A disturbing new discovery....

by EWAN LAMB

An investigation by Not Just Sheep & Rugby has uncovered another mysterious chapter in the story of the Scottish Borders' failed £23 million waste treatment project following the release of 'commercially confidential' files on the orders of the Scottish Information Commissioner.

As we have reported over the last few days, the recently published paperwork showed Scottish Borders Council's deal with waste management contractors New Earth Solutions Group (NESG) was in deep trouble during the second half of 2013.

Project reports and emails from senior officers confirmed troubling issues had been encountered on two fronts - technology and finance.

There was even mention of the scheme to construct an Advanced Thermal Treatment (ATT) facility at Easter Langlee, Galashiels incorporating New Earth's self-styled NEAT technology having to be cancelled altogether.

The development of the NEAT system was proving troublesome while potential funders New Earth Recycling & Renewables Ltd (NERR) - managed by Premier Group (Isle of Man) - could not bridge the cash gap.

As an email written by a project team member warned: "NERR's cash balances stood at £5.484 million on August 20 (2013), down from £7.968 million on July 19 ---- the gap between the cash funds at NERR's disposal and the amount actually required to deliver the (Borders) project (£23 million) has widened over the past month".

By November 2013 NESG had advised there would be another two-year delay at Easter Langlee with construction of the ATT facility unable to start until June 2016.

A 120-hour technology trial of the NEAT system which started on November 17 had to be stopped after just five hours, and the plant had to be shut down to prevent significant damage. This event prompted a council appointed consultant to comment: "This may have been the final incident that convinced NES to come clean and admit that there was no chance of implementing NEAT on a commercial scale in 2014".

However, those engaged in the procurement of Project Easter Langlee appear to have been living in a parallel universe to that inhabited by directors and managers of the NERR fund, and by the top brass at NESG, our investigations have found.

A lengthy press statement issued on the Isle of Man by Premier, and dated November 28 2013, boasted that net assets of NERR "are now around £200 million". But that was not the only claim being made by those at the helm.

According to the news release NEAT was "patented and fully operational", and the company's 'stat-of-the-art' energy recovery facility in Avonmouth, Bristol could process 120,000 tonnes of waste derived fuel each year and exported enough electricity for around 25,000 homes.

The highly positive spin on the performance of NERR and of NEAT was part of a strategy leading to a "possible Initial Public Offering [IPO] on the London stock exchange to support ambitious UK and overseas growth plans".

These must have been staggering claims in light of what was happening with the Scottish Borders venture. But there is no indication that these fanciful plans were challenged or questioned by those in charge at SBC.

 Premier's statement declared: "Launched just over 5 years ago amidst the worst global financial crisis this century, the New Earth fund range have seen strong demand both in the UK and internationally such that net assets of New Earth Renewables & Recycling (Infrastructure) plc, the master holding fund, are now around £200 million.

"The fund’s investors have seen the value of their shares increase by nearly 84% in the original Sterling Sub-Fund of the Premier Investment Opportunities Fund Protected Cell Company plc, with very little volatility along the way, whilst even the more recent investors are looking at good returns over 6 months of nearly +6% in the same share class."

NERR investors were barred from making withdrawals from the fund from 2013 onward and the investment entity became totally insolvent in 2016 with more than 3,200 individuals warned they could expect to lose everything. And in 2013 NESG was already heavily in debt to banks and to NERR itself.

None of that prevented NERR director David Whitaker telling potential investors: "The successful conclusion of this project (IPO) will help New Earth make the step change required to take it on to the next level and, very importantly for the shareholders, should lead to a successful outcome for them too."

And Head of Premier, Mike Richardson provided this quotation:“We are really pleased that New Earth feel that the time is now right to make their move. Given the recent performance of the UK economy and stock markets, including a very successful high profile IPO, we are fully behind the decision and hope it will be as beneficial for investors in the funds as it will be for the New Earth themselves.”

A number of publications appear to have taken company statements at face value, and a clutch of positive articles were published, including a feature in the Financial Times.

Commenting on the future of New Earth to online trade magazine Let's Recycle, company chairman Bill Riddle said: New Earth started life as a composting business but is now firmly focused on residual waste treatment, thermal technology development and renewable energy generation. The NEAT technology offers scope for us to become not just a national company, but an international one."

Unfortunately the Stock Market flotation never happened, the finance to develop Easter Langlee was never in place and the NEAT technology continues to cause problems at Avonmouth to this day.