A Blast from the Past
I thought, dear readers, it was high time to resurface the ineptocracy of local government in our beloved County of Shropshire, albeit it is a decade on, Omnipresent did not become aware of The Legacy Grant until 2018.; yet still hauntingly true.
The Legacy Grant (Or when is a loan not a loan, and a grant not a grant)
Background:
Shropshire Council have been subjected to an audit investigation by Shropshire Council auditors over the gift/grant/loan of £80,000 to a limited company.
The opposition leader of Shropshire Council dubbed the issue a “cock-up,” not a conspiracy.
(Sherlock Holmes he aint!)
Computer records “accidentally” vanishing into the digital abyss.
Shropshire Council missed 8 opportunities to recover the money.
Council’s own auditor pondered whether it was by accident or design.
Senior Shropshire Council officers brandishing the threat of police action towards councillors.
And the leader of the opposition at Shropshire Council clamouring for an independent inquiry.
But hey, lessons have been learned – a familiar refrain, isn’t it?
Oh, “And a number of officers involved with the project have left the Council.” So, that’s ok then.
Allow me to fill in some of the gaps, as I’ve recently received additional information that I’ll soon share with you. This information might help you fathom how this circus unfolded.
The Beginning:
Let’s journey back to the beginning with an explanation of the Legacy Grant.
So, what is a legacy grant? A somewhat enlightening definition of a legacy grant can be found in the minutes of the Finance & General Purposes Committee meeting of 3rd September 2012. It reads:
- As part of the Market Towns Regeneration project, approximately £80,000 was allocated to *** *** ****** ******** **** to construct a new stand to comply with European standards.
- However, this funding wasn’t bestowed as an outright grant. Due to financial regulations and the framework set for the MTRP, it couldn’t be granted from MTRP funds, but it could be doled out as a legacy grant.
- A legacy grant is a provision that allows an Authority to offer a loan (disguised as a grant) repaid not to the granting Authority but to a third party. Another perk is that the repayments can be used for either revenue or capital projects.
- In this case, the third party is Oswestry Town Council, which was to receive annual payments of £16,000. Members may recall that the Town Clerk brought this to our attention some time before his departure. (But as nearly half of the Town Council members were also Shropshire Councillors, it is not surprising that nothing was done to claim the money) until of course along came Omnipresent.
- Shropshire Council officers advised that the terms of reference for the Joint Economic Board should include a provision for this arrangement, and the funding should be earmarked for economic outcomes. Subject to this caveat, the repayments can be managed through the Town Council accounts.
Well, that’s about as clear as the 20mph speed limit in Wales.
So, what were these “financial regulations”?
They happened to be the regulations governing state aid concerning anti-competition issues. The Department of Innovation and Skills has thoughtfully provided us with a clear explanation of the criteria for state aid: Step 1 of the guide:
The answer to every question in this instance was a resounding YES.
- Is the assistance granted by the state or through state resources? YES
- Does the assistance give an advantage to one or more undertakings over others? YES
- Does the assistance distort or have the potential to distort competition? YES
- Does the assistance affect trade between Member States? YES
So, the £80k couldn’t be a grant because that would have constituted state aid. It couldn’t have been an interest-free loan either, as that would also have been considered state aid, and thus ILLEGAL.
A police investigation was also instigated into the matter, but this was abruptly shut down – I wonder why? It got to close to certain people perhaps?
And so, when is a grant not a grant, and when is a loan not a loan.
Yes, you’ve guessed it!
When it’s a “LEGACY GRANT,” which in this case was used as a tool to sidestep state aid regulations. That council officers, who are usually so diligent in pointing out taxpayers’ shortcomings, actively sought ways to bypass regulations in place for very good reasons, I’ll leave to others to judge.
However, despite the dubious legality of this grant/loan, it transpired, and the terms were that it should be repaid through annual sums of £16k per year over 5 years to Oswestry Town Council.
If these repayments had been made, we wouldn’t be here, and no one would be the wiser. But they weren’t made, so here we are, once again.
It has been said that Oswestry Town Council did not diligently pursue the return of the money, but that’s incorrect. They did, at least up to a point, and I have documentary evidence to prove it.
Emails:
I possess an email from an OTC officer to an OTC councillor dated 27th February 2013 that states:
“As we are nearing the end of the year and there is no sign of the *** loan repayment being made to us, please could you advise who was the contact at Shropshire Council? Or shall I just invoice **** ****** at ***? Was the amount £16,000, please?”
On the same day, another email from an OTC councillor to an SC officer inquired:
“Can I have some insight into this, please?”
Another email on 11th September 2013 from an OTC councillor to an OTC officer asked:
“With regard to the *** loan, can you provide me with information on the loan? When were payments due? When were invoices sent? How many reminders were sent and when? When was the first payment made? How much is currently outstanding, and how late is the payment? Where are we sending the invoices?”
There’s an email from the same day from an OTC councillor to the former leader of SC:
“I have had information from Roger about the *** loan, and the situation seems to be more serious than I indicated last night. The note to the accounts that I read out, which seemed to indicate that the amount outstanding at the moment was £8,000, was actually saying something quite different – i.e., that £8,000 of the amount outstanding had been allocated against a different budget heading to balance the amount of money that OTC has provided to Start Up. According to Joe Bubb, who negotiated the deal, £80,000 is due in 5 annual instalments due annually in January (i.e. £16,000 per year). The first invoice was sent on 13th May for £16,000. This was due for payment on 13th June, now 4 months overdue. 2 reminders have been sent on 15th June & 1st August. Invoices addressed to *** ****** ******** ****, *** *****, ***** Road, Oswestry SY11 ***. This bit was commercially sensitive so has been REDACTED by the author. It doesn’t mean it’s not true though.
No payments have been received by us. £16,000 is outstanding this year. If the first repayment was due in January, then we are already 8 months overdue.”
Excerpt from auditor’s report 9th April 2018:
“Yet, for reasons undefined, a process to facilitate receipt of the funds has not been raised, implemented or followed. It is unclear why this occurred…”
Let me shed some light on the mystery of “It is unclear why this occurred.”
Email from an OTC officer to an OTC councillor 16th October 2013:
“Keith also rang me and said take no action; it is going to be repaid, and he is sorting it. Mark Pembleton also rang me just before 5 yesterday and read the clause signed by *** ******** of *** to me. That clearly states the repayment amounts and dates. He is now sorting it, so it seems.”
So, an order was given, and further demands for payment effectively ceased. The then leader of Shropshire Council said take no action, as he was going to sort it; but he didn’t sort it, did he? He left it as a legacy. (if you will pardon the pun)
Consequently, Shropshire Council sued *** ****** Ltd through the County Court until, on the brink of the trial in Birmingham County Court, Shropshire Council and *** ****** Ltd reached an agreement. What was this agreement? Who knows? Perhaps it was “accidentally deleted” by Shropshire Council, like so many documents..
The Truth of the matter?
Both Shropshire Council and a limited company found themselves entangled in something they shouldn’t have, and instead of doing the right thing from the start, they attempted the “cover-up” route, a path destined to fail.
This route was always doomed, just like it failed countless times before, and involving individuals much more competent and intelligent than those entangled in this fiasco.
Some of them are still “in post,” while others have moved on to new pastures, no doubt to perform more wonders.
The accountancy term for the dubious transfer of money is “embezzlement.” Embezzlement refers to the misappropriation or theft of funds that have been entrusted to someone’s care, often within an organization or company. It involves the unauthorized transfer or use of funds for personal gain, and it is a serious financial crime. So, was the transfer of £8,000 embezzlement, or as the Council Opposition Leader said at the time, “a cock-up” by incompetent people too frightened to say no to their Leader!
P.S The Leader in question resigned shortly after and gained employment with a company with an association with the Legacy grant recipient company.
“Oh, what a tangled web we weave, when first we practice to deceive!“
The Legacy Grant fiasco was laid bare by Omnipresent. Please subscribe for more revelations about those who take liberties with our money.
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