Waltham Forest Business Board

Information from Nick Tiratsoo

Another interesting example of the way that LBWF now conducts itself.

There are two issues.

One is the morphing of the Waltham Forest Business Board into 'Waltham Forest Business Board of North London Business', and then the Argall BID.

The other is the peppercorn rent.

Because I know for a fact that in other cases where LBWF is leasing assets, but this time to charities, the rent is definitely not peppercorn! So why is Mr Polledri treated differently?

NT

Dear Mr Tiratsoo, 

Freedom of Information Request 

Thank you for your request for information received by the Council on 12 June 2014. 

In your request, you asked for the following information: 

‘Thank you for your letter (FOI Ref 2014-0227). 

The documents that you guide me towards show that on 14 June 2011 the Cabinet 

agreed to lease the Argall Avenue car parks 'to BID' (Appendix B, p.1) - I presume the 

Argall BID Co. In fact, on 26 February 2013, the Council leased the Argall Avenue car 

parks not to 'BID' but to 'Waltham Forest Business Board of North London Business'. 

1. Please will you state where the decision to transfer the Argall Ave car parks to 

'Waltham Forest Business Board of North London Business' is documented in 

Council records, i.e. which Council officer or committee took the decision, and 

where that decision is recorded, i.e. the audit trail of the decision 

2. I understand that the Council is leasing the Argall Avenue car parks to an entity 

called 'Waltham Forest Business Board of North London Business'. 

 Please will you state whether under the terms of this agreement 'Waltham 

Forest Business Board of North London Business' 

(a) is granted any kind of rent free period; and 

(b) whether it pays the Council no rent, a peppercorn rent, or a greater than 

peppercorn rent? 

In response, I can confirm that the London Borough of Waltham Forest holds the 

requested information and would advise the following: 

1. As the Waltham Forest Business Board of North London Business is part of the 

“Argall BID Organisation/Board”, there was no requirement to refer the matter 

back to Cabinet following its decision of the 14 June 2011. 

2. The Waltham Forest Business Board of North London Business has not been 

granted any rent free period and pays this Council a peppercorn rent.  

I trust that the above satisfies your enquiry. If you have any queries about this letter, 

please contact me. Please remember to quote the reference number above in any 

future communications. 

Under the Freedom of Information Act 2000, you have the right to complain about the 

Council’s response to your request for information. If you wish to pursue such a 

complaint, please do so within 28 days from the date of this letter and ask for a review 

of the Council’s decision. Please write to: The Information Officer, Learning from 

Complaints Team, Room 104, Waltham Forest Town Hall, Walthamstow E17 4JF, or 

email information.officer@walthamforest.gov.uk. Please mark your request clearly as 

“Request for Review”. 

If after receiving a response to the review, you remain dissatisfied with the Council’s 

response, you have the right to complain to the Information Commissioner. Further 

information can be obtained via the Information Commissioner’s helpline 0303 123 

1113 or their website at: 

http://www.ico.gov.uk/complaints/freedom_of_information.aspx 

Yours sincerely 

Shifa Mustafa 

Deputy Chief Executive 

15 July 2014

Dear Mr. Esom,

Council statements about the E11 BID Co.

I am concerned about statements that have been emanating from the Council about the E11 BID Co., since on occasion these appear to be either significantly wanting in the face of the established facts, or unsubstantiated.

I attach an appendix, which documents four of the most noteworthy examples.

I believe that by acting in this way, the Council has fallen short of the Nolan principles - not least the requirement that ‘holders of public office should be as open as possible about all the decisions and actions that they take…[and] should give reasons for their decisions and restrict information only when the wider public interest clearly demands’.

Accordingly, I wish to make a formal complaint to you about each of the quoted instances.

As this is a serious matter, and one of considerable public interest, I look forward to your response forthwith.

Yours sincerely,

Nick Tiratsoo

Appendix: Council statements abut the E11 BID Co. – claims and reality

1. The Council and the E11 BID Co.’s debts and near insolvency

1.1. The Council’s claim

One of the Council’s fundamental claims is that it found out about the E11 BID Co.’s chronic indebtedness and near insolvency only relatively recently, and therefore cannot be held responsible for what transpired beforehand.

This claim was first made at a public meeting on 30 October 2013, when Shifa Mustafa (Deputy Chief Executive) insisted: ‘we did not know there was a problem until June [2013] when the undisclosed debts were revealed to us, we cannot act on things we don’t know about’.

Subsequently, Council statements have told a broadly similar story, though with surprising and unexplained variation of detail. Thus, while one Cabinet paper of December 2013 reiterates that ‘In June 2013, during negotiations with the [E11 BID] Company…the Council obtained information from the Company relating to previously undisclosed debts’, a second of March 2014 refers to ‘the non-disclosure by the Company of its historic debt at the time of the BID renewal’, a comment that by implication dates the moment of alleged revelation not to June 2013, but to October 2012, a full eight months beforehand.

1.2 The evidence

It is worth underlining at the outset that the Council has never elaborated on what the E11 BID Co.’s ‘undisclosed debts’ consisted of; while at the public meeting already referred to, the E11 BID Co.’s longstanding chair, Fawaad Sheikh, flatly contradicted Ms. Mustafa’s allegation, stating ‘it is unfair of the Council to say they were unaware of the debts that have been mounting’, a view that is also endorsed by the Co.’s then finance director.

However, more significant is what emerges from two sets of written sources.

(a) The E11 BID Co. 2009-10 accounts

Contrary to its responsibilities under the 2004 Regulations, the Council rarely bothered to ask the E11 BID Co. for information about its balance sheet.

However, the one document of this type that the Council does admit to possessing is a copy of the E11 BID Co.’s ‘Directors’ Report and Financial Statements for the Year ended 30 June 2010’, and this is surely significant.

For what these accounts reveal is that over FY 2009-10, the E11 BID Co. lost £103,169, ended up owing creditors £141,144, and had negative net assets of no less than £59,757 – equivalent to approximately one year’s worth of levy income.

Thus, in general terms, the Council was well aware long before 2013 that the E11 BID Co. was prone to substantial and potentially crippling debts.

(b) Letters, e-mails, and briefings

Between 2010 and late 2012, letters, e-mails and briefings about the E11 BID Co.’s problems were sent or copied to various interested parties, encompassing amongst others Clyde Loakes (E11 BID Co. director, and Deputy Leader of the Council); Michael Polledri (Chair of the Waltham Forest Business Board, the body sanctioned by the Council to guide and assist the E11 BID Co.); Councillors Jenny Gray (E11 BID Co. director), Marie Pye (Cabinet member), and Mark Rusling (junior Cabinet portfolio holder for economic development); and Gary Ince (an employee of North London Ltd., and a close colleague of Michael Polledri).

What is noteworthy about this material is that although it ranged across a variety of issues, it virtually always made reference to the E11 BID Co.’s troubling finances.

Indeed, several addressees well understood the issues at hand. For example, in early 2012 Michael Polledri advised: ‘It is a very difficult situation…my very strong recommendation…[is to] convene a special meeting of directors and appoint an independent firm of accountants (perhaps the auditors Barnes Rolfe) to carry out a forensic audit on the entire activities of the company since its formation’.

More significantly still, during June 2012 Cllr. Pye was informed specifically in writing about the E11 BID Co.’s enormous debts, which now amounted to no less than £103,169, and went out of her way to claim in response that she was taking the requisite action, writing:

‘As you are raising some serious operational issues about one of our key partners in the Borough…I am referring this through to a senior officer to look into and to provide myself and Cllr. Mark Rusling…with appropriate information’.

1.3 Conclusion

The Council’s assertion that it found out about the E11 BID Co.’s ‘historic debts’ only in mid-to-late 2013 does not stand up to scrutiny. In 2010, the Council knew that the E11 BID Co. owed substantial sums to creditors, and had large negative net assets. Subsequently, a range of senior Councillors and local business figures were informed of the details of the E11 BID Co.’s financial problems, including its debts. If Cllr. Pye is to be believed, in June 2012 a senior officer was also explicitly apprised of the most significant facts.

Thus, the Council’s plea that the negotiations of 2013 revealed something new is unsustainable, not only directly refuted by both the chair and finance director of the E11 BID Co., but also contradicted by the documentary evidence.

Why the Council apparently was so dilatory in responding to the alarming information that was placed before it, is, of course, a different question, though one that in the end will demand to be answered, too.

2. The Council and concerns about the E11 BID Co.’s governance

2.1 The Council’s claim

The Council claims that the negotiations with E11 BID Co. in mid-2013 also  ‘gave rise to significant concerns regarding [the E11 BID] Company governance.’

2.2. The evidence

This claim is rather vague, and therefore difficult to assess. However, what is clear is that the E11 BID Co.’s governance arrangements had attracted open opprobrium from long before mid-2013, and indeed the criticisms of them were so wide ranging and well documented that it is difficult to conceive of anything new that subsequently might have emerged, in the way that the Council claims.

Letters, e-mails and briefings of the type already cited detailed everything from the fact that the E11 BID Co. had not submitted its returns to Companies House on time, to the lack of transparency in the organisation, to the confusion about the relationship between the E11 BID Co. and the Leytonstone Business Forum CIC, to the slapdash internal accountancy practices being used, to the embarrassment of the company’s two adverse County Court Judgments.

In fact, the E11 BID Co.’s governance problems were considered to be so serious from 2011 onwards that the Waltham Forest Business Board arranged that (a) since the required annual company audit had not occurred, Barnes Roffe be paid to complete one; and (b) Gary Ince be employed to help sort out some of the most pressing issues.

However, the upshot of these actions, far from clearing the air, only reinforced the sense of chaos. In a letter accompanying the results of the 2011 audit, Barnes Roffe noted, amongst other things that:

·      ‘accounting records were not kept in an orderly or logical manner’;

·      ‘the company was not writing up its accounting records’;

·      ‘the company has employees but does not have a payroll scheme registered with H.M. Revenue & Customs’;

·      ‘income tax and national insurance were being deducted from employee’s wages but were not being paid over to HMRC’;

·      ‘Mr. Fawaad Shaikh…is the sole cheque signatory and is able to authorise electronic payments on his own’;

·      cash payments of at least £18,000 had been made but could not be reconciled ‘due to the lack of a petty cash book’; and

·      the company’s shareholder register was out of date.

Meanwhile, Gary Ince clearly found the scale of the issues facing him very taxing, and having attended several Board meetings, was moved in July 2012 to suggest both that North London Business might need to ‘take on the interim management of the E11 BID company’, and that Cllr. Jenny Gray  ‘be asked to step down from the board’ on the basis that ‘her directorship presents her with a conflict of interest…[and] in addition encourages a dependency culture within the board’.

2.3 Conclusion

The possibility that the Council made some fresh discovery about the E11 BID Co.’s governance in mid-2013 is very unlikely. Well-evidenced and serious concerns about how the E11 BID Co. was operating had been communicated to Councillors and Michael Polledri from 2010 onwards, and the latter, at least, took them extremely seriously. Thus, at best any fresh revelation in mid-2013 would have merely reinforced what was already well know – that the E11 BID Co.’s governance arrangements had for some time fallen far below the standard normally expected.

3. The Council and contracts

3.1. The Council’s claim

From 2009, the Council made payments worth £150,000 to the E11 Bid Co. from its portion of the government’s Local Authority Business Growth Incentive (LABGI) scheme, with the largest portion (for reasons that remain unexplained) routed via the Waltham Forest Business Board’s operating arm, the Waltham Forest Business CIC.

In a paper presented to Cabinet dated 8 December 2009, which dealt in detail with the allocation of the LABGI funding, Shifa Mustafa (then Director of Environment and Regeneration) stated:

3.2 The Waltham Forest Business Board will manage the spend of the grant themselves to deliver benefits to the local business community.

 

3.3 The Authority will enter into contract with the Waltham Forest Business Board for the administration of funds.

The Cabinet agreed Ms. Mustafa’s paper, and without any modification.

3.2 The evidence

On 7 November 2013, Nick Tiratsoo asked the Council under the FIA: ‘In relation to the substantial monies that LBWF has paid over on a regular basis to the Waltham Forest Business CIC since 2009-10, please will you forward copies of the contracts that were involved?’.

On 5 December 2013, the Council answered: ‘I can confirm that the Council does not hold the information requested.’

On 19 March 2014, Mr. Tiratsoo wrote to Ms. Mustafa, and asked her directly for a copy of the contract referred to in her Cabinet paper at point 3.3 (reproduced above).

Treating this as an FIA inquiry, on 16 April 2014, the Council answered: ‘In response, I can confirm that the Council does not hold the information requested in recorded form’.

3.3 Conclusion

Ms. Mustafa’s Cabinet paper unambiguously stated that the Council would ‘enter into contract’ with the Waltham Forest Business Board for the administration of LABGI funds. The Council is unable to produce this contract. At no time has the Council stated that the document is mislaid or lost.

4. The Council and monitoring

4.1. The Council’s claim

In a letter to Nick Tiratsoo dated 23 January 2014, Shifa Mustafa stated that ‘over the lifetime of the E11 BID Co.’, the Council had paid it £258,247, and added: ‘All payments were monitored to ensure that the services agreed to were delivered.’

4.2 The Evidence

On 23 January 2014, Mr. Tiratsoo asked the Council under the FIA: ‘In a letter to me of 23 January 2014, Ms. Mustafa asserts re the LBWF payments to the E11 BID Co.: “All payments were monitored to ensure that the services agreed to were delivered”. Please will you forward evidence of monitoring that substantiates this assertion?’.

On 18 March 2014, the Council answered: ‘In response, I can confirm that the Council does not hold the information requested in recorded form’.

4.3 Conclusion

Ms. Mustafa’s statement about monitoring is straightforward, and without any qualification. The Council cannot produce the evidence to substantiate it. At no time has the Council stated that such evidence is mislaid or lost.