Calls for LOCAL control of Common Good funds

EWAN LAMB continues our coverage of a burning Borders issue

A group of "campaigners" from the Scottish Borders have urged Scotland's Parliamentarians to place the administration and management of Common Good funds in the hands of the townsfolk who are supposed to benefit from the assets and end the current regime of 'remote control' by large local authorities.

The Scottish Parliament's Local Government and Communities Committee is looking at the current legislation surrounding the ancient funds to see whether it requires tightening up or strengthening. And an invitation calling for written submissions must have left the committee members in no doubt that changes are needed as a matter of urgency.

Not Just Sheep & Rugby has already reported on contributions from Hawick Callants Club, and from Derick Tait, a former chairman of Future Hawick.

That organisation has lodged its own submission which is as hard-hitting as the rest.

Future Hawick has told the committee:"The definition of what is and what is not common good is all too often open to misrepresentation and misinterpretation.  Greater clarity is required and the rules need to be obeyed as common good property needs to be properly administered for the community it serves.

"The recent compilation of assets lists has clearly demonstrated a desertion of duty in this respect by local authorities, many of whom tend to regard common goods as a nuisance to their administration.  While attempts to address this issue have been made as a result of Scottish Government initiatives, the delays which have occurred in compilation are a sign of lack of proper record keeping.  All too often, administration of common good funds has been treated by local authorities as a right rather than an obligation, and to suit the ends of the local authority rather than the community.

"The administration of common goods has become remote from the communities they are supposed to serve.Often, councillors who have no connection with a particular common good are responsible for its administration and have no knowledge of community requirements.  In the Scottish Borders, all councillors are de facto trustees of all common goods and in effect control their administration. 

"While local sub-committees are appointed for each common good, final decisions rest with the full council.  This is not a sustainable situation, and there is a need for greater devolution of management to the communities the common goods serve.  More effective and dedicated management would be attained through the establishment of local committees comprising members of community councils and representatives of local civic and cultural organisations, all with full voting rights.  At present the situation where community councillors can sit and speak, but not vote, on common good committees is anathema to the democratic process."

Former Hawick councillor Andrew Farquhar is equally forthright in his submission.

He writes:"It is unfortunate that the legislation at that time did not allow for some form of local democratic administration to be put in place within the Burghs that owned them. Recent consultation has confirmed that some authorities view Common Goods as an inefficient administrative burden and are seen as diverting resources from the work done by them in the expanding role of delivering local services in partnership with communities.

"Managing Common Good assets is understandably low in the list of council priorities and has not been without controversy. The importance can be measured in local terms however because in Hawick for 2013/14 the net assets are shown to be £3.061 million with a deficit for the year of £115,000. Common Good assets have not fared well under Council stewardship due to councils having to do more with less. Administering the Common Good is low down in their list of priorities. E.g. Progress made with registers of assets!"

Committee hears Common Good mismanagement allegations

DOUG COLLIE reports on disturbing claims in Hawick submissions

A SET of written submissions to the Scottish Parliament's Local Government & Communities Committee contains evidence of alleged mismanagement of the country's network of Common Good funds including poor record keeping, and valuable assets having disappeared or been misappropriated by councils.

Members of the committee are currently investigating the status of scores of Common Good funds which have been in existence for centuries, and should now be worth hundreds of millions of pounds.

The MSPs will determine whether changes in ancient statutes are necessary to protect the funds from further decline and to ensure they achieve their full financial potential.

Not Just Sheep & Rugby has reported in the past on the poor investment returns being chalked up by funds in the Scottish Borders compared to a neighbouring common entity in Berwick-on-Tweed.

The Borders funds have been combined into a single organisation with investment managers appointed to look after each town's interests. But complaints persist that the funds continue to under perform.

As part of its investigation, the Holyrood committee issued a call for written submissions which have been published. And this week members started taking evidence from experienced Common Good witnesses, including Dr Lindsay Neil, of Selkirk, a regular critic of how his town's fund has been run by Scottish Borders Council.

A number of the most critical and hard-hitting submissions have come from Hawick which has a Common Good fund worth in excess of £3 million. The fund includes farmland, woods, buildings and movable assets which have recently been comprehensively listed for the first time in ages.

In their written contribution members of Hawick Callants Club have told the committee: "Many of the common goods have been merged by these larger councils and the loss of local knowledge has generally resulted in inadequate control over the goods. The Scottish Government’s instruction to Local Government to compile lists of common good assets has exposed the failure to maintain accurate records.

"Hawick Callants Club have recently been instrumental in raising the issues of omission of Moveable Assets in the Hawick Common Good Fund. This was directly as a result of the Hawick Councillors insisting that Scottish Borders Council inform Hawick civic groups, including this Club, of items they had recorded on the Moveable Assets list."

The Club says it immediately identified a significant number of assets missing from the list and after further investigation noted numerous further omissions although there were conflicting views of what was common good and what was not. Numerous townsfolk had donated to the ‘town’ thinking they were going to the common good, but the council had argued that they were donated to a museum and therefore were‘council’ property.

"These donations need to be assessed to ensure the correct recipient is identified", add the club. A club member who held a senior position in the previous organisation, Roxburgh District Council, maintained that a full list of all fixed and movable assets of Hawick Common Good Fund had been prepared at the end of the District Council in 1996, but SBC were unable to find this list and others that had been mentioned to them.

"This is a prime example of a remote organisation failing to keep accurate records of local assets. Very recently another club member identified an area in Hawick where potential movable common good assets are stored and these are now being checked. At the moment, unfortunately, due to the way SBC is structured, any actions taken by the sub-committee can be overturned by councillors from other wards. This arrangement totally defeats the whole purpose of common good being managed locally and leaves the funds at the mercy of someone who is not interested in the local community."

Local man Derick Tait - a former chairman of Future Hawick -  had some equally strong and sensible things to say in his submission.

Mr Tait writes: "Common Goods were once an important specific part of local community culture, managed by Town Councils and the like, which because of their dedicated specialist knowledge, were able to manage and disburse their obligations in that respect conscientiously, expediently, and appropriately.

"Sadly, as local government has become bigger (but not better), management of individual common goods has merged and passed into the trusteeship of those who neither appreciate their significance and importance to local communities, nor care particularly about their management. In recent years, I personally have been aware of instances of failure to manage common goods properly in three towns, principally because of lack of local knowledge.

"There is no doubt that the edict from the Scottish Government to Local Authorities to compile lists of common good assets opened several cans of worms, with delay upon delay in reporting entirely due to the failure to maintain proper records. In Hawick, that list has only now been completed, completion only being achieved thanks to the assistance of several civic groups in the town.

"Part of the problem with incomplete records is that the intentions of the original donors may not have been properly interpreted. Financial assets present their own problem in that these are very often swallowed up, often without trace, into Council coffers. Indeed, I suspect that if all common goods asked for their monies back simultaneously it would spell financial disaster for many local authorities. The merging and management of “joint” common good funds into single investment portfolios clouds the issues of management fees charged and apportionment of dividends (and losses).

"On one occasion I even heard local council talk of a proposal to allow borrowing in excess of investment from such joint portfolios. Fortunately, those with an interest and knowledge prevailed. Common goods are a diverse subject and have been the subject of diverse management over the years. Many have been frittered away or spent to suit council budgets with little reaction from the communities involved. 

"However in towns with a strong sense of community and appreciation of custom and tradition, common goods are a precious commodity to be jealously guarded not by sentiment, but by structure. Politicians ignorant of such structure are neither qualified, nor able, to analyse the present or shape the future. 

"As local government becomes less local, and the pen grows ever mightier than the sword, the intensity of the community fight to protect its rights and common should not diminish. Management should be devolved to appropriate civic bodies whose trustees are town dedicated councillors, community councillors, and representatives of appropriate local organisations."

TO BE CONTINUED....

SBC contractors all washed up

EXCLUSIVE by DOUGLAS SHEPHERD

The dissolution of the insolvent New Earth Solutions Group - the waste management contractor hand-picked by councillors in the Scottish Borders for a "ground-breaking" treatment project - may herald the end of a dark chapter in the area's local government history.

A decision by the Group's administrators Duff & Phelps to end their involvement with NESG has been published on the Companies House website, indicating it is intended to conclude the administration by way of dissolution.

New Earth's debt mountain together with their failure to deliver the urgently needed £23 million treatment facility for Scottish Borders at Galashiels is probably how the bankrupt firm will be best remembered.

But the role of elected members on Scottish Borders Council in a scandal which saw £2.4 million of taxpayers' money squandered (mainly on expensive consultants) for absolutely no return will not be forgotten either.

Their decision to sanction a completely unproven brand of technology, and to rely on an offshore investment fund - New Earth Recycling & Renewables (NERR) - to come up with the cash for the scheme proved catastrophic.

Unfortunately no-one will be held to account thanks to the lack of interest in the debacle by Audit Scotland, the public spending watchdog which allowed SBC to write off their losses without offering a public statement outlining the factors behind their mismanagement of public funds..

The Final Progress Report to NESG creditors outlines the various debts owed by the Group which appears to have been insolvent long before Borders council pulled the plug on a 24-year contract.

Even the Co-op Bank, a secured creditor owed £41.8 million, has not been reimbursed in full because of "insufficient realisation" to pay.

And although NESG and NERR were inter-linked, the contractors owed the Isle of Man-based fund £39 million at the time of the administration process being instigated for quasi-equity funding. The report states: "There is no prospect of any distribution being made to NERR under its security".

Dozens of unsecured creditors who were owed a total of £9.1 million have received payments equating to 1.5 pence in the pound.

Duff & Phelps' fees for the administration total more than a quarter of a million pounds. In the case of NESG the administrators will be paid £194,740 (748 hours at an average hourly rate of £260). And the fees for New Earth Solutions Facilities Management, which ran the operational treatment plants amount to £90,455 (302 hours at an average of £299.

Duff & Phelps say: "The joint administrators consider they are now in a position to conclude the administration and cease to act. It is intended to exit the administration by way of dissolution."

The insolvency experts have filed a report to the UK Government regarding the conduct of the directors of NESG in the three years prior to administration, but the contents of that report remain confidential.

The end of NESG follows the news earlier this week that Premier Group (Isle of Man) which ran the NERR fund and is also in the process of being liquidated had had its licence to practice revoked by the Manx financial services watchdog for breaches of regulations and failure to pay money due to the authority for the licence.

Council's offshore "funders" have licence revoked

EXCLUSIVE by EWAN LAMB

Premier Group Isle of Man which ran the fund chosen to bankroll Scottish Borders Council's £23 million waste treatment facility has had their licence to practice revoked by Manx. financial regulators for breaching regulations.

Not Just Sheep & Rugby has already revealed how Premier Group collected tens of millions of pounds in fees for controlling and managing New Earth Recycling & Renewables [Infrastructure] Fund (NERR) while that fund was involved in the disastrous Borders project alongside contractors New Earth Solutions Group (NESG).

Research has shown that NERR was never in a position to put up the cash for the combined Mechanical Biological and Advanced Thermal Technology plant at Easter Langlee where a landfill site is due to be closed down next year.

The council scheme also collapsed because of technical issues...in other words the form of technology approved by elected members was unable to function. But the loss of £2.4 million of taxpayers' money on the failed venture was blithely written off with no public explanation.

Since then Premier Group has plunged into liquidation with a similar fate for NERR whose 3,250 investors are almost certain to get none of their money back. At the same time NESG is in administration following the revelation it had debts of more than £150 million.

Now the Isle of Man Financial Services Authority (IOMFSA) has confirmed that Premier Group (in liquidation) which was licensed under the island's financial regulations has had its licence revoked with effect from December 6.

Premier, whose managing shareholder is Premier Group Distribution Inc. (PGDI) registered in the British Virgin Islands, had already ceased trading, but IOMFSA was not able to accept the surrender of the licence, according to a statement issued by the regulator.

The statement, which sets out the reasons for revoking the licence, cites the following: "Audit requirements including the provision of audited financial statements for the year ended December 31 2016 of the Financial Services Rule Book have not been met.

"Premier Group has not discharged amounts it owes to the Authority in respect of the last annual licence fee and certain administrative civil penalties".

Yet Premier Group claimed when liquidators were called in that it would meet all of its financial obligations.

IOMSA's statement added: "Under Rule 8.57 (8) of the Financial Services Rule Book the Authority may require a licence holder to hold professional indemnity insurance (PII) cover in respect of claims arising from past acts or omissions.

"The Authority would expect a licence holder such as Premier Group to take steps to hold appropriate PII but Premier Group has not been able to achieve this".

Meanwhile NESG administrators Duff & Phelps have given notice to Companies House of their intention to move NESG from administration to dissolution. Details of the notice are expected to be made public during the next few days.

It seems that in the not too distant future all of the businesses and funds chosen by Borders councillors for their "cutting edge" waste treatment project will cease to exist. And yet none of this warrants an investigation by Scotland's spending watchdog Audit Scotland.

Police raid council's Belgian bankers

EXCLUSIVE by DOUG COLLIE

The offices of the Belgian state bank which holds six separate loans taken out by Scottish Borders Council over a decade ago was raided by police this week as part of an investigation into allegations of tax avoidance by companies exposed in the so-called Panama Papers.

Belfius Bank - formerly known as Dexia until the institution had to be rescued by Belgian taxpayers in 2008 - has its headquarters in Brussels.

Six out of eleven LOBO (lender option borrower option) loans drawn down by SBC during 2004 and 2005 are with Dexia Bank. Three were for £3 million each while the three others were for £5 million each. Full details of the controversial transactions were revealed in Freedom of Information requests during 2015 and 2017.

The Dexia portfolio is now valued at over £38 million with the council not due to clear this aspect of its outstanding debt until 2054 and 2065 respectively. Interest rates on the loans range from 3.75% to 4.5%. Critics of LOBO loans claim councils throughout the UK were wrongly advised to borrow from foreign banks by treasury consultants who collected fat bonuses for arranging the credit.

Dexia was one of the "banks of choice" when LOBO loans were being set up in the early years of the Twenty-first Century.

Reports in the Belgian press and media this week say that the Dec.5th raid on the bank followed last year’s revelations that Belfius’former subsidiary, Experta Corporate and Fund Services, had been a prominent client of Mossack Fonseca, the Panamanian law firm at the centre of the Panama Papers probe based on 11.5 million leaked files.

Last year we revealed SBC's other links to Mossack Fonseca. The company in control of the council's bankrupt waste management contractors New Earth Solutions was registered at the law firm's offices in British Virgin Islands.

Experta, a tax consulting firm, helped to establish hundreds of offshore companies on its clients’ behalf, allegedly taking advantage of lax reporting requirements for foreign accounts, according to the Belgian news organisations.

The Panama Papers revealed that Experta requested the Panamanian law firm set up 1,659 offshore entities for clients in Belgium, France and Germany. Most of the companies have since closed.

Experta, whose services range from accounting and tax advice to financial planning was a unit of Dexia Group — the Franco-Belgian bank later renamed Belfius — until 2011. That year Experta was sold to Banque Internationale à Luxembourg.

Directors of Dexia, the former parent bank, included Belgium’s ex-Prime Minister Jean-Luc Dehaene, and authorities are now investigating what role the bank’s managers played in the tax avoidance schemes.

Media commentators claim the raid at the Brussels headquarters of Belfius signals that, after months of investigation by the federal police anti-fraud unit, Belgian authorities have begun to close in on the most active players in the offshore advisory business. 

On Tuesday Belgian officers seized computers and files documenting Dexia and Experta’s business operations, the Belgian press reported.

A Belfius spokeswoman told local media that the bank is cooperating with the investigation.

In the aftermath of the Panama Papers revelations, politicians criticised Experta for enabling tax avoidance, and possibly helping clients hide funds, even after its former parent Dexia had been rescued by the $3.7 billion government bailout in 2008.

“It is inconceivable for a financial institution, which has been supported by taxpayers money, to become involved, actively or passively, in tax evasion on such a scale,” said Finance Minister Johan Van Overtveldt last year, according to Belgian media.

Suddenly Tories are the "borrowing party"

by EWAN LAMB

Conservative-led Scottish Borders Council may have inadvertently set the mood for Philip Hammond's budget by embarking on a borrowing spree which will increase local government debt in the region by in excess of £15 million in 2017/18, equivalent to more than £280,000 a week.

However, this complete turnaround in fiscal policy in the face of Tory declarations stressing 'we must get the deficit down' has not even merited a mention in Borders local newspapers even though the details were published in full in the council's mid-year Treasury Management Report.

The latest hike in borrowing will push SBC's outstanding debt to a figure well above the council's annual revenue budget. The report revealed: "Additional borrowing amounting to £10 million has been undertaken in April 2017. Further borrowing of £5.2 million is anticipated during the remainder of the year".

All of that against a backdrop of £6 million additional grant from the (SNP) Scottish Government and the prospect of the much trumpeted South-east City Deal which is already turning out to be far less attractive for the Borders than the spin doctors would have us believe.

So much for the battle cries of those at the top of the Tory Party since 2010 that "we must not leave higher burdens of debt to our children and grandchildren". Labour were the bad guys who would bankrupt the nation by borrowing billions to fund public services, warned Theresa May and her Cabinet colleagues

In the Borders this greater reliance on borrowing means the council’s external debt which was already £265.4 million at the start of the current financial year (bigger than the annual revenue budget of £264.7 million) will now rise to £271.2 million.

Apparently the current approved (capital expenditure) budget at SBC is higher than the original budget due to "adverse timing movements from February 2017 to 31 March 2017 in areas of the capital plan".

According to the finance document: "The key drivers for the 2016/17 changes are assets and infrastructure - roads and transport infrastructure total additions to budget amount to £1.86 million.

"Also increases to the Land and Property Infrastructure projects total £0.63 million. The Other Corporate Services budget has increased by £2.85 million, principally from the inclusion of additional £2.64 million ICT Transformation budget.

"Children & Young People - School Estate budget increases amount to £3.32 million. The key increases in estimated expenditure result from a net timing movement relating to the construction of Broomlands (Kelso) and Duns Primary Schools.

"Economic Development - Additional budget as a timing movement between financial year amounting to £3.6 million relates to the Hawick Regeneration project".

The council's liabilities comprise long-term borrowing of £198.3 million plus £72.9 million of other outstanding debts. The level of debt has increased significantly over the last five years. The equivalent figures in 2010/11 were £164.8 million for long term borrowing plus £61.8 million for "other liabilities".

But at least the Tory group on SBC can claim to be in step with the party hierarchy. Following yesterday's UK budget in which Chancellor Hammond also embarked on a campaign to increase borrowing any hopes of balancing the nation's books have been dashed until at least 2031.

Unfortunately, in the Borders case, - given the current direction of travel - it could be several centuries before the debt is paid down, leaving generations of council taxpayers to pick up the tab for servicing those burgeoning external liabilities. Interest payments are currently running at more than £10 million a year.

Will Borders waste station find favour this time?

DOUG COLLIE on a council dilemma

Just six months after throwing out proposals for a multi-million pound waste transfer station (WTS) at Galashiels Borders councillors will be invited to backtrack and sanction virtually the same scheme when they meet next week.

Members of Scottish Borders Council planning committee turned down an application in April from local authority colleagues for the development of the storage facilities at Easter Langlee amid fears for road safety outlined in objections from local residents.

There were suggestions at the time that councillors were 'playing to the gallery' just a few weeks before municipal elections were held in May.

That decision threw SBC's waste management strategy into complete chaos given the looming deadline for the closure of landfill sites in Scotland. The WTS is required as a matter of urgency so that tens of thousands of tonnes of household refuse can be taken to Easter Langlee before it is transferred by road to treatment facilities elsewhere.

There are even more individual objections (eighteen) to the revised application which will be considered next Monday. But as before, senior planners at SBC are recommending approval even though they concede the serious shortcomings of the C77 road cannot be overcome.

Opponents have the backing of local ward councillor Harry Scott, and a nearby residents' association has also tabled a strong objection.

A 22-page report compiled by planning officer Carlos Clark outlines the pros and cons associated with the siting of the WTS at Easter Langlee.

The report says amenity impacts - according to protesters - include:

*The development will unfortunately prolong use of the site for waste treatment or disposal. Further consideration should be given to protecting the area for residential and other compatible uses. 

*Concerns are raised regarding impacts on existing residential properties, and potential for future houses.

*The development will prolong and may exacerbate noise, dust and smell concerns (including odours during construction); visual impacts, including trees and landscape issues; vehicle noise (including from more HGVs and from reversing vehicles); and air pollution. 

*The content and findings of a Transport Statement produced by the applicants are challenged, including factual accuracy, speed survey findings and proportion of commercial vehicles using the road. The report is considered to be one-sided in favour of the development being approved. 

The report adds: "There is no answer to the fact that the pinch point between Aislinn Cottage and No 2 Easter Langlee Cottages cannot be widened. This is the most dangerous point of a pedestrian’s journey where the road is not wide enough to accommodate a HGV and another vehicle passing each other, visibility is severely restricted, and verges are extremely narrow and overrun by HGVs. The transport statement confirms that a solution cannot be achieved.

 "Another blind bend creates a similar hazard further north. Proposed improvements were previously judged to be inadequate. There is no change in the improvement proposals that can overcome the intrinsic unsuitability of the C77." 

The report to councillors also states that all properties flanking the C77 have had vehicles enter their property through boundary fencing, one experiencing this twice. Vehicles have also come off the road and fallen into the valley adjacent the waste site. Photographs demonstrate instances of vehicles involved in accidents, including one showing a Council refuse lorry (though it is unclear if the lorry was involved in the accident).

Despite there being a 30 mph limit here, a traffic survey carried out on behalf of the Council indicated that, on a weekly average, a substantial number (47.1%) exceeded the speed limit, with excessive speeds ranging between 36.3 mph and 49 mph.

People and children (sometimes unsupervised) with or without dogs walk this road and walkers are increasingly using it. Six properties on this stretch have no other means of accessing a bus stop or post-box without walking on this road. The path through the industrial estate is steep, on an angle and has steps. Therefore, the only route for wheelchair users, those with restricted mobility and parents with pushchairs is to use the C77. There is no footway and the grass verge is non-existent.

Locals also warn: " A major accident, with possible fatalities, may occur and the development should be stopped before the inevitable occurs."

But according to Mr Clark: "The provision of the Waste Transfer Station will provide clear community benefit, particularly in allowing closure of the landfill site”.

The Transport Statement states that there would be 6 extra vehicle movements per day of which 5 would be articulated lorries, when compared with the existing traffic for the landfill. This amounts to 88 movements per day in total, of which 14 would be artics., as opposed to 82 and 9 for the landfill site respectively. 

The predicted traffic would be less than that for the consented MBT (Mechanical Biological Treatment) facility. While that consent is an historic approval it is, nonetheless, a consent that is capable of still being implemented without further planning approval and the judgements leading to that permission are valid considerations here. This increase in traffic is not considered to be significant, he writes.

His report concludes: "Ultimately, it must be acknowledged that the development will replace the existing landfill activity and achieve a waste management solution that will have less intensive traffic implications than the consented MBT facility.

"While objectors’ concerns are legitimate and fully acknowledged, there is insufficient evidence to suggest that the WTS would result in road safety impacts that are so materially different to either the existing landfill operations or approved MBT facility such that the C77 would be incapable of safely accommodating its traffic."

The recommendation is for approval with conditions. 

It will be interesting to see whether the reconstituted planning committee sticks with the previous decision or gives the WTS their seal of approval.

Methane from Borders landfill = 7,000 cows!

Blowing in the wind EXCLUSIVE by EWAN LAMB

The 356,000 kilos of methane sent skywards from the Easter Langlee landfill site on the outskirts of Galashiels in 2016 equates to the annual gas production of 7,120 beef cattle, according to an investigation conducted by Not Just Sheep & Rugby. 

The rubbish tip operated by Scottish Borders Council is already mired in controversy as planners consider a second application from the local authority who wish to develop a £4 million waste transfer station on land which may already be contaminated.

A growing number of objections to that plan - mainly on grounds of road safety - have been submitted to the planning department which is, of course, another service run by SBC. In the last few days Councillor Harry Scott, one of the Galashiels representatives on the council, has added his voice to the list of waste transfer station opponents.

Meanwhile the Scottish Environment Protection Agency (SEPA) today published environmental statistics on emissions of greenhouse gases in 2016 including methane and the even more damaging chlorofluorocarbons (CFCs) and hydrochlorofluorocarbons (HCFCs).

The reporting threshold for methane is 10,000 kgs per annum and for CFCs and HCFCs 1 kg per annum.

That means the 356,000 kgs of methane emissions at Easter Langlee last year were more than 35 times above the reporting threshold. There was a slight drop from 403,000 kgs in 2015, but the figure was well above the 2010 level of 274,000 kgs.

Scientists claim methane warms the planet by 86 times as much as carbon dioxide (CO2). And based on the estimate that one beef cow emits 50 kgs of methane into the atmosphere each year it would require 7,120 head of cattle to equal Easter Langlee's "performance".

The toxic mixture of emissions at Easter Langlee also included 27.4 kgs of CFCs and 21.4 kgs of HCFCs. Both figures are more than 20 times above the reporting threshold. Levels of CFCs and HCFCs above the threshold are not generated from any other site in the Scottish Borders.

SBC intends closing the landfill facility down in 2018 in yet another bid to comply with Scottish Government regulations on burying household refuse.But their intentions could be jeopardised if planning committee members reject the waste transfer station concept again.

The waste disposal issue should have been dealt with by 2013 had proposals for a modern Mechanical Biological Treatment (MBT) facility been delivered on time. Instead SBC took a huge gamble in a bid to incorporate untried Advanced Thermal Treatment (ATT) technology into the project which resulted in the entire venture having to be aborted in 2015 without a single brick being laid on site.

Now we wonder - mischievously - whether spreading vast quantities of seaweed over the landfilled sections of the Easter Langlee site might cut methane emissions by say 90%. Apparently boffins in Australia may have come up with proof that including seaweed in the diet of cattle might curb their harmful 'botty burps'.

News of this potentially game changing breakthrough emerged in a Scottish Parliament written answer, published only hours before SEPA produced their data. Here is the riveting exchange in full:

John Scott (Ayr) (Scottish Conservative and Unionist Party): To ask the Scottish Government what evaluation it has made of the claim made by the University of Queensland that including a certain type of seaweed in the diet of cattle can reduce their methane output by up to 90%.

 

Fergus Ewing:  (Cabinet Secretary for Rural Economy): The Scottish Government is aware of this work as part of a wider assessment which it has undertaken on the potential for reductions in GHG emissions to be made through changes to livestock diets.

 

John Scott (Ayr) (Scottish Conservative and Unionist Party): To ask the Scottish Government whether it has invited any research institutions to evaluate the work of the University of Queensland with regard to methane reduction in cattle by including seaweed in their diet, and to assess whether a Scottish application might be found for this research. 

 

Fergus Ewing: Experts at Scotland’s Rural College were invited to consider these findings and advised that the reductions observed were based on laboratory based tests only, using seaweeds which are not native to Scottish waters. We remain keen to see how this research progresses and shall continue to monitor developments in this emerging research area.

Council "scandal" hits the headlines

NOT JUST SHEEP & RUGBY reproduces the text of an article which appeared in today's edition of Scotland's The National newspaper. It is the first time a daily paper has covered the dossier of evidence compiled after Scottish Borders Council poured at least £2.4 million of public money down the proverbial drain on a worthless infrastructure project

Bombshell report reveals fresh concerns over aborted waste project that cost council taxpayers £2.4m

by Martin Hannan 

Scottish Borders Council refused to answer questions from retired journalist Bill Chisholm, but was rebuked by the Information Commissioner

A BOMBSHELL report about the loss of more than £2.4 million of public money by Scottish Borders Council casts doubt on the official investigation into that loss.

Distinguished journalist Bill Chisholm, who was awarded the MBE for services to journalism when he retired some years ago, spent 30 months investigating the scandal. The Easter Langlee waste transfer system was never built but still cost the public purse more than £2.4m.

Despite Scottish Borders Council (SBC) constantly refusing to answer his questions, Chisholm – now 72 and describing himself as a concerned council tax payer – persevered and the Scottish Information Commissioner ruled in his favour seven times so that he was able to access the information, which he claims shows mismanagement and a misuse of public funds.

But Audit Scotland’s investigation has cleared the council and it says its file on the matter is now closed.

The saga began in 2011 when the council awarded a 24-year waste management contract, valued at between £65m and £80m, to an English firm, New Earth Solutions Group (NESG), which would include the development and construction of a “cutting-edge” waste treatment facility at Easter Langlee near Galashiels at an estimated cost of up to £23m.

Chisholm’s 43-page report alleges the technology to be used at Easter Langlee by Dorset-based NESG, backed by Isle of Man-based New Earth Recycling & Renewables [Infrastructure] PLC (NERR), was not fully tried and tested.

He reports: “In an interview published in the Journal of the Chartered Institute of Waste Management in October 2015 … Richard Brooke, the commercial director of NESG, said ‘The development in Scotland that would have been New Earth’s sixth facility did not come to fruition for a variety of reasons … the specific energy technology to be built and operated was not ready to bring on-line on a commercial scale.’”

The contractors were given more time and 18 SBC councillors and officers visited NESG’s premises in October 2014 – a trip that cost council taxpayers almost £4,000.

NESG then failed to deliver on Easter Langlee. Less than four months later on 19 February, 2015, the contract was terminated.

Both NESG and NERR went bust and SBC had to write off more than £2.4m. The council has since tried to establish its own new £4.8m waste transfer system at Easter Langlee, but after planning problems work has still not begun and the council continues to face penalties for its failure to treat its waste.

Chisholm asked a series of questions about the technology and funding but received insufficient answers.

The Information Commissioner then overruled SBC in very strong terms, saying: “In the Commissioner’s view, disclosure of the withheld information would serve the public interest in informing the public about the actions and decisions taken by the council, the basis for those actions and decisions, and the reasons why the project failed. The project had involved many years of work, and substantial sums of public money.”

Chisholm was finally told by SBC that the costs involved during the lifetime of the contract totalled £1.968 million – excluding 20 per cent VAT – with much of the money having gone to highly paid consultants.

After external auditors KPMG passed the council’s accounts, public spending watchdog Audit Scotland took over as auditors and concluded the council acted correctly. Both SBC and Audit Scotland have refused to re-open any inquiry into the failed project.

Chisholm told The National: “I would suggest Audit Scotland has made a misjudgment [in connection] with the Borders’ £65m waste management contract

“A significant number of people who have read the report, including an eminent procurement expert, have expressed the view that there are many issues I have uncovered which would justify an investigation.

“Examples include the question of whether the council might have breached EU procurement rules, not to mention the complete loss of at least £2.4m of taxpayers’ money.”

Chisholm added: “Audit Scotland may have closed the file on Project Easter Langlee: I have not.”

A Scottish Borders Council spokesperson said yesterday: “Mr Chisholm has not yet presented Scottish Borders Council formally with a copy of his report, however it is worth noting that both KPMG and Audit Scotland have examined the matter and are both satisfied with the steps taken by the council in relation to the contract with New Earth Solutions.”

An Audit Scotland spokesman said: “In our response to Mr Chisholm we explained that our opinion is that the council came to a reasonable judgment in terminating the contract when it did. We are also satisfied that audit work previously completed by the external auditor showed that the council followed a reasonable process in the procurement of the waste management contract.”

The file ignored by Audit Scotland, parliament and politicians [5]

2013’s NOTIFICATION OF A TWO-YEAR DELAY

The project had been beset by problems and issues from the very outset thanks to a combination of undeveloped technology and the absence of the £23 million to pay for it.

Among a collection of 80 reports, emails and other correspondence which SBC released in August 2017 on the SIC’s orders were details of yet another delay of two years of which notice was given by NES in late 2013. The NEAT trials in Canford were going extremely badly, and after a catalogue of excuses the contractors finally admitted there was no prospect of commissioning the Borders plant until July 2017 although even that date could prove to be ‘ambitious’.

Here’s how the council’s own consultants reacted to the news – although the council seemed content to allow matters to drift on.

SLR Consulting (technical experts) wrote: “In summary it is difficult for SLR to understand whether there is a reticence to try to develop because; data attained does not show the process favourably; if operational issues at Avonmouth are taking priority or are showing some fundamental issues with the technology; if the technical team are capable of addressing and managing the problems to an expedient solution.”

And financial advisers Nevin Associates were more forthright in their correspondence with SBC following the latest test failure at Canford: “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.

“This could leave us hanging on the outcome of the Canford trials, over which we have no control, and if those were to fail or (more likely) take longer than anticipated to succeed, then we would still potentially be exposed to the risk of having no treatment solution in place for the Council’s residual waste.

“It is imperative that momentum is not lost and that NES show evidence of continued commitment to the project, otherwise we may have little option but to pursue a Plan B to avoid the risk that the Council fails to achieve ZWP regulatory requirements.”

NES had already been granted a so-called ‘contract moratorium’ giving them extra time to solve the various problems dogging Project Easter Langlee.

Surely council members should have stepped in and ordered an end to the fiasco in December 2013. That would have avoided a 15 month period up to February 2015 when tens if not hundreds of thousands of pounds of public money continued to be squandered without any progress being made. But yet again councillors appear to have been conspicuous by their absence.

CONCLUSION – Those who take the trouble to read this report are free to draw their own conclusions.

In my opinion Scottish Borders Council - at the very least - was grossly incompetent in its stewardship of substantial sums of public money. SBC was equally inept in the management and administration of a £23 million building contract, work on which had not even started after almost four years of dithering and interminable delays caused by a model of technology which had never been commercially proven, and by an inability to secure funding for construction.

The fact that no-one will be held to account for the entire debacle is regrettable and disgraceful.

That concludes our "serialisation" of the comprehensive document which our regulatory bodies and public representatives chose to ignore and refused to act upon. WHY? As we said at the outset your comments will be welcomed.

The file ignored by Audit Scotland, parliament and politicians [4]

MONITORING OF PROJECT BY ELECTED MEMBERS

 There is virtually no mention of councillor involvement in the Easter Langlee project in any of the documents SBC has volunteered to give me or in the many more released on the orders of the Scottish Information Commissioner.

Minutes of meetings should provide a full picture of the role played by our elected members, but incredibly, during my inquiries I have been told on more than one occasion that events were not formally recorded. Therefore written documents containing information about the ill-fated scheme do not, in many cases, exist on the council’s ‘New Earth Solutions’ file. I would submit that such an admission of sloppy record keeping should be worthy of investigation on its own.

A classic example of this cavalier approach towards the (non) minuting of meetings came to light after I submitted a FOI request seeking information about the council’s large delegation of elected members and officers who made a “fact-finding” trip to NESG headquarters at Avonmouth in October 2014, just four months before the Easter Langlee shipwreck had to be abandoned.

No fewer than 18 of the most powerful members and officials of SBC made the trip (including an overnight stay) at a total cost to taxpayers of £3,939.35. In public statements following their return to the Borders they made it clear they were pleased with what they had seen and were convinced SBC was “on the right track”.

When I requested a list of the questions asked and answers given at a briefing session this is what I was told: “There was then a question and answer session with NES so that Councillors could get a detailed understanding of the delivery strategy, technology development, permit and funding. No information is held on record in respect of the questions or answers provided. Only the presentations are held – which are commercially confidential, a redacted copy is attached.”

I went on to ask for copies of reports generated before and after the visit. Here’s the reply from SBC: “Subsequent project reports, minutes and emails make reference to the visit but were not generated specifically as a consequence of the visit. Again the content of these documents contains commercially confidential information and cannot be released.”

This repeated failure to maintain written records which appears to have permeated much of the four-year liaison between SBC and NESG may be a convenient way of avoiding public scrutiny. But it also runs totally counter to the local authority’s own Information Governance Policy.

That document states unequivocally: “Scottish Borders Council is committed to creating, managing and keeping records that document its principal activities. Information must be processed and protected diligently, lawfully and ethically through good data security, accurate information and informed openness.”

One can only assume those high-minded principles ‘went out of the window’ in the case of the Easter Langlee shambles. Or perhaps the failed Easter Langlee project is not regarded as one of SBC’s “principal activities”.

In fact the visit to the Avonmouth facility may well have been a complete waste of time and money. The misfiring steam technology there was different from the system which was to have been deployed in Galashiels. The 18-strong team carrying out ‘due diligence’ should, according to some experts, have been 67 miles from Avonmouth - in Canford - where NEAT was on trial.

Councillor David Parker, the local authority’s leader, told the Border Telegraph in October 2014 (following the visit) the Avonmouth trip had been “valuable and illuminating”.

“The integrated WTF is a really big deal for our council as it will transform the way we deal with our waste and help us comply with our zero waste obligations,” he told the newspaper.

“It also involves a major investment, in partnership with NES, which requires councillors to carry out due diligence and, in that respect, the trip was necessary. I am satisfied after our visit that we are on the right track and confident that the WTF will be up and running before the 2019 contract deadline, hopefully by mid-2017.”

Contrast that upbeat declaration with DUFF & PHELPS ADMINISTRATORS’ REPORT on New Earth Solutions Group July 2016:

Paragraph 2.8 – “In October 2014 (the same month in which the Borders delegation was briefed by NESG) the Group carried approximately £159 million of debt, with £37 million due to the Banking Group (Co-op) and £102 million to New Earth Recycling & Renewables [Infrastructure] PLC (NERR) which was subordinated to the Banking Group’s debt. A further £20 million was also owed to Macquarie Bank with a request for further funding. Funding from NERR was suspended in 2014 and Co-op was requested to step in to provide financing.”

In other words the due diligence carried out by Councillor Parker and his colleagues managed to miss the fact that NESG was completely insolvent long before the contract was terminated. The cash-strapped company was, to all intents and purposes, incapable of delivering the Easter Langlee project a year if not more prior to February 2015. Did anyone examine the company’s books? What information were the expensive financial consultants [hired at a cost of £146,000] giving SBC about their contractor’s economic well-being (or lack of it)?

COMING NEXT - 2013’s NOTIFICATION OF A TWO-YEAR DELAY

The file ignored by Audit Scotland, parliament and politicians [3]

REVELATIONS AND ISSUES THROWN UP BY THE INVESTIGATION

SBC undoubtedly wished to draw a line in the sand under the New Earth affair as soon as the highly embarrassing decision to terminate the useless contract was taken in February 2015. Their attitude towards my series of FOI requests proves that beyond any reasonable doubt.

But information they have been forced to give me on the instructions of the SIC has penetrated the wall of silence and has shed some light on many worrying aspects of the council’s dealings with a group of financially unstable companies and funds. However, it is impossible to complete the picture without full disclosure. Here are some of the points requiring full investigation:

1. NESG TRACK RECORD AND CONDUCT - NESG was a relatively inexperienced player in the waste management industry, and had little if any knowledge of environmental rules and regulations governing waste disposal in Scotland, including SEPA’s rigorous process before issuing operating certificates.

 Information I obtained showed how NESG became so frustrated over delays in the sanctioning of a permit for the ATT aspect of the Easter Langlee project that they suggested SBC and others should put pressure on the independent environmental watchdog to achieve the desired result. This surely amounted to totally unacceptable and unprofessional conduct.

2. SURETY FOR SEPA - In the very early stages of the contract SBC had to provide financial security in the sum of £315,000 to SEPA on behalf of New Earth Solutions (Scottish Borders) Ltd., the ‘ special vehicle’ set up to deliver the Borders project. The council refused to tell me why this was necessary on grounds of “commercial interests”.

The SIC disagreed and told SBC to give me the information I had asked for. It transpired that NES could not acquire £315,000 of insurance without incurring costs which would have had to be passed back to the council “nor can they afford to hold the capital aside to cover this requirement”. So a contractor involved in a multi-million pound scheme didn’t have £315,000 to spare. Surely alarm bells should have been ringing at SBC. Did anyone ask questions about such a worrying issue?

3. THE STATUS OF NERR & PGIOM - Information obtained during the course of my inquiries has confirmed that SBC were completely unaware of many complaints lodged by investors and shareholders in the NERR fund and against its parent company PGIOM. These businesses were crucial to the successful delivery of Easter Langlee, and SBC was told £6 million per month was pouring into NERR from eager ‘green’ investors.

The truth was that any money reaching NERR’s coffers was either being used to prop up NESG (£39 million in total) or being siphoned off by PGIOM managers and controllers in fees (£12.027 million in 2014 and £10.748 million in 2013 while the Borders contract was ‘live’). The impression is given that SBC accepted at face value what NESG and NERR were telling them. Even in the early years of the contract (2011) NESG was recording sizeable financial losses.

Liquidators Deloitte appointed to investigate NERR by the Isle of Man Financial Services Authority soon discovered almost 3,500 investors and shareholders in the fund would get none of their money back. Deloitte is currently considering the possibility of pursuing third parties in a bid to recoup cash and NERR has insufficient resources to even pay for its own liquidation. PGIOM is also in the process of being dissolved. How did SBC become involved with such unstable offshore entities?

4. DEED OF VARIATION – Perhaps the most important reason for the collapse of the project, and the most puzzling issue to emerge from SBC’s web of secrecy. Within a matter of months of the original contract being signed NESG was telling SBC the MBT plant was undeliverable because it could not attract bank funding as a stand-alone project. How much had changed in such a short period of time? Why were MBT facilities being developed elsewhere in the UK? Did anyone at SBC ask?

In October 2012 members of SBC decided (in private, naturally) to radically change the terms of their contract with NESG to include ATT using so-called NEAT Technology, NESG’s very own brand of gasification and pyrolysis to convert rubbish into electricity.

The councillors must have realised they were taking a huge gamble. Apparently they were labouring under the impression NEAT could install them as champions of the Scottish waste disposal league table. But in fact the technology had not even started its arduous journey through development trials at NESG’s R&D centre in Canford, Kent.

How was any financial institution likely to put up £23 million under those circumstances? What persuaded SBC’s elected members to sanction NEAT when the technology was not commercially proven and funding was not guaranteed? Each member who voted in favour of the DoV must be asked to explain their reasoning, and officers and members of the Project Team who recommended this risky course of action also need to provide a detailed public explanation.

In an interview published in the Journal of the Chartered Institute of Waste Management in October 2015 - AFTER the SBC/NESG contract was shredded, and THREE YEARS AFTER the DoV was rubber-stamped - Richard Brooke, the commercial director of NES, confirmed that the form of technology which had been planned for Easter Langlee was not commercially ready in late 2014. So why did SBC sign up for it in October 2012? Brooke’s reference to the Borders project reads as follows:

“The development in Scotland that would have been New Earth’s sixth facility did not come to fruition for a variety of reasons, most notably the drop-off in the quantity of residual waste requiring treatment; and the specific energy technology to be built and operated was not ready to bring on-line on a commercial scale.”

This amounts to a damning indictment of SBC’s decision making. In actual fact this form of ATT technology remains unproven in 2017 while a similar system installed at another NESG facility in Avonmouth, Bristol has proved so troublesome the entire plant has had to be closed down to allow radical remedial work to be undertaken. It is hoped to reopen the ATT there in 2018.

COMING NEXT - MONITORING OF PROJECT BY ELECTED MEMBERS 

The file ignored by Audit Scotland, parliament and politicians [2]

FIGHTING THE COVER-UP

I was personally annoyed and dissatisfied that my local authority could treat its citizens in such a cavalier manner, and I was determined to investigate this disastrous chapter in the annals of Borders local government after being told SBC had decided to simply write off their losses and move on.

The only way to get at the facts would be via Freedom of Information (FOI) requests although I realised this avenue was bound to be littered with pitfalls and obstacles. Requests would have to be carefully worded to guarantee some chance of a worthwhile return. And questions to the council would have to be divided up into numerous sections to avoid refusal by breaching the £600 cost ceiling allowed for each request.

The first FOI was aimed at discovering the true scale of the financial loss to taxpayers as even this basic information remained a closely guarded secret. Surely details of what had been spent on the aborted contract should have been published as a matter of routine. Not in the secretive world of local government.

- My FOI 7651 received a response in April 2015. It claimed the costs involved during the lifetime of the contract totalled £1.968 million (exclusive of 20% VAT), most of the money having gone to highly paid consultants, most notably Edinburgh law firm Brodies who received £679,000 for specialist legal advice even though the project was a complete failure. In-house staffing costs were given as £356,400. There was to be additional costs associated with post-contract expenditure.

My own feeling is that the true losses linked to the NESG debacle were considerably higher than this but unfortunately I have to accept what SBC has told me.

The response from SBC contained the following sentences which indicated how they would resist further requests for information: “You suggest that ‘now that the contract and the project have been abandoned the issue of commercial confidentiality no longer applies.’ This is factually incorrect. The confidentiality clauses pertaining to the contract remain in place for six years after termination of the contract.” 

So I’d have to wait until 2021 for full disclosure!

However, the loss of a substantial sum approaching £2.5 million surely warranted further investigation. I half expected an announcement from Audit Scotland, the nation’s public spending watchdog, that it would be launching an enquiry into the affair. But announcement came there none, and my own repeated requests for their intervention have all been rebuffed.

I have copied Audit Scotland into correspondence throughout the investigation. Unfortunately their email to me dated May 26^th 2017 illustrates their attitude towards SBC’s multi-million pound loss of public funds:

“Thank you for forwarding the decision by the Scottish Information Commissioner, regarding Scottish Borders Council and its waste management contract.

“This information has been shared with the external auditor of the council. After full consideration of the content of the decision, they are content that the audit work previously completed by the external auditor of the council showed that the council followed a reasonable process in the procurement of the waste management contract.

“We believe the key judgement for the council was whether continuing with the contract would have seen even more public money lost. It is our opinion that the council came to a reasonable judgement in terminating the contract when it did.

“We do not deny that a loss of £2.4m is a poor outcome for the council. Therefore as part on the 2016/17 annual audit of Scottish Borders Council we will be reviewing whether the council have identified any ‘lessons learned’ through their review of how the waste management contract was managed. Any significant findings will be reported to the council in our Annual Audit Report. This will be available on the Audit Scotland website by October 2017.

 “In your correspondence you state your view that the commissioner’s findings represents clear evidence of a deliberate cover up.  Although we do not agree with this view, we continue to encourage councils to be as open and transparent as possible with the information they hold.“

During the early stages of my own investigation I also attempted to enlist interest from Scottish politicians and from Scottish parliamentary committees. No luck there either. A £2.4 million gamble with public money did not merit anyone’s attention. Shining a spotlight on bungling councillors of virtually every political hue and holding the incompetents to account might be disadvantageous for all of the parties involved, so avoid such scrutiny like the plague appeared to be the stance taken.

It seemed all that was left would be a one-man campaign to uncover as much information as possible and have it published in a bid to at least embarrass those responsible for the losses. That’s pretty much how it has panned out.

The council started to reject my FOI requests in late 2015. In each of seven successive cases information was withheld on “commercially confidential” grounds and after subsequent requests for reviews of decisions I had to take each case individually to the Scottish Information Commissioner.

In the majority of applications for decisions the SIC found in my favour, and in at least a couple of the Commissioner’s reports the SBC arguments in favour of either keeping documents secret or redacting those they offered to release were demolished and heavily criticised.

It is worth reproducing just some of the findings outlined by Acting Scottish Information Commissioner Margaret Keyse in Decision Notice 100/2017 issued in June 2017 as they demonstrate how flimsy the council’s arguments in favour of secrecy really were.

The Commissioner's conclusions

“The Commissioner recognises that the Council made a significant investment in the integrated waste management project in the belief that it would resolve some of the waste disposal issues in the Scottish Borders Council area. The Council and NESG expended considerable effort, time and money to ensure the project was a success. If the project had completed successfully, it would have increased the Council's household recycling performance by an estimated 2.6%[15]. However, the contract was terminated on 19 February 2015, leading to the Council having to write off at least £2.4 million.

“The Commissioner accepts that there is significant public interest in understanding what steps the Council had taken to ensure that the project was robust. There is a strong public interest in understanding the measures that the Council had taken in order to limit its financial exposure in a project which had been on-going for four years and had involved substantial sums of public money.

“In the Commissioner's view, disclosure of the withheld information would serve the public interest in informing the public about the actions and decisions taken by the Council, the basis for those actions and decisions, and the reasons why the project failed. As noted above, the project had involved many years of work, and substantial sums of public money. The integrated waste management project would have had a direct effect on the residents in the Council area.

“The Commissioner has given weight to the particular circumstances of this case, which incurred the Council investing substantial time, money and resources, in a project that ultimately did not come to fruition. In these circumstances, the Commissioner finds it is legitimate for the public to seek to understand what happened, and in the public interest for this understanding to be as complete as possible.

“The Commissioner accepts that there will be cases in which it is in the public interest for post-contract discussions and project discussions to be kept confidential. However, in the circumstances of this case, the Commissioner considers that the public interest in understanding the Council's role in the project is stronger, for the reasons outlined above.

“Having considered all of the representations made by Mr Chisholm and the Council, the Commissioner has concluded that, even if she had found that disclosure of the information would, or would be likely to, prejudice substantially the confidentiality of commercial or industrial information in line with the exception in regulation 10(5)(e) of the EIRs, she would have found, in all the circumstances, that the public interest in making the information available outweighed that in maintaining the exception.”

All seven decision notices can be found on the Scottish Information Commissioner’s website, reference numbers as follows: 185/2015; 069/2016; 078/2016; 097/2016; 220/2016; 061/2017 and finally 100/2017.

So the process of forcing SBC to release documentation has taken well over two years because of the need to divide up requests which are all linked to the same subject but would not pass the FOI test on cost grounds. This has involved many hours of additional work preparing applications for the Commissioner and dealing with necessary requests from SIC for more evidence or clarification.

Meanwhile SBC staff and their legal experts must have devoted countless hours in dealing with seven separate SIC investigations as they sought to defend their corner and keep those sensitive reports out of sight. Perhaps a FOI request asking for details of costs incurred by SBC over the course of the seven cases might be justified!

At the end of the day with NESG bankrupt, NERR in liquidation and PGIOM in the process of being dissolved there can be no commercial confidentiality argument for a continuing cover-up of this tawdry affair. Every document on the SBC Waste Management Project file must be published.

However, that is clearly not how SBC sees it. The last of my successful applications to the SIC was concluded on June 28^th 2017 when Ms Keyse issued her decision completely in my favour. The council was given until August 14^th 2017 to comply – some six weeks. But they delayed releasing the documents they had withheld until August 11^th, waiting until virtually the last day allowed before obeying the orders of the Commissioner.

An earlier release of the information would not have proved difficult. I originally requested the material in early 2016, and following their refusal to make copies available on two separate occasions my SIC application was lodged on August 5^th 2016.

During that same month SBC was asked to send the SIC the withheld information – 86 documents among 200 relating to the case. So it is clear the council had sorted through and assembled the requested reports at least a year before they complied with Decision 100/2017. 

They could have been sent to me within days of the June 28^th decision, but SBC – as they did on previous occasions – decided I could wait for the maximum period allowed under SIC rules. Little respect there for Freedom of Information.

COMING NEXT - REVELATIONS AND ISSUES THROWN UP BY THE INVESTIGATION

The file ignored by Audit Scotland, parliament and politicians [1]

In a series of articles over the course of today, Not Just Sheep & Rugby will publish the complete text of the damning report into Scottish Borders Council's (mis)handling of its £65 million waste management contract with insolvent contractors New Earth Solutions (NES) and their penniless "funders" Premier New Earth Recycling & Renewables (NERR) fund.

Bill Chisholm, a retired journalist worked for The Scotsman for 38 years. He spent two and a half years from 2015 investigating the loss of at least £2.4 million of Borders council taxpayers money on a failed project which was supposed to provide the local authority with a state of the art waste treatment plant costing £23 million at Easter Langlee, Galashiels.

The one-man inquiry, dogged by concerted efforts on the part of the council to prevent the release of embarrassing evidence and a complete unwillingness by local politicians to get involved, eventually uncovered a number of disturbing elements of SBC's disastrous four-year liaison with NES.

But when he circulated his 42-page report to Scotland's 'guardian of the public pound' (Audit Scotland) and to Borders-based MSPs Mr Chisholm discovered there was no interest whatsoever in pursuing the issue in a bid to discover why so much public money was lost on a venture which left the Borders with nothing for its cash.

Audit Scotland indicated several times that it was satisfied with an examination of SBC's books by accountancy firm KPMG, commissioned by the watchdog and paid well over £200,000 by SBC for the exercise. And after receiving the report the watchdog made it clear it would not be responding to any further correspondence on the matter.

Meanwhile not a single MSP has offered a comment on the report's findings while SBC has maintained a stony silence when approached by the local press. 'Ignore it and it will go away' seems to be the attitude of anyone and everyone who should be concerned.

So now the public can judge for themselves whether there was or is a case to answer. Any reader who would like to pass comment is welcome to do so.

Here is the first section of the report reproduced without any alterations or editing.

A DISTURBING STORY OF COVER-UP AND INCOMPETENCE

How Scottish Borders Council (SBC) gambled with at least £2.4 million of taxpayers’ money, lost it, wrote it off, then mounted a concerted campaign to conceal hundreds of documents, emails and letters linked to the financially disastrous episode from public scrutiny.

EXECUTIVE SUMMARY

NOTE: The vast majority of this information has been assembled in the course of a two and a half year investigation which SBC has consistently tried to frustrate and hamper.

From 2008 onward Scottish Borders Council was faced with an urgent environmental/financial issue. Time was beginning to run out on their practice of land-filling the vast majority of some 40,000 tonnes of waste per annum generated by households across the local authority’s territory.

Previous attempts (well documented) to devise a credible waste management strategy for the Scottish Borders had failed, and in 2008/9 elected members of SBC were being told by senior officers that to ‘do nothing’ and continue to landfill rubbish at the Easter Langlee disposal site on the outskirts of Galashiels was no longer an option: rapid, and potentially expensive action was required.

It was decided to award a 24-year waste management contract, valued at between £65 million and £80 million to a firm of specialists which would include the development and construction of a “cutting edge” treatment facility at Easter Langlee at an estimated cost of up to £23 million, depending on the specifications.

The plant was to be built in two stages over seven years. A conventional Mechanical Biological Treatment [MBT] centre would divert up to 80% of Borders rubbish from landfill. Then, at a later date once technological processes had proven themselves to be commercially viable an Advanced Thermal Treatment [ATT] facility would be added. This would have the capability of converting waste into energy to power local homes, factories and public buildings with surplus electricity being sold off to the National Grid. SBC would receive some of the profits.

A team of environmental, financial and legal consultants was assembled to advise SBC. Following a lengthy procurement process it was announced in March/April 2011 that the contract had been awarded to Dorset-based New Earth Solutions Group (NESG), a company which had never worked on a project in Scotland before. The losing competitor was Shanks, a business with vast experience in the field of waste management throughout the UK.

But the release of highly confidential documents during the course of 2016/17 following SEVEN separate applications to the Scottish Information Commissioner to overturn refused Freedom of Information requests, shows the project had hit funding and technological problems by January 2012, only nine months after the contract was handed to NESG. These issues proved insurmountable, but the council granted NESG generous contract moratoriums which allowed the undeliverable project to squander hundreds of thousands of pounds of public money until it had to be abandoned in February 2015.

Letters from NESG to SBC in January 2012 claimed the stand alone MBT could no longer attract bank funding. Money for the Easter Langlee scheme was supposed to come from either the Co-op Bank or from NESG’s partner, the Isle of Man-based New Earth Recycling & Renewables [Infrastructure] Fund [NERR].

But changes in the Scottish Government’s waste disposal policies were allegedly proving tricky and unattractive to financiers, according to NESG, and an alternative way of delivering the Borders project would have to be identified.

Following months of unsuccessful negotiations between NESG and the council’s Project Team it was finally decided to recommend a very major alteration to the contract to combine the MBT and ATT in a single phase development.

This has to be viewed as an extremely high risk strategy for one simple reason. NESG’s brand of ATT – named NEAT Technology – was completely untried and untested in 2012. For the record it remains problematical and unproven in 2017. And the release of sensitive documents dating from 2012 shows the NEAT system had not even completed its journey through research & development testing in October 2012 when members of SBC sanctioned the so called Deed of Variation [DoV] at a private meeting even though this could have been construed as commercially unfair to rival bidders Shanks.

The DoV was to make little difference. NESG was heavily in debt to banks and to NERR whose directors had a major stake in NESG and were basically keeping New Earth Solutions afloat by providing a total of £39 million to that company. This arrangement/mortgage was concluded in September 2011, and the paperwork is available for public scrutiny at Companies House.

 At the same time NERR’s parent company Premier Group (Isle of Man) Ltd [PGIOM] was picking up millions of pounds each year in fees for managing and promoting NERR to 3,500 unwitting investors and shareholders. The managing shareholders of Premier Group were entities based in the offshore tax haven of British Virgin Islands.

SBC appears to have been completely unaware of the complex financial arrangements involving NESG, NERR and PGIOM. The council has also confirmed it was unaware of many alleged complaints made about the conduct of Premier’s array of investment funds, including NERR, to the Manx regulatory authorities, and to the UK Financial Services Ombudsman from 2004 onwards.

The problems and apparently insurmountable technological and financial issues facing NESG and SBC dragged on through 2013 and 2014 without a brick being laid at Easter Langlee. A selection of documents, many of them heavily censored by SBC before release, give a patchy view of what was happening on a month to month basis as the project staggered on.

Details of a high powered visit by a large delegation of Borders councillors and officers to NESG headquarters in Avonmouth, near Bristol in October 2014 are extremely sketchy as SBC claimed when asked for reports on the trip that nothing had been written down. But representatives of the Borders press were given the impression the visit had been extremely worthwhile from a “due diligence” point of view, and the elected members had been impressed by what they had been shown. SBC firmly believed it was on the right track to become Scotland’s leading waste management authority.

Unfortunately there was a different behind-the-scenes scenario which suggests Borders councillors were completely deluded. By now NESG was virtually insolvent; the NEAT technology continued to misfire, NERR had still not come up with the £23 million needed to build the Borders project, and Scotland’s environmental watchdog SEPA (Scottish Environment Protection Agency) was still refusing to sanction an operating permit for the combined MBT and ATT because of unresolved issues.

Four months after the expensive trip to south-west England a press release issued by SBC in February 2015 contained the shattering news of the contract’s complete collapse.

The statement declared: “Since the contract was signed in April 2011 there have been significant changes with regard to Scottish waste policy and regulation, and project-specific issues in terms of technology and funding.”

No further details were given despite the complete failure to deliver a crucial facility, and the squandering of millions of pounds of public and private money over four years. On top of that SBC’s waste management strategy was in tatters yet again with landfill deadline day looming.

From the publication of the press release on February 19^th 2015 SBC was determined to pull down the shutters on Project Easter Langlee to cover their own backs and to prevent anyone from exposing their sheer incompetence and risky decision making. The Borders public deserved better.

COMING NEXT - FIGHTING THE COVER UP