAL] had foreclosed on the shares in the bamboo plantation companies which were formerly owned by ERF subsidiary Eco Planet Bamboo (IOM) Ltd. That meant the fund had no remaining interest in the plantations.

Mr Wilson wrote: "Mr Wiseman indicated that the fund might be able to buy the plantations back. However no progress had been made about that and in the event the fund lacks the resources necessary to make any purchase for the indicated amount of $10 million. Accordingly other than the small balance of cash (reported to be £12,000) the fund has no assets of any realisable value."

The letter concludes: "I consider it unlikely that investors will see any return on their investment in the fund and creditors are unlikely to receive any distribution either. In light of the financial difficulties dating back almost two years I don't expect that this news will come as a surprise to you.

"I hope that through liquidation a fuller explanation of what has happened here might be forthcoming and that any necessary action against those involved n the affairs of the fund might be taken".

A great detail of background of ERF's collapse is included in the Isle of Man Financial Services Authority (IOMFSA) petition to the Manx court seeking a winding up order.

The court papers reveal that 99 of 100 management shares in ERF are held by Premier Group Distribution Inc. [PGDI], an off-shore entity based in the tax haven of British Virgin Islands.

Not Just Sheep & Rugby discovered last year that the NERR fund was controlled from the same BVI address which just happens to be the offices of law firm Mossack Fonseca who featured in the so-called Panama Papers. PGDI shareholders and beneficiaries include former directors of Premier Group and its businesses.

IOMFSA's petition gives a complete timeline of events leading up to ERF's demise. The document claimed a winding up order - it was granted by the court - was desirable to address the concerns surrounding the operation of the fund.

It states: "It is a matter of public interest and concern that Isle of Man financial institutions accepting investments should adhere to recognised standards and investors should have an appropriate degree of assurance in relation to their investments".

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".