Wednesday, 25 May 2016

Taxpayers lost twice as much as council's contractor


The disastrous waste management contract between Scottish Borders Council and New Earth Solutions Group Ltd [NES] cost hard-pressed local taxpayers twice as much as the losses sustained by the company's shareholders, Not Just Sheep & Rugby can reveal.

By the time the 24-year deal was terminated in February 2015, Borders councillors were responsible for the loss of at least £2.4 million in a catastrophic venture which was to produce no material benefit for households in the area.

Now, newly published accounts for New Earth Solutions (Scottish Borders) Ltd, the firm with just £2 of share capital which was specially formed to develop a £21 million "state-of-the-art" waste treatment centre at Easter Langlee, Galashiels has, for the first time, disclosed how much the contractors lost in the fiasco.

According to a director's report and financial statements for the year up to January 31 2015, expenditure racked up by NES amounted to £1,287,247.

The report explains: "In March 2015 the contract with Scottish Borders Council was terminated. The assets of the company at the time represented the value of securing that contract and as a consequence were impaired".

The accounts do not include a breakdown of how the substantial sum was spent. But like their former local authority partners, the NES Group seem content to write off their losses and move on. The combined deficit resulting from the incompetence and failures of the contract partners now exceeds £3.5 million.

New Earth Solutions (Scottish Borders) Ltd - it retains its active status well over a year after the council and their contractors parted company - is now wholly owned by the Isle of Man-based New Earth Recycling & Renewables Infrastructure Fund [NERR] which in turn is controlled by managing shareholders registered in the tax haven of British Virgin Islands.

The 15-page report detailing the accounts shows that at the year end loan notes totaling £1,300,959 were issued by NES (Scottish Borders) Ltd. to NERR "which has significant influence and provides finance to the company". A shareholders' deficit of £1,291,352 is also recorded.

A contribution from the Group's auditors BDO repeats warnings given in the Group's accounts which have also been published this week. BDO say: "The Group's external financing facilities are currently being reviewed and extended on a monthly basis, and the facilities need to be refinanced."

If a European developer who is currently negotiating to take over the Group's debts which total in the region of £60 million cannot cut a deal then the directors of NES may have no option but to call in administrators.

The debts include over £30 million owed to the Nord and Co-op banks. These debts are secured over all the assets held by NES - five waste treatment plants in England - as well as waste management contracts which the Group has with local authorities in Kent, Bournemouth, Gloucestershire, Leicestershire and the West of England.

No comments:

Post a Comment