Tuesday, 6 September 2016

Mystery deepens around 'irrelevant' technology

DOUGLAS SHEPHERD presents part two of our latest waste contract trilogy

The 'advanced' thermal technology, dismissed as irrelevant by external auditors who scrutinised Scottish Borders Council's disastrous waste management contract in 2015 following losses of £2.4 million enjoyed a much more elevated status when councillors sanctioned the system in 2012, according to a report which was never meant for publication.

As we reported last week, accountants KPMG who audited the local authority's books concluded their investigations into the collapse of the £80 million contract with New Earth Solutions by stating: "The technology which has subsequently not been able to be implemented was not core to the initial agreement with NES. The basis of award was not reliant upon delivery of the technology".

Such a conclusion might cause some to wonder how the planned £21 million facility at Easter Langlee for treating 40,000 tonnes of municipal rubbish annually could have worked if the so-called New Earth Advanced Technology (NEAT) "was not core" to the project.

But the NEAT system, which turned out to be useless and had still not been certified by the Scottish Environment Protection Agency [SEPA] by early 2015, certainly featured in the private report to councillors which persuaded them to include it in a contract variation in October 2012.

The report states specifically: "The proposed facility will use two technologies to achieve the outcome of the project. The second element of technology to be delivered was a form of Energy from Waste technology specifically known as Advanced Thermal Conversion.

"The technology would ensure that the facility is self-sufficient in terms of energy consumption but would also export up to 3MW of electricity to the National Grid".

Council members were told: "Agree to sign the Deed of Variation (to include thermal technology). If this recommended option is chosen then the project will continue and deliver the previously agreed objectives (legislatively and financially) by delivering an integrated waste treatment facility for the service commencement date of March 2015".

In those circumstances it is difficult to understand how KPMG and their paymasters Audit Scotland were able to dismiss the technology as irrelevant when the entire project together with the 24-year contract went pear-shaped.

The subsequent financial collapse of the New Earth Group and the bankruptcy of the firm chosen to fund Easter Langlee, New Earth Recycling & Renewables [Infrastructure] PLC or NERR, simply compounds the mystery.

A newly published report from liquidators appointed to NERR earlier this year may also be of interest to Scotland's public finance watchdog, and to Scottish Borders Council. There are some alarming statistics within the 12-page document which confirms none of the investors who were naïve enough to place money in the offshore Fund will see a return.

As Not Just Sheep & Rugby reported some time ago, NERR was run from offices on the Isle of Man where directors of Premier Group were able to collect millions of pounds in fees over four years while SBC waited for the Easter Langlee funding to materialise. But it never did.

And as we also revealed, the NERR entity was ultimately controlled by Premier Group Distribution Inc., operating from Panamanian law firm Mossack Fonseca's office in the tax haven of British Virgin Islands.

According to the liquidators' report on NERR potential options for recovery of shareholders/ investors cash could include actions for misfeasance, fraudulent trading, or fraudulent disposal or concealment of assets.

The bottom line is that the NERR Fund on which delivery of the Borders' £21 million waste treatment facility relied is expected to yield just £465,000 for unsecured creditors before the costs of the liquidation process.

Many of the debts, including multi-million pound loans made to the soon to be dissolved New Earth Solutions Group, are irrecoverable.

Of course Scottish Borders Council's dealings with these bust organisations - the report shows NERR held a £1 million equity stake in New Earth Solutions (Scottish Borders) - and the subsequent write off of £2.4 million of public money do not warrant any kind of official investigation.

COMING NEXT: SEPA's issues with that useless technology

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