The offshore business chosen by Scottish Borders councillors to bankroll a £21 million waste management project is now the subject of an investigation by financial regulators after the collapse of a second investment fund controlled by the company.
News of the probe into the affairs of the Premier Group (Isle of Man) Eco Resources Fund is contained in a letter to shareholders which can be read on the Channel Islands Stock Exchange website. As we reported in recent days the Fund invited deposits of cash in a venture involving several bamboo plantations in Central America and South Africa.
The fate of the Eco Resources Fund - efforts to attract new investors appears to have failed - follows the demise of Premier's New Earth Recycling & Renewables [Infrastructure] Fund (NERR) which is now in the hands of liquidators Deloutte with reports being submitted to the Isle of Man courts.
Although Premier Group's directors received millions of pounds in management and promotion fees for running the two funds, hundreds of investors seem unlikely to get any of their money back.
Scottish Borders Council clearly believed NERR could finance a much needed waste processing plant at Easter Langlee, Galashiels. But in fact cash from NERR's coffers was being used to prop up council contractors New Earth Solutions [NES] which is now in administration with millions of pounds of debt.
While NES and NERR provided the council with a string of excuses for delays to the waste management project, the local authority was squandering at least £2.4 million of public money, mainly on expensive lawyers and consultants. Eventually the entire deal was abandoned when it became clear NES and NERR could neither fund the project nor provide the necessary technology.
The latest debacle involving the problems facing the "bamboo" fund have been emerging in recent weeks, a short time after the NERR fund's liquidation.
The latest missive from Premier Group director Jamie Sutton begins: "Over the last few weeks I have spoken to a number of you, discussing the lack of liquidity affecting the Fund and the urgent need for further investment in order to continue."
No doubt readers can guess what follows. Mr Sutton continues: "Although several of you gave serious consideration to committing additional money, regrettably no firm commitments were forthcoming. As a result, the Fund board has been left with no option other than to commence the process to put the Fund into liquidation.
"You will receive formal notices about the liquidation process next week and a date will be set, most likely in early December, for the meeting to put the Fund into liquidation".
More than 3,200 investors in NERR are caught up in the liquidation of that particularly entity, and no doubt hundreds if not thousands more will be hit by this latest Premier Group financial disaster.
Mr Sutton tells the bamboo punters: "Throughout the recent past, the Board has been in regular contact with the Isle of Man Financial Supervision Authority (FSA). Today we were informed by the FSA that they have made an application to the High Court in the Isle of Man for the appointment of an inspector to fully investigate the background and events leading to the current situation".
According to the letter, the Board welcomes the appointment of the inspector and will be co-operating fully with him with regard to the investigation.
Mr Sutton then invites potential investors to get involved in "confidential discussions" in a bid to keep the Fund's subsidiary ERF Ltd. outside the liquidation process. The future of ERF and its ability to progress the plantations is entirely reliant on new funding from new investment, he warns.
The circular concludes: "The Board very much regrets this outcome for the Fund's investors and other stakeholders. However, despite concerted efforts for a considerable period of time, it has not been possible to resolve the liquidity situation and secure a future for the Fund".
It is believed some $36 million was invested in the Eco Fund which paid $3 million in fees to Premier Group and its associates in recent times.
Meanwhile Deloitte's have promised further updates on the liquidation of the NERR fund which had around £59 million invested in NES, including ownership via a solitary £1 share of New Earth Solutions (Scottish Borders) Ltd, the business specially set up in 2011 to deliver the Easter Langlee project.