Borders council on 'toxic' loans database

EXCLUSIVE by DOUGLAS SHEPHERD

Local authorities with high-risk LOBO loans are being urged to reschedule their debts to save billions of pounds in interest charges amid calls for a sweeping inquiry into treasury management within the public sector which saw 240 councils signing up for the controversial funding system.

Scottish Borders Council was among those authorities which brokered loans from a number of banks in the early years of the Twenty-first Century. In some cases the LOBO arrangements can run for up to 70 years before the debt is paid off.

A profile of the Borders situation is included on a new national database assembled by the action group Research for Action which is campaigning for councils to exit their high interest LOBO agreements and source money instead from the UK Government's Public Works Loans Board (PWLB).

LOBO is a long-term loan, typically 40-70 years. The acronym stands for “Lender Option Borrower Option”. The lender’s (bank’s) option is to change the interest rate at pre-agreed call dates (e.g. once or twice a year). The borrower (the council) can then repay the loan in full or agree to the new interest rate. The borrower can only use their option when the lender uses theirs. Should the council want to exit the loan on any other occasion they will have to pay breakage fees at the discretion of the bank.

According to the database Scottish Borders Council currently has nine LOBO loans totalling £35 million, including loans that have had their option removed by the bank. The Borders authority is 107th out of 210 in the ranking of councils with the most LOBO debt.

In total SBC took out 11 LOBO loans worth £43 million. But figures obtained by Research for Action via Freedom of Information shows the council exited two of the agreements in 2018 after handing over exit fees.

The database includes the following information: "Scottish Borders is currently paying £1.49 million in interest per year. It is projected to spend at least £58.64 million in interest payments over the remaining term of the loans, the last one ending in 02/10/2066.

"The interest rates for Scottish Borders Council’s LOBO loans are between 3.750% and 4.990%. Currently, councils can borrow from central government (via the Public Works Loans Board) at much lower rates (between 1% and 2.5%) and on much more favourable terms." 

The campaign group discovered that councils have successfully exited at least £1.6 billion from 'expensive and risky' LOBO loans since monitoring began in 2015.

In the case of SBC the decision was taken in July 2018 to exit two £4 million LOBO loans held by KA Finanz. Interest rates on the loans at that time were 4.8% and 4.99% respectively.

The statistics show that remaining interest payments of £5,859,419 applied on one loan and £3,805,524 on the other, a total of £9.664,943. The council paid exit fees totalling £2,807,412 to KA Finanz to terminate the agreements.

Research for Action claims: "You can see how much a council saved exiting a loan by comparing the penalty fee with the remaining interest at the time of exit. You might wish to suggest to councils who still have LOBO loans to negotiate good exit deals".

All of SBC's loans were arranged over a period when the council's treasury management advisers were a firm called Butlers, a division of ICAP Securities Ltd. at that time.

Research also shows that one of the LOBO loans was brokered by ICAP Securities while two ICAP directors were also on the board of Garban Intercapital PLC, another of the brokers involved in the Borders transactions. 

The database shows the brokers' fees paid in setting up all eleven LOBO loans were "missing" from information gleaned via FOI. In 2011, Butlers was acquired and merged with Sector Treasury Services Ltd.

Joel Benjamin, a researcher involved in the LOBO investigation, said: "Our figures confirm after years of citizen-led pressure, local authorities can save millions of pounds by refinancing toxic bank debt, with low risk, low interest, loans from the Treasury PWLB."

He added: "A root and branch inquiry of council treasury management practice is required, to understand why borrowing and investment in the public interest appears  to be the exception, not the rule".

Ludovica Rogers, database project lead, said: "Our new database is the first comprehensive, publicly-accessible depository of information about LOBO loans. We hope it will enable more UK councils to exit the loans, restoring public accountability and reclaiming public money for much-needed local services."

The research shows that 95% of outstanding LOBO debt is now owed to European Banks, with councils projected to pay at least £14bn in interest payments until the loans end.

Here are the details of SBC's existing LOBO loans as they appear on the Research for Action website:

NOTE: The table shows the name of each bank, the sum borrowed, the year the money was drawn down, the number of years left on the loan, the current interest rate, the annual interest payments and the estimated remaining interest to be paid.

Barclays       £6 million    2005    44  4.4%       £264,000             £11,616,000

Commerz     £2 million    2007    16  4.99%     £99,800               £1,596,000

Dexia           £5 million    2005    44   3.75%     £187,500             £8,250,000

Dexia           £5 million    2005    45   3.8%       £190,000             £8,550,000

Dexia           £5 million    2005    45   3.82%     £191,000             £8,595,000

Dexia           £3 million    2004    33   4.5%       £135,000             £4,455,000

Dexia           £3 million    2004    33   4.5%       £135,000             £4,455,000

Dexia           £3 million    2004    33   4.5%       £135,000             £4,455,000

Erste            £3 million    2006    45   4.938%   £148,140             £6,666,300

TOTALS    £35 million                                      £1,485,440         £58,639,100          

Alcohol related harm cost Borders £30 million a year

by EWAN LAMB

Alcohol related attendances at Borders General Hospital's emergency department [ED] plummeted by almost 50 per cent in 2020/21, but the overall cost of damage and harm caused by excessive drinking in the region is estimated at £30.5 million annually, according to a new report.

Scottish Borders Alcohol Profile 2021 was prepared for members of the local licensing board. The document includes an array of statistics related to alcohol consumption and its knock-on impacts. Here are a few of the numbers:

*In Scottish Borders, nearly 1 in 3 men (31%) and more than 1 in 6 women (18%) were drinking at hazardous/harmful levels (2016/19). 

*597 alcohol-related hospital stays in Scottish Borders during 2019/20 financial year. 15 alcohol-specific deaths in Scottish Borders in 2019. 

*Seven child protection cases in Scottish Borders where parental alcohol or drug problematic use was involved (2019 July snapshot). 

*Scottish Borders has an alcohol outlet availability lower than Scotland as a whole, but has pockets of high availability. 

*The annual cost of alcohol related harm to Scottish Borders (health, social care, crime and productive capacity) was £30.5m (£270 per person). 

*There are areas in the Scottish Borders that are more negatively affected by alcohol related harm than others (Hawick Central, Burnfoot, Peebles North, Galashiels North).

The profile report says: "There continues to be a notable trend in thefts of alcohol from ‘off sales’ premises over the reporting year, this may be due to the introduction of minimum pricing.

"Violence recording indicates an “Alcohol” marker as a clearly defined aggravator to indicate where the presence of alcohol is deemed a factor in the act of violence. Of the 1009 recorded crimes of violence for the 2019-20 period, a total of 235 had the alcohol marker attached to the crime report. Of that total 107 were in residential locations leaving 128 acts of violence in a public space where alcohol featured. . Galashiels, Hawick, Kelso, Selkirk and Peebles are the areas most frequently affected."

The evidence on the health factors associated with drinking heavily is laid out in detail. There were 414 attendances to the ED in BGH that were alcohol related during 2020-21. This total was 49% lower than the previous year’s 839 attendances.

"Attendances were highest in July, August and September. The lowest months were January, February, April and May which coincides with national lockdowns due to the COVID-19 pandemic. When compared with the last two years’ averages, the rate of ED alcohol attendances (per 1000 population) for 2020-21 has reduced by 51%. However, the split by age group retained a similar pattern with 18 to 24 age group being the highest. Residents of the most deprived areas were more than 6 times likely to attend ED due to alcohol compared to residents living in the least deprived areas of Borders."

And the report warns: "In Scotland there is an increasing rate of alcoholic liver disease hospital stays. Scotland’s rate has increased by 45% from 83 in 1997/98 to 128 in 2019/20. The trend in Borders is also similar with rates increasing from 54 in 1997/98 to 83 in 2019/20 (an increase of 54%). In Borders there were 21 new acute inpatients in 2019/20 with alcoholic liver disease. This compares to an average of 18.2 new inpatients between 2007/08 and 2019/20."

According to Scottish Health Survey (2016/2017/2018/2019 combined), 24% of all adults (aged 16 and over) in Borders were drinking above low risk guidelines (14 units per week) which is the same as the Scottish average.

In all health boards, a higher proportion of men than women drank out with the guidelines. The proportion of males drinking at harmful levels in Borders had a significant drop from 38% (2012/15) to 31% (2016/19). Scotland’s male population drinking at harmful levels remained fairly stable (from 36% to 33%). There is minimal change in the proportion female population drinking at harmful level from 2012/15 (17% Scotland; 16% Borders) to 2016/19 (16% Scotland; 18% Borders).

Bankrupt Avocet boss has "less than £100,000"

by LESTER CROSS

Bankrupt businessman Martin Frost has told a Sunday newspaper he has potential liabilities running into many millions of pounds while his personal estate is worth less than £100,000, and that he is dying.

Mr Frost who was chairman of the Avocet Group until Monday of this week when he and his wife were bankrupted by a judge has circulated an email with attachments including his response to questions from a Sunday Mail journalist. 

The paper carried a two page feature on the Avocet revolutionary fuel saga several weeks ago and looks set to feature a follow up on Mr Frost's business activities in tomorrow's edition.

These columns have carried detailed reports on the bankruptcy proceedings at Leeds Business and Property Court where finance company United Kingdom Agricultural Lending Ltd. (UKALL) successfully petitioned Judge Joanna Geddes to make the Frosts bankrupt. The couple are said to owe UKALL some £4 million including interest on an original loan of £3.25 million.

In his response to the Sunday Mail, Mr Frost writes: "I was a director and major ANC Plc [Avocet Natural Capital] shareholder. Since I am dying; from 2015, I gave away some £20 million of which some £5 million was given to ANC Plc shareholders in the last three years. 

"It is possible that some of this £5 million gift might be clawed back from those I had gifted should my bankruptcy ultimately stand. Otherwise, I cannot see what other complications there could be to ANC Plc shareholders."

Mr Frost claims his legal and accountancy team - they were not present in court for Monday's judgment -  could not understand why UKALL should wish to bankrupt him..."since for impending death reasons my personal estate is now less than £100,000 with potential liabilities to HMRC and others running into many millions UKALL will not even recover their legal fees from Janet and I."

In his email Mr Frost also takes a swipe at Judge Geddes and levels accusations at UKALL's counsel Jonathan Rodger. 

According to Mr Frost: "Judge Geddes may be a very good family law judge, but she got her insolvency law & contract law badly wrong. (For example, a guarantee by way of deed needs both to be dated and signed – mine and Janet’s were not.) Judge Geddes nasty comments about the Scottish judiciary have prompted a Scottish complaint against Judge Geddes."

In his submission to the court Mr Rodger outlined the concerted efforts made to serve statutory papers on Mr and Mrs Frost in Berwick-on-Tweed and Scarborough as part of the process of promoting the petition. He also said Avocet appeared to be practising alchemy; in other words the fuel patents held by ANC are worthless.

But Mr Frost tells the Sunday Mail: "Counsel for the Petitioners at best misled or at worse lied to the court re the service of the statutory demands – video evidence contradicts his assertions – and indeed due to a postal error Janet Frost had still not been formally served with a Bankruptcy Petition. Note: further complaints against UKALL counsel and ---- over their alchemy suggestions plainly shows they know NOT this cause."

The former director of numerous companies has told shareholders and investors in the Group via newsletters that he is terminally ill with a rare form of blood cancer.

And when Mr Frost was sequestrated [made bankrupt] under Scottish law in 2004 a report from accountant Alan Hall to the Court of Session declared: "Martin Frost’s senior's health is poor, suffering polycythemia vera and advanced osteoporosis, life expectancy 2- 4 years."

The very detailed report from Mr Hall, seeking to have Mr Frost's sequestration recalled, is still available on the businessman's archived website.

Included in the report are details of Mr Frost's assets and liabilities. It says: "In 1996 Martin Frost entered into an IVA (Individual Voluntary Arrangement, an English personal insolvency); in January 2000 his personal obligations ceased but his responsibility to the IVA Trust Fund remains. On behalf of the IVA Trust, Martin Frost continues to litigate.

"From 2000 till to date Martin Frost has received personal loans from family and friends of approximately £600,000. In general they have agreed to postpone their debt behind the other debt. In addition to the above loans Martin Frost has approximately £50,000 of unsecured institutional personal loans and credit cards, repayable over a three year period. Third parties will meet the monthly payments on these institutional loans, in like vein third parties agreed prior to sequestration to settle all other small personal and trade debts."

Mr Hall adds: "An oil painting by Richard Parkes Bonnington was valued in 1998 by the Antiques Road Show personnel at between £300,000 to £400,000; the painting has an excellent provenance, being authenticated repeatedly over the last 100 years and was used in the mid nineties to secure some £250,000 of borrowing with the Bank of Scotland.

"On balance I believe Martin Frost’s assets as stated being available to the sequestrated estate should if properly realised exceed not less than £2,000,000, while liabilities and contingent liabilities should not exceed £1,013,000." 

 

Council assets register and Common Good funds

 by LESTER CROSS

An unspecified number of operational buildings 'owned' by Scottish Borders Council but which occupy Common Good land may have to be transferred out of local authority ownership following a landmark court ruling which applies throughout Scotland.

The issue is highlighted in the annual external audit report on the Borders council's 2020/21 accounts by public spending watchdog Audit Scotland. It shows SBC is in the process of reviewing the legal and accounting implications of the judicial ruling and expects to conclude the process by March 2022.

As Audit Scotland points out: "A judicial review, published in August 2020 relating to Angus Council, concluded that all council assets built on Common Good land cannot be considered as owned separately from the land they stand on and are therefore Common Good assets. This is a new legal ruling with wide ranging impact on all Common Good funds across Scotland. Scottish Borders Council has a number of operational assets which stand on Common Good land."

Following the decision by judges in the Court of Session which centred on a sports centre in Forfar, Angus Council has proposed Common Good transfers from the authority's General Fund to Common Good funds worth a total of £13.648 million. The buildings concerned will be added to local funds in Arbroath, Brechin, Forfar and Montrose. Similar exercises will be necessary throughout Scotland.

Basically the judicial review concluded that all council assets built on Common Good land cannot be considered as owned separately from the land they stand on and are therefore Common Good assets.

The issue in Angus came to light when objectors took legal action to block the demolition of the disused Lochside Leisure Centre in Forfar Country Park, part of the Common Good.

But the council claimed the decision in question did not relate to any disposal or change in use of the common good fund, but rather the demolition of the non-operational leisure centre that sits on land forming part of the common good fund. 

Angus Council argued the land in question is part of the common good fund, but the building constructed upon it never has been. Each was held on different accounts and a notional “rent” was paid to the common good fund. 

The land upon which the leisure centre and adjacent caravan park, car parks, all weather tennis courts, play park and football pitches are situated is held by the respondents [the council] as common good land, and recorded as such in the common good asset register and balance sheet but the buildings and other uses thereon are held as assets in the Council’s general fund asset register land balance sheet and have been since at least 2008. 

In his written Opinion Lord Menzies said: "The Community Empowerment (Scotland) Act requires the local authority to publish details about any proposed disposal of, or as the case may be, the use to which the authority proposes to put the property, and on publishing details about its proposals to notify the relevant community council and other community bodies. 

"Again in deciding whether or not to dispose of any property held as part of the common good or to change the use to which any such property is put, the local authority must have regard to representations made by the relevant community council, other community bodies, and other persons. The aim is transparency, and encouragement of community involvement. 

"In the present case there is no dispute that the land on which the leisure centre was built forms part of the common good of the local authority. It follows that the leisure centre also forms part of the common good. The respondents argue that when the leisure centre was constructed, the local authority had no intention of donating the building to the common good. That may be, but in this respect intention seems to me to be neither here nor there. The leisure centre buildings are property held by the respondents as part of the common good."

Audit Scotland's report to members of Scottish Borders Council says: "The full list of affected assets is still to be determined. The council is in the process of reviewing the legal and accounting implications of the judicial ruling and expects to conclude the process in time for the preparation of the 2021/22 accounts. Risk – the Common Good Funds omit assets which rightly belong to them."

Avocet company secretary's "startling" claims

EXCLUSIVE by OUR BUSINESS STAFF

Statements coming from the Avocet Group's company secretary while multiple attempts were being made to serve payment demands on the firm's chairman and his wife were described as 'startling' by the judge in a bankruptcy hearing earlier this week.

Barrister Eirlys Lloyd, the appointed secretary of more than a dozen companies in which Martin Frost or his wife Janet have an interest, resides at a property in Palace Street, Berwick-on-Tweed which has also acted as the registered address for numerous 'Avocet' businesses.

The conduct of Mrs Lloyd when representatives of the petitioners visited her home in a bid to serve statutory demand notices had been mentioned at a previous session of the Business and Property Court in Leeds in September. At that time Jonathan Rodger, counsel for bankruptcy petitioners United Kingdom Agricultural Lending Ltd. (UKALL) referred to what he called "a schoolboy attempt to evade service".

The Frosts suggested the petition should be set aside as the statutory papers had not been properly served on them.

But on Monday of this week, in her judgment which rendered Mr and Mrs Frost bankrupt, Judge Joanna Geddes outlined the actions of Mrs Lloyd in considerable detail.

She said: "I must decide whether the statutory demands were properly served".

The judge explained that when Ms Lloyd returned the statutory demand and appointment letters which had been delivered to Palace Street on 1^st April 2020 she made three claims by way of individual bullet points.

These were: "Neither Martin Frost nor Janet Orr Frost have, or have had a place of business or any arrangement which has any connection to my home; No direction has been given by either Martin Frost or Janet Orr Frost to serve documents at 25 Palace Street, Berwick; I do not accept service on behalf of either Martin Frost or Janet Orr Frost in respect of their personal matters. I am not authorised to do so and I would never accept such authorisation with personal matters"

Said Judge Geddes: "Those claims are startling given what I set out next."

She continued: "25 Palace Street may be the residential address of Eirlys Lloyd but it’s also the registered address of 14 companies of which Mr Frost is a director and four of which Janet Frost is a director as set out in the statement of Georgina Johnston [a witness for the petitioners]. 

"Certainly it’s the residential address of Eirlys Lloyd in her capacity of sole director of Eirlys Lloyd Company Services Ltd and is also that company’s registered address. Eirlys Lloyd Company Services Ltd acted as company secretary of Orrdone Farms (the insolvent company which obtained the loan from UKALL) and many if not all of the companies the Frosts are interested in. 

"Further, it is the address named by Janet Orr in her personal guarantee [for the loan] as the address to be used for all notices, and, fourthly it’s the address at which the original demands by letter were sent and received in early March 2020. Those demands by letter were received and Mr Frost replied to them on his own and his wife’s behalf. Nothing within his replies would have alerted UKALL to any objections to receiving post at that address".

In his submission to the court on Monday Mr Frost outlined in detail how he would soon be able to repay the £4 million due to UKALL.

He told Judge Geddes: "the situation is very clear on the ability to pay. Another company called Avocet Natural Capital - its subsidiary recently sold some intellectual property and this is the intellectual property which is very valuable which relates to the production of jet fuel from air, in other words is by sophisticated methods taking the carbon out of the air and translating it into fuel. 

"The original transaction was completed in June, that’s June of this year and the consideration at that time was $100M (US). Due to problems which followed that consideration was reduced to £$40M. That $40M consideration was to be paid in two tranches, one in September and the second in February. The $20M tranche has duly been paid, the missing problem with the $20M tranche was the fact that one then had to get withholding tax, US withholding tax consent, so in other words one can remit the money from the US without it being subject to roughly a 30% tax. That consent eventually came through on Friday last and the money currently is available in the US and it will take between four and ten days for that money to be transferred."

When Judge Geddes put it to Mr Frost there was no documentary evidence as to the existence of the money he said: "The only question on the money at the moment is the method of payment and there is some debate on whether it should go in to a client’s account or a joint escrow account, as such. The evidence of the money has been provided to our solicitors."

In a letter to 'colleagues' today Mr Frost has given his reaction to yesterday's court decision.

States Mr Frost: "Unexpected to Janet and I, we were made bankrupt on 18th October, at Leeds County Court. Janet and I are appealing on legal grounds. May I thank all of you who have sent your commiserations.

"Yesterday afternoon and last night, I spent time with lawyers discussing what this means to us all. All were surprised that UK Agricultural Lending Limited’s counsel on Monday suggested to the court that Avocet was engaged in alchemy and that by inference there is No Avocet Patent Value.

"Shortly put, my bankruptcy: Does not upset, the forthcoming ANC Plc dividend. Because pending payment was refused by the Petitioners: this supports my lawyer’s contention that my Bankruptcy Petition was prematurely raised for collateral purposes. Provides a possible extra £6.6 million for alternative Avocet investment or litigation· Now enables indemnity Bankruptcy Petitions to be raised.

Personally, I had hoped that with the good dividend news and excellent happenings with Genfro that we had a chance for peace. Sadly, such has not happened.

"In the UK until our English Bankruptcy appeal application are heard we need to resign as a director of UK companies. Because I hold main citizenship elsewhere in differing jurisdictions, matters will largely wait until my UK appeal hearing as to implications." 

Avocet chairman declared bankrupt by judge

SPECIAL FEATURE by OUR BUSINESS STAFF

The promise of a £6.6 million windfall from the sale of 'air to jet fuel' patents to the state of Israel failed to persuade a judge not to make Avocet Group chairman Martin Frost and his wife Janet bankrupt in a judgment handed down today.

Mr Frost, a self-styled controversial businessman with at least three companies either in liquidation or administration made a last ditch effort to convince the Business and Property Court in Leeds that the release of $20 million from a Texas bank would enable him to settle a £4 million debt being chased by financiers United Kingdom Agricultural Lending Ltd. (UKALL).

But Judge Joanna Geddes dismissed Mr Frost's assertion that the cash would be on its way from the United States if she granted an adjournment of ten or fourteen days. There was also an allegation that Mr Frost was relying on Twenty-first Century alchemy to get him out of trouble.

This was the latest attempt by the Frosts to convince the court that Avocet's intellectual property [IP] would yield sums ranging from $40 million to $100 million. Mr Frost has made similar claims in numerous letters to hundreds of Avocet shareholders.

In a witness statement in April this year as part of evidence aimed at defeating the bankruptcy petition he said the valuable patents were being sold to a major US oil company with the transaction due to be concluded "in a matter of days".

Today's proceedings, conducted via remote links, heard submissions from Mr Frost who was not represented by counsel, and from Jonathan Rodger, on behalf of petitioners UKALL.

Mr Rodger was scathing in his dismissal of Mr Frost's latest assertion. He referred to a letter Mr Frost sent to court on October 11th - the date set by the judge as a deadline for evidence of the Frosts' ability to pay. Mr Frost claimed the money from the sales was being held by America's Frost Bank.

UKALL's counsel told the court there were three over-arching points. "The first one is that there is no evidence of any offer to pay the petitioner's debt, whether that offer be made by Mr Frost, Mrs Frost or a third party. I have taken instruction from my solicitor in the last few minutes and she has confirmed that there has been no offer to pay. 

"The second of my three points is that the evidence as contained in Mr Frost’s letter of the 11th October is that he is presently without means. It is clear from that letter that there is a tension between Mr Frost and his advisors arising over fees. You can see that from the first, sub paragraph A. But there is also a plain statement that Mr Frost’s cash position is difficult and that he has no availability on his personal banking or credit cards and he cannot borrow against his unspecified, uncharged UK properties. The starting point is that Mr Frost hasn’t got any means now." 

Mr Frost was not saying that he had means, he was making an assertion of the following facts: that there is a company called Avocet Natural Capital Plc [ANC], that company owned the intellectual property in a technology that allowed air to be turned into aviation fuel; that company had sold the technology to the state of Israel and that company could properly, and would, pay a substantial part of the proceeds of sale to Mr Frost.

Mr Rodger continued: "Now, ANC is a corporation registered and domiciled in the UK, in England and Wales, the record shows that and the record shows that Mr Frost is a director of ANC but also that he is one of 697 shareholders. In my submission the factual assertion put up by Mr Frost, which I have just summarised, inherently is implausible. 

"There is no bank statement from any bank holding all of this money belonging to ANC. The availability of such a bank statement ought not to be a matter of difficulty. Bank statements are more readily available these days than at any other time in history. Second, Mr Frost is a director of ANC Plc, third on his own account he has some good connection with the eponymous bank holding all of this money. There are no documents at all from Frost Bank.

"There are no transaction documents, by which I mean documents effecting the sale of $40M of intellectual property to the state of Israel. The idea that such a transaction would not have generated a forest of documents is absurd. There is no evidence that any money transfer from the Frost Bank to Mr Frost is in progress. There are no minutes of the board of ANC or of a shareholders meeting of ANC approving the disposition of such an enormous amount of ANC’s money to Mr Frost. Obviously for a company to just give $6.1M of its money to a director is an eyebrow raising thing which ought properly to be done with attending formality. 

"And finally, there’s no copy of the written confirmation of this favourable decision from the Texan taxation authority – all of this could have been produced to you. I’m afraid that it’s my submission that Mr Frost’s letter of 11^th October and his assertion that essentially 21^st century alchemy is going to put $6.1M in his pocket is fanciful and utterly without substance. My submission is there is no good reason, no basis for not making a bankruptcy order here and now."

In response, Mr Frost claimed there had been an embargo in place that there should be no mention of the state of Israel. Counsel for UKALL had broken that embargo in a public forum.

Mr Frost added that Israeli security services had been involved in the transaction. ANC had a number of prominent Islamic shareholders, and "one did not want a big announcement that this technology was being sold to the Israelis".

Judge Geddes said Mr Frost had contended he would have the benefit of £6.6 million from the sale of IP and that he could then pay the petitioner's debt. But despite the significant sums of money and significant transactions Mr Frost had not provided evidence to back up his claims.

The judge continued: "This is not the first time this has happened. Mere assertions are not enough. I am not satisfied he can pay or will be able to pay the debt in reasonable time, and therefore I make Mr and Mrs Frost bankrupt".

Mr Frost immediately indicated that he would be appealing the decision in a higher court.

Borders mental health charity 'implodes' into bankruptcy

by DOUG COLLIE

An organisation which has helped hundreds of individuals with mental health issues in the Scottish Borders over more than 25 years has been sequestrated following a catastrophic decision to wrongfully dismiss its service director in 2019.

New Horizons Borders [NHB] which operated from premises in Island Street, Galashiels and received council funding, is one of only four registered Scottish charities to have been 'awarded' bankruptcy by the charity regulator over the last four years. It is now in the process of being wound up after what has been described as its "implosion" during the Covid-19 pandemic.

The sad story of NHB's demise is set out in a redacted report by the Board of Trustees which is available on the website of the Office of the Scottish Charity Regulator (OHCR). A copy of the letter from the Accountant in Bankruptcy (AIB) to the charity is also on the website.

Earlier this year the sacked former service director Laura Lawson was awarded a settlement of more than £32,000 by an employment tribunal. And in 2020 there were mass resignations by staff and board members from NHB.

According to the report to OSCR covering the months April to September 2020 "The period was one of considerable challenges and unforeseen transition for New Horizons Borders.

"The anxiety and isolation of the pandemic and its resulting lockdown had a significant negative impact on the mental wellbeing of our members (beneficiaries of NHB support services), and it must be said, our staff and volunteers.

"Ultimately the pressures on staff and volunteers of developing and delivering 'projects' and services to an ever growing and more vulnerable membership took its toll..."

The report then reveals how the resignation of the charity's manager in June 2020 precipitated the resignation of two members of staff and eight of the trustees on the Board of Management over the period July-October 2020.

A new Board was appointed "to contribute to the ultimate conclusion of the employment tribunal of a former manager; to undertake all necessary administrative tasks involved in achieving a dignified closure of New Horizons Borders".

By March 2021 the lease of the Galashiels premises had been terminated with "kitty" money to be held by another charity, Health in Mind.

The document states: "Now that all funding sources have ceased an application to wind up the organisation has been made to OSCR".

NHB had a financial deficit of £32,000 at the end of the financial year. Support from Scottish Borders Council for core funding ended in July 2020. 

"This together with an employment tribunal held in April 2021 which resulted in a settlement due to a former employee has consequently ended up with an insolvency application to wind up the organisation."

In a section dealing with the impact of Covid-19, the trustees' report says: "In our opinion the Covid-19 pandemic was one of two catalysts which ultimately led to what can only be described as the implosion of the organisation.

"The other was a high level of constant background workload and stress resulting from the considerable uncertainty of the outcome of the employment tribunal and its impact on the organisation".

Sequestration was granted to NHB by the charity regulator on August 16th this year.

A letter from the Accountant in Bankruptcy (AIB) to the charity states: "Provided you co-operate fully with your trustee you may expect to be discharged from bankruptcy one year after the date of your bankruptcy award".

An Online Borders directory notice tells readers: "New Horizon Borders is no longer delivering any support services. Similar peer support services will be available from Health in Mind shortly".

Avocet boss's Texas talk "utter garbage"

by DOUGLAS SHEPHERD

Rumours in the press that Avocet Group chairman Martin Frost could be made bankrupt next week "for technical reasons" rather than due to inability to pay a £4 million debt have been seized on by the self-styled controversial businessman.

But Mr Frost's latest newsletter to Avocet Natural Capital (ANC) shareholders was dismissed as 'utter garbage' and 'piffle' after he told investors that payment of promised dividends from the sale of patents would be made by an unnamed Texas entity.

As reported in these columns a judgment in the bankruptcy petition case brought against Mr and Mrs Frost by finance company United Kingdom Agricultural Lending Ltd. (UKALL) is to be handed down in court at Leeds on October 18th.

In a reference to the legal proceedings, Mr Frost writes: "On Thursday 7th October, a rumour was peddled by some members of the press that despite the ability to pay I may (for technical reasons) be made bankrupt next week. These rumours echoed again today. Provisions are made for such an eventuality - since 2012 I have made gifts of over £29 million pounds – I regret some £11 million are Avocet related of which over £5 million recent could be subject to a trustee claim. I have provided for such a possible hiccup; I trust any gift recipient has done similar."

Earlier Mr Frost had urged recipients of the £5 million worth of shares gifted by him to now pay him one penny per share to avoid having their "gifts" seized by UKALL.

There has been widespread scepticism among Avocet investors after the Group's management claimed intellectual property worth $40 million had been sold to 'mystery' Middle East buyers with the cash being deposited in the USA for safe keeping.

Yesterday's newsletter outlined what would happen next.

According to Mr Frost, on Saturday 23rd October 2021, Eirlys Lloyd [company secretary of a number of Avocet firms] will start work on the list of ANC Plc shareholders who will benefit via a dividend from the recent intellectual property sales. Mrs. Lloyd expects to conclude her input by Monday 1st November 2021.

"The Texan company from which the dividend will emanate, is subject to the commercial laws of Texas which provides that a dividend may be withheld from an entity in which the Texan company or its parent may be in dispute with.", he added.

"On Tuesday, 2nd November I shall provide Mrs Lloyd with such in dispute entities. Thereafter, the dividend will be issued in gross form to the shareholder. Payment in US currency will be made from Texas. This dividend payment shall be bounced off (or then routed out) of a European country. Payment will remain in US dollars. It will be up to the individual shareholder to notify their tax authority as to their dividend receipt.

"As of 4pm Texan time on 13th October, there has not been a formal written notification re: the non-applicability of the US withholding tax. That said, one is assured that receipt will now not be later than 10am on Friday 15th October Texan time, and it is that time & date that ANC Plc’s executive shall work to."

However, these disclosures from Mr Frost failed to impress an unnamed contributor to the online Avocet Shareholders' Independent Forum.

He or she wrote: "The latest newsletter from Frost is utter garbage. Apart from pushing the date back he is telling us that some unknown Texan company will pay the dividend and that some obscure law says that if that company is in dispute (not avocet) with an entity the dividend can be withheld. What nonsense. I have never heard of a third party company paying a dividend for another company especially when the money is meant to be in the bank.

"I think I may be joining the bad people as after all the damage he has done I would quite happily see him and his cronies ruined".

And a second Forum post went into greater detail.

This writer claimed: "Frost, please allow me to give you a refresher course in very basic business law.
We are not shareholders in a “mystery” company in Texas. We are shareholders of Avocet Natural Capital Plc, a company incorporated in the UK, and as such, both the company as well as our relationship with it, are governed by UK, not Texas, law.

"Regardless of where the money to pay this (so far very imaginary dividend) comes from, from a legal perspective ultimately the shareholders must be paid the dividend directly from the company whose shares they hold – in this case, Avocet Natural Capital, a UK company governed by UK, not Texas, laws.

"If it is not, then under the law (UK or Texas, or any other jurisdiction that I can think of), any such payment would not be considered to be a dividend, with the resulting tax and other implications. So, in summary, Frost, in any future statements, please try and conform to well-understood basic business and legal principles. Never your strong point, was it?"

In his newsletter Mr Frost also revealed that solicitors Fieldfisher, of London, had recently completed a debt purchase and debt assignment form. Companies or individuals wishing their debt against Omega [Omega Infinite was the former Avocet Group parent company now in compulsory liquidation], or any other Avocet company purchased should first approach Dr. ‘Bob’ Jennings (Mr Frost's fellow Avocet director) for a form. Agreed payments should be paid in October 2021."

Patent sales and evidence of 'ability to pay'

by OUR BUSINESS REPORTER

The revelation that more than $6 million from the sale of intellectual property will be used to provide evidence that Avocet Group directors have the ability to pay their creditors has apparently shocked some shareholders who have been waiting seven years for a return on their money.

News of the financial manoeuvre was given at the weekend by Avocet Natural Capital PLC [ANC] chairman Martin Frost just a day before the October 11th deadline set by a judge in Mr Frost's bankruptcy petition hearing.

The self-styled 'controversial' businessman was given until today to provide the Leeds Business and Property Court with proof he could settle a £4 million debt with petitioners United Kingdom Agricultural Lending Ltd. (UKALL). A judgment in the case is scheduled for handing down on October 18th.

In a newsletter to ANC shareholders Mr Frost explained: "Please note from Summer 2020 most of my UK assets have been frozen by UK Agricultural Lending Limited. I am now aware that UKALL will seek to freeze my UK debtors and UK potential debtors.

"Within potential debtors is a £5.5 million sum of personal gifts I have made in the last three years. Within this £5.5 million are my gifts of ANC Plc shares – unless these shares are bought either for cash or by arrangement any dividend on these shares may be apprehended by UKALL. To prevent this happening please ensure such gifted shares are purchased before Wednesday 13th October 2021."

But angry shareholders immediately took to the Independent Forum to warn against such a move. This followed frequent claims that the shares in Avocet were now worthless.

A Forum contributor wrote: "Frost is now claiming in his October 10th, 2021 letter that his gift of shares to us has made us each a ”potential debtor” of his, and we must immediately pay him personally for the shares that he gave as a gift to us to prevent this.

"This makes absolutely no sense. Frost just needs money. Don’t give it to him. Or, ask him this - 'if you want any more money from us, just show us proof that ANC has in its possession half of the funds from the $40 million sale. It is very easy for you to do.'"

ANC management say unidentified investors from the Middle East have purchased $40 million worth of intellectual property from Avocet and associated company Genfro in recent times. The money is said to be deposited in a US bank account.

In his Sunday correspondence Mr Frost wrote: "On Friday, ANC Plc verbally heard that its funds in the US (neither $20 million held nor the $20 million in escrow - $40 million in all) will NOT be subject to US withholding tax. This verbal approval will be confirmed on Wednesday 13th October 2021. This means that ANC Plc will on Thursday 14th October 10, 2021, be making some payments".

These payments would include £6.6 million under ANC Plc’s guarantee liabilities to Martin Frost; Dr. Bob. Jennings; Mrs. Janet Orr Frost; and Mrs. Rose Mary Jennings to be put into an escrow account to evidence ability to pay.

The cash would also be used to purchase "some Omega related debts from Fieldfisher, Basck, Ryecrofts, and Collir IP. The advance of a small working capital fund to support the restructured Avocet Bio Solutions (e.g., payments to methanol & fodder plant developments). Payment of all outstanding ANC Plc trade creditors including those with Mr. Paul Newsham & payment into a ‘bash-up ‘litigation fund."

Fieldfisher is a law firm frequently mentioned in correspondence from Mr Frost. He told investors recently that the firm's Kit Jarvis would be used to pursue litigation against a large number of parties who had 'damaged' Avocet.

Basck are patent specialists while Ryecroft Glenton are a Newcastle-on-Tyne based firm of accountants who resigned as auditors of Mr Frost's businesses for non payment of professional fees. "Collir IP" - it should be Coller IP - provided valuations of Avocet's intellectual property in 2016 and 2018.

In a separate email circulated by Mr Frost last Friday shareholders were informed: "The Genfro Share Trading Platform based in Panama, remains unregulated. That said, unregulated share dealing in Genfro Limited shares along with the reconstituted (Eire-based) Avocet Bio Solutions shares shall commence next week. All Genfro Limited & Avocet Bio Solutions shareholders shall be notified as to the opening and transaction methodology. As a guide – Bio Solutions shares are expected to exchange around one euro and Genfro for more than one pound."

Cold store manager 'frozen out', tribunal hears

by DOUG COLLIE

One of Scotland's leading fish wholesalers has been ordered to pay its former cold store manager more than £10,000 in compensation after he brought successful claims for wrongful and unfair dismissal against the company at an employment tribunal hearing.

A judgment in the case published at the weekend found Darren Amers' claims were justified after he left the employment of D R Collin & Son, of Eyemouth. Collin's processes and supplies fresh and frozen fish and seafood products to wholesale customers in the UK, the EU and (on occasion) outside the EU, including bars and restaurants.

In evidence, Mr Amers told the tribunal he 'loved' his job and when he was removed from his managerial position and offered a lesser paid post after a period on furlough it was "like a kick in the teeth".

The written judgment from employment judge Antoine Tinnion explained that Mr. Amers had pleaded that three actions “had a bearing” on his dismissal: (i) his involvement in a workplace accident in Autumn 2018 in which another employee of the respondent (Collin's) had negligently electrocuted him (ii) his choice to pursue a personal injury claim against the respondent arising out of that accident (Mr. Amers contended this was the real reason for his dismissal) (iii) his informing the respondent that there were pigeon droppings within the cold store and there was a lack of toilet facilities.

"As well as challenging the reason for dismissal, Mr. Amers pleaded his dismissal for redundancy was unfair for two reasons: first, he was not warned or consulted, properly or at all, of the impending redundancy situation; second, he was not offered any right of appeal against dismissal", states Judge Tinnion.

D R Collin accepted Mr. Amers had worked for the firm, but only in the capacity of a worker, not an employee, therefore alleged the Tribunal lacked jurisdiction to hear the unfair dismissal claim. They also denied dismissing Mr. Amers, claiming instead he had “terminated his own position by indicating that he did not wish to undertake any further work as offered by them.

In addition the respondent contended that if he had been dismissed, the reason for dismissal was  redundancy, and denied Mr. Amers’ personal injury claim had anything to do with its treatment of him. They denied Mr. Amers was entitled to a redundancy payment because he had unreasonably refused an offer of suitable alternative employment. 

However, in correspondence prior to the start of the hearing, the respondent conceded that Mr. Amers had been one of its employees (without qualification). Given that concession, and the undisputed fact that Mr. Amers had worked continuously for the respondent for over two years, the Tribunal was satisfied that it had jurisdiction to hear the unfair dismissal claim.

According to the written judgment: "On 1 May 2017, Mr. Amers joined the respondent’s employment as a cold store operative and was paid £10/hour plus overtime. During his employment, Mr. Amers’ primary place of work was always the cold store.

 

"When Mr. Amers joined the respondent, he already knew – and was on good personal terms – with its owner/director Mr. James Cook. Mr. Amers and his wife socialised together outside of work with Mr. Cook and his wife. It was in fact through Mr. Cook that Mr. Amers obtained this employment."

The tribunal was told Mr. Amers was involved in a workplace accident at the respondent’s premises, which on his account was the result of the negligence of another named employee which caused Mr. Amers to receive an electric shock, throwing him out of the reach truck he was in at the time. 

Then in 2019, after the accident but before he intimated any intention to bring a personal injury claim, the respondent promoted Mr. Amers to the post of Cold Store Manager, gave him a pay rise to £11/hour, and provided him with a company car and fuel allowance.

The judgment continues: "In 2019 Mr. Amers issued a personal injury claim against the respondent for a PTSD injury which he claimed the 2018 accident caused him. After Mr. Amers issued a personal injury claim, Mr. Amers’ previously friendly personal relationship with Mr. Cook ended, the Tribunal infers at Mr. Cook’s instigation."

Following the onset of the Covid-19 pandemic in March 2020 and the measures the UK government (and EU governments) introduced to address it – primarily,  “lockdowns”, the temporary closure of most businesses for retail customers (bars, restaurants), and social distancing requirements – the respondent’s business suffered a significant downturn in trade. Collin's closed the cold store, and put Mr. Amers and others on furlough. Mr. Amers never returned to work, and remained on furlough until July 2020.

When he was called to a meeting with management Mr Amers was told that due to the way trade was going the business was doing more fresh fish, the Cold Store would no longer be used as much as there was less need to store frozen food, and there was no longer a position for him at the Cold Store. He was then told he could work at a different site. Mr. Amers asked if he’d be on the same pay. But he was informed he’d have to take a pay cut to £9.50/hour.

On 14 July 2020 Mr. Amers informed the company via WhatsApp that he would not be accepting the new job and pay cut offered to him. Mr. Amers confirmed later that he was not accepting the offer to work at a different site.

"When asked in his evidence in chief what he believed the true reason for his dismissal was, Mr. Amers stated 'That’s what I would like to find out'. Mr. Amers stated that once his personal injury claim was made public within the company and he made a request for CCTV, his relationship with the respondent’s directors changed."

Judge Tinnion concludes: "The Tribunal finds that Mr. Amers was expressly dismissed. The Tribunal is satisfied, on the balance of probabilities, that the sole reason for Mr. Amers’ dismissal in July 2020 was genuinely that of redundancy. 

"The Tribunal pauses to note that the evidence on this issue was less than satisfactory. The obvious way to establish that the Cold Store was less busy in the second quarter of 2020 than it would normally have been would have been for the respondent (on whom the burden of proof lay) to provide data comparing the Cold Store’s utilisation in Q2 2019.

 

"Affording Mr. Amers a right of appeal against his dismissal would have given him a proper opportunity to consider the situation and state his case to his employer to the best of his ability. That opportunity was denied him, and in the Tribunal’s judgment the respondent acted unfairly and unreasonably in doing so. 

 

"The respondent denies Mr. Amers was dismissed, but has put forward no reason why (if he was dismissed) it was reasonable not to offer him a right of appeal against dismissal. The Tribunal’s judgment is therefore that Mr. Amers’ unfair dismissal claim is well-founded and he is entitled to a remedy in respect of same. The Tribunal’s judgment is therefore that Mr. Amers’ wrongful dismissal claim is also well-founded and he is entitled to a remedy in respect of same."

Collin's was instructed by the judge to pay compensation to Mr Amers totalling £10,434.36.

 

 

Borders addiction centre's push for private clients

by EWAN LAMB

An over-reliance on EU based contracts and restrictions on NHS budgets means a 'world class' addiction hospital in the Scottish Borders is stepping up its efforts to attract more private patients willing to pay from £5,300 a week for treatment.

Less than a year ago the Scottish Government was urged by then Tory leader Ruth Davidson to make much more use of Castle Craig Hospital in the Peeblesshire countryside by having a far greater number of drug addicts referred to the treatment facility.

At First Ministers' Questions in the Scottish Parliament in December 2020 Ms Davidson asked First Minister Nicola Sturgeon about the number of 1,264 drug deaths in Scotland in a single year, a record toll for the sixth year running.

Ms Davidson, now a member of the House of Lords, said: "Just an hour from here there are world class rehab facilities at Castle Craig. In 2002 these facilities admitted 257 NHS patients. By 2008 the number had dropped to 145. First Minister, what was the number in 2019".

She then told Parliament the total in 2019 had been just five referrals, adding: "Castle Craig could be saving more than 250 Scots a year...it has done it before. Why did the Government stop funding those beds?

"Today, to get rehab people need to be really lucky and get charity help, or they need to be wealthy enough to afford it, because the Government provides only 13% of rehab beds in Scotland".

But the latest annual report and financial statements from Castle Craig Hospital Ltd. explains how the company will be turning increasingly to the private sector for its business.

The alcohol and drug treatment centre was founded in 1988 by Peter McCann. The McCann family continue to run the hospital and a number of subsidiary companies including a similar treatment centre at Smarmore Castle in the Republic of Ireland.

The Group's 2020 accounts show turnover fell from £9.010 million in 2019 to £6.842 million last year. The operating profit in 2020 of £686,000 was only slightly less than the £706,700 recorded for the previous twelve months.

"Occupancy levels during the period [2020] were similar to the previous year. In a difficult market this is testament to the reputation and standing of the Group", says the report.

The Castle Craig treatment model, according to the hospital website, follows the Minnesota model or "12 step treatment". Addiction is viewed as a disease and complete abstinence from all mind-bending drugs is necessary for long lasting recovery.

The report explains that challenges and risks facing the company include "an over reliance on Euro-based contracts with EU zone insurance companies which form approximately 36% of total sales.

"We are striving to increase revenue from other sources, in particular the private market. Private sales increased by 22%. Marketing emphasis has been and will continue to be placed on this sector".

Castle Craig has been 'significantly impacted' by the Covid-19 pandemic during 2020.

"The various lockdowns effectively closed the hospital to admissions for long periods and this reflected in the reduction in turnover and profit. The company took advantage of the furlough scheme to maintain its workforce and also drew down a loan to ensure funding was available to cover the loss of income".

Furlough payments of £368,937 were received to help secure the posts of the 134 employees including 74 medical staff.

A qualified opinion from the company's auditors Whitelaw Wells states: "Included in debtors shown on the balance sheet are total balances of £1,007,576 for which recoverability of the debts concerned cannot be concerned certain.

"These relate to balances owed by four related companies which recorded losses during the year and had net liabilities as at DEcember 31st 2020. The companies continue to trade and the directors expect they will be able to generate future profits. The financial statements do not include the adjustments that may result if the debts were deemed to be irrecoverable".

Smarmore Castle Private Clinic Ltd. was established in Eire in 2015 to take advantage of an EU directive which entitles an EU citizen in one country to claim the costs of healthcare treatment provided in any other EU state.

The Irish company has been funded by inter-company loans, and the report shows its rent was waived in 2018 and 2019 before a reduced rent of E50,000 was fixed for 2020. Nevertheless the Smarmore facility is to be extended at a cost of £816,667 to provide further patient capacity. 

Calls for Avocet probe "two years too late"

by OUR BUSINESS REPORTER

The so-called "Avocet fiasco" which has sparked allegations of possible misuse of company funds could have been halted two years ago had major shareholders backed a 'freezing' injunction application to the courts, it has been claimed.

Calls were made at the weekend for a forensic examination of the Avocet Group's accounts following a Sunday Mail article in which investors in the 'disruptive technology' fuel additive businesses told the newspaper they believed their shares were now worthless.

But Ulster farmer James Christie, whose agricultural buildings were partially demolished for a planned Avocet project before company chairman Martin Frost pulled the plug on the scheme says shareholders who were at last asking for action should have supported him back in 2019. 

He had contacted several individuals in a bid to get help for his desperate plight and to discuss possible action going forward.

Mr Christie, after seeking legal advice, approached a number of influential Avocet Infinite PLC stakeholders and suggested they should obtain a so-called Mareva Injunction against the directors which would have frozen assets while the company's affairs were looked into. 

"This form of legal action costs about £10,000 which wouldn’t have been much if enough investors had agreed", Mr Christie told us. "But they decided not to go for the injunction and look what has happened since. They shouldn't be portraying themselves as 'victims' now. A great opportunity was missed"

Mr Christie recalled: "The first individual I phoned simply hung up on me; the second eminent shareholder I spoke to told me I was 'being boring'".

In a series of texts to the struggling farmer, a third stakeholder - a professional gentleman - wrote: "Money spent on a legal battle will be a total and utter waste of money. Finally, almost no Englishman will ever think Ulster has any remote glimmer of an economically successful future, so please put no faith in that, even if you're right about the future prospects. And personally I think you may be right, but I'm sadly in the minority".

Avocet Infinite emails to shareholders in the run-up to the 2019 annual general meeting (AGM) outlined a number of current issues facing the company. The list compiled by Mr Frost included "a purported Mareva Injunction by James Christie to cancel the AGM". 

Mr Frost told the October 2019 meeting of Avocet Infinite investors in York: "Earlier this week I heard that James Christie had raised a Mareva Injunction (MI) to try to freeze Avocet’s assets and my own assets. It appears that in Northern Ireland you can put a motion seeking a MI before a judge without having to put up security. 

"However, to enforce a MI in the UK you have to get the required court to agree to it. Our Northern Ireland lawyers advised that to delay the process if we changed the name of the company (to Omega Infinite PLC) it would give us 24 or 48 hours to combat it. The danger from the MI was it would likely seize my assets and my family’s assets including £800,000 specified for Avocet Infinite’s creditors. The MI would have put that at risk."

Mr Frost also said “By 1pm tomorrow [November 1st 2019] all the money should be in place; should have been transferred to Avocet Infinite to pay the creditors, The MI threatened that which prompted the name change."

Those present at the meeting who had previously undergone 'security checks' were then asked to confirm the name change which Mr Frost had made days earlier.

But within a matter of a few months Omega Infinite was the subject of a Winding Up order and was then placed in compulsory liquidation with creditors claiming many millions of pounds.

Said Mr Christie: "Changing the company's name made no difference. It was the company number which mattered. We could have stopped Avocet's management in their tracks".

Mr Christie, who claims to have lost many hundreds of thousands of pounds as a result of his association with Avocet also asked us to correct a "misleading statement" which was included in a newsletter issued by Mr Frost to shareholders this week.

In it, the Avocet chairman wrote: "“To cut short a long story, this year in the long running defamation action with James Christie against me, my Northern Ireland Q.C. (first) looked at the demerger agreements and readily decided that the ownership of the Omega debt due from Avocet Faculties Limited clearly passed to Avocet Bio Solutions Plc in the 2019 reconstruct.”

But James Christie explained: "My defamation action is against Martin Frost personally, not against any Avocet company. He made very serious allegations against me in another of his communications to investors. But the claims made by Mr Frost are too dangerous to mention here, for safety reasons". 

£5 million gifted shares a problem for Avocet chairman

by OUR BUSINESS STAFF

Self styled 'controversial' businessman Martin Frost has today issued a "Putting The Record Straight" communication following weekend claims that shares in his Avocet Group of Companies are worthless, and a forensic audit of the books is urgently needed to probe possible misuse of funds.

The strong views of concerned shareholders in the 'disruptive technology' firms Avocet Natural Capital (ANC) and Omega Infinite (in compulsory liquidation) were set out in a damning two-page article in yesterday's Sunday Mail.

At the same time major shareholder Alistair Munro took to the Avocet Shareholders Independent Forum to outline what he believed should happen next.

Later this month a judge will rule on a petition by an agricultural mortgage company which seeks to have Mr Frost and his wife declared bankrupt. The lenders are pursuing an alleged debt of £4 million. 

This is one of the topics covered by Mr Frost in today's letter to Avocet's numerous shareholders.

Investors with an estimated stake of £30 million in the Avocet fuel and 'healthy beef' concepts are told: "As a precaution against problems that my possible bankruptcy could bring to Avocet / Omega shareholders is the problem that I have gifted over 3.5 million pounds worth of ANC Plc shares along with a further 1.5 million pounds worth of Avocet Infinite Plc shares. 

"To turn this gift into a purchase and defray a possible demand of a pound a share from my potential executors it is suggested you can pay me direct a penny per share in respect of each share you received from me". Mr Frost then provides his bank details, adding "Such payments / agreements negate any danger from my estate."

As a response to the Sunday Mail feature and as a rebuttal to continuing criticism from long suffering investors, Mr Frost includes the text of an email he claims to have received yesterday from a shareholder together with many other messages of support.

The unnamed writer of the email says: "Firstly, can I just say how impressed I have been with the dignified way that you have dealt with the nefarious dealings of those who would do you harm and it’s a tragedy that your time and efforts have been distracted by their nonsense. Lesser men would have weakened but clearly your stature, demeanor [sic]  intelligence and thirst for the truth has them on the back foot and no doubt you will breathe clearly again when they are properly dealt with."

In a reference to Mr Munro, an Edinburgh and Dubai based business executive, Mr Frost writes: "Mr. Alistair Munro was with Bob Jennings & I, in Ireland in February 2019, when it is true that I wished to see Alistair as group Avocet managing director. For a variety of reasons, not least the machinations of Mr. Chris Smylie and Mr. Stuart Lucas such appointment did not happen."

Almost every shareholder letter from Mr Frost contains details of threatened legal action, and the latest communique is no exception.

The readers are told: "Because the strength of Avocet is in its intellectual property, Avocet Natural Capital Plc (ANC Plc.) has just sold its jet fuel from air intellectual property for $40 million, leaving a residual patent strength value of some £25 million sterling in ANC Plc. 

"ANC Plc is proposing to sue insolvency practitioners Begbies Traynor (liquidators of Omega Infinite, and administrators of Avocet Faculties Ltd), and Aver (administrators of Orrdone Farms Ltd) for over £100 million for the intellectual property losses that they have caused to ANC Plc. ANC Plc are proposing to engage Mr. Kit Jarvis of (law firm) Fieldfisher to pursue this recovery."

Genfro Ltd., another associated business dubbed 'son of Avocet' is due to have its first annual meeting in late October, an event for which Mr Frost says "full precautions will be taken so that the conference cannot be hijacked. Note: the hijacking prospect was one of the reasons that ANC Plc’s General Open Meeting was cancelled at the last moment."

Today's newsletter declares: "Many Avocet shareholders are benefitting from their new 2021 investments into Genfro Limited. Genfro has developed new intellectual property in conjunction with a conceptually new share trading platform. Many believe that the share value of Genfros will well exceed their past expectations with Avocet Infinite Plc. On Friday 8th October 2021, opening Genfro share prices shall become public."

In a strong riposte to the negativity currently affecting the Group Mr Frost says: "ANC Plc is a very liquid company. How many companies do you know that have $20 million in the bank / $20 million as good debtors / £25 million in good liquid assets / with a potential recovery of a further £100 million in claims?

"ANC Plc / Avocet / Genfros are recognized success stories – do not let these naysayers baffle you with their nonsense."

One of those investors who may be regarded by Mr Frost as a naysayer commented: "Basically, it's the same old waffle. He doesn't address any of the concerns raised by the contributors to the Sunday Mail article or answer the very salient points made by Mr Munro regarding the responsibility of directors".

 

Seized by the Crown: won back by the people!

SPECIAL FEATURE on a stupendous victory for steadfast underdogs

For centuries the townspeople of Selkirk enjoyed the right to fish for salmon from the banks of the River Ettrick as it flowed through their Scottish Borders town.

But that treasured right was snatched away by a UK Government agency no less in 1912 when the forerunners of the Crown Estates seized ownership of the rights on three fishing beats then imposed ever increasing annual fees on the local angling fraternity.

But following an incredible 27-year campaign which saw a group of Selkirk anglers become determined amateur sleuths, the Crown was forced to hand back the five-mile long salmon rights to their original owners in 2016.

The investigation uncovered a long forgotten and unknown Seventeenth Century Royal charter and a hoard of relevant documents hidden in a Glasgow cellar. In addition the team identified an unlikely local hero…a colourful habitual poacher wrongly convicted and jailed for alleged illegal fishing who caused UK law to be changed.

Now, retired Selkirk GP Dr Lindsay Neil, a veteran of Gulf War 1 and a key member of the ‘river detectives’ has published a fascinating account of the saga. 

A Hundred Years of Fishy Skulduggery lays bare the Crown’s unlawful taking of the angling rights from the then owners of the estates of Philiphaugh and Haining, and from The Common Good of the Royal Burgh of Selkirk.

Said Dr Neil: “The circumstances in which the Crown Estates predecessors, HM Woods, Forests and Land Revenue [HMW] decided our fishing rights belonged to them were very dodgy, as the book explains. The result was that the Crown started charging Selkirk anglers ever increasing amounts to fish their own river.

“Prior to 1912 the annual charge was just a negligible £1. But by 2003 the Crown was demanding a stunning £4,700. Little wonder we mounted our challenge to their ownership”.

A Hundred Years of Fishy Skulduggery traces the investigation from its humble beginnings in 1989 - when the team had little idea on how to proceed - through a journey of remarkable discoveries before submitting their evidence to the Crown Estate Commissioners (CEC) who resisted with all the legal might they could muster before being worn down. They never admitted defeat, but defeated they were...totally.

Dr. Neil suggests the Selkirk case could prove to be a valuable guide for other communities seeking to win back similar rights which were taken from them back in the mists of time.

HMW, based in luxurious premises in faraway London appears to have been a power mad outfit in the early years of the Twentieth Century, hellbent on controlling and administering as much land and as many rivers as it could get its hands on.

The mandarins first turned their attention to selected fishing rights on Ettrick Water in 2010, claiming their aim was to amalgamate the Philiphaugh, Haining and Selkirk Burgh stretches of river into a single lease and to discourage salmon poaching. But the waters on either side of town with their rights vested in the aristocracy remained untouched. 

HMW's move came despite the fact that Philiphaugh estate had been in possession of salmon rights since 1615, Haining estate since at least 1702, and Selkirk Burgh since 1119.

There was no indication of the burdensome leasing fees HMW's successors (Crown Estate Commission came into being in 1924) would levy in the later years of this illegal arrangement.

Following much toing and froing between HMW headquarters and Selkirk Burgh Council the transfer of ownership was completed in 1914, ending those hundreds of years of free fishing enjoyed by countless generations of Souters (natives of Selkirk).

But by the 1980s those Selkirk natives, or at least the membership of Selkirk Angling Association (SAA) were becoming increasingly restless as the Crown Estates bureaucrats piled on the financial agony.

The takeover of the town's fishing rights had shifted from an administrative tidying up exercise for the pen pushers to the creation of a cash cow to swell the bulging coffers of CEC. It was decided the tiny SAA would challenge the mighty CEC in a bid to bring ownership back home.

Dr Neil's book describes the long battle to assemble evidence for a case which might stand a chance of overturning what had been an illicit act by HMW 80 years earlier. 

A war chest was also built up in case the SAA had to go to court and confront the CEC's lawyers although Selkirk's anglers were able to tap a rich source for unofficial legal advice in the shape of now retired Sheriff Kevin Drummond, a fishing enthusiast and close friend of Dr Neil.

Without spoiling the story for those who decide to get a copy of A Hundred Years of Fishy Skulduggery, it is fair to say the campaigners benefited from a trio of 'near miracles' along the way. It was as though the gods were smiling on the sleuths of Selkirk.

As Dr Neil explained: "Our cause was helped enormously when a neglected and unrecognised King James VI charter turned up at an Edinburgh auction. The text proved that Philiphaugh's owners had enjoyed the right to fish Ettrick since the early Seventeenth Century".

The discovery of all the original correspondence between the parties in the period 1910 to 1925 stored in the cellar of a Glasgow law firm added weight to the Philiphaugh case while also backing the veracity of Selkirk Burgh's protests.

And finally the SAA stumbled on the case of that wrongly convicted local poacher who was sent to prison in 1913 when he couldn't pay a fine. There was an immediate outcry with protests by the local community which led to his case being raised on the floor of the House of Commons..

As a result UK law was changed which meant that from then on innocence took precedence until guilt was proved.

To read the fascinating story of the habitual reprobate we'll call Mr T you must get in touch with Dr Neil and obtain a copy of his newly published book.

Contact Dr Lindsay Neil by email at: drldneil@gmail.com

Produce evidence of patent sales, Avocet bosses told

by DOUG COLLIE

One of the largest shareholders in the Avocet 'disruptive technology' businesses has challenged the company's directors to produce conclusive evidence of the sale of intellectual property to unidentified Middle East buyers for $40 million dollars.

Alistair Munro is also calling for a forensic investigation of Avocet Natural Capital's [ANC] books, and says he holds the directors personally liable for the situation the Avocet Group is currently in.

A two page spread in today's Sunday Mail newspaper on the business activities of Avocet chairman Martin Frost is headlined "We'd Love to Know What He's Dung With Our Cash" and includes an interview with Mr Munro, an Edinburgh and Dubai based owner of several companies.

According to the most recent shareholder lists for Avocet Natural Capital (October 2020) Mr Munro held 1,658,250 shares in the company having previously owned 1,005,000 shares in Avocet Infinite (now called Omega Infinite and in compulsory liquidation).

The strong views Mr Munro holds about the Avocet 'fiasco' as he calls it are set out in detail on the Avocet Shareholders' Independent Forum.

In a response to an ANC newsletter which was sent to investors by Mr Frost on October 1st, Mr Munro writes: "I note with interest but with no surprise that the General Meeting of Avocet Natural Capital Plc was cancelled (postponed). I want to confirm that I wrote to the Directors on September 29....objecting to this proposed meeting on the basis that it was not properly structured in compliance with UK regulations."

On the matter of the Sunday Mail article, Mr Munro says he had given an interview making the same points that there was no financial transparency in the Avocet family of companies and the time had now come for action in the form of an independent forensic audit of the accounts and if necessary action taken personally against the Directors for misuse of company funds. 

"Misuse at a minimum would be in line with the information already provided by Martin Frost in relation to inappropriate purchases from his personal estate funded by shareholder monies and for the company funding costs associated with the internal family feud with the Orrs which is of no relevance to Avocet/Omega business plan. This is apart from a simple incompetence to deliver against previously published business plans."

Mr Munro's sweeping condemnation continues: "The only satisfaction I can have from the fiasco that Avocet has become under its current leadership is for a dividend to be paid to all cash paid up shareholders, I being one of those, and for us to be able to exit the Avocet Group of Companies with our funds returned and for many to put this down as a bad investment experience.

"I am deeply sceptical that even this will happen as there is no evidence to validate that the claims made in the newsletter of October 1st are real and based on historical performance. Until this is the case all communications "For and on behalf of ANC Plc" must be treated as fictitious and not based on any validated evidence."

Mr Munro adds that he joins others in the request for the Board of Directors to produce certified evidence that the reported sale of patents has taken place and that such funds exist.

Mr Frost told shareholders last week that $40 million had been paid for intellectual property, and the first tranche of $10 million would be used to pay debt and to pursue litigation against parties which had 'damaged' Avocet.

Mr Munro writes: "I for one object to the Board of Directors using any payment received by ANC Plc for any purpose other than for distribution to shareholders either as a dividend or as a buyback of shares."

The Sunday Mail article has contributions from several individuals who believe their shareholdings in Avocet are now worthless. Since the first Avocet company was formed not a single product has been marketed.

Mr Frost issued a strong denial to the paper that investors had lost cash or that shares were now worthless. And he said he was unaware of an investigation being conducted by the Government's Insolvency Service.

He is quoted as saying: "A new fuel often costs £400 million plus to obtain commercial approval. Avocet perfected this on less than £10 million. On other Avocet products there is widespread support".

No accounts: just "another fairy story"

by EWAN LAMB

The last minute cancellation of last Thursday's planned General Meeting of 'revolutionary fuel' promoters Avocet Natural Capital means some shareholders do not now expect to receive the first set of  accounts for the company since 2018.

Avocet chairman Martin Frost pulled the plug on the video-link meeting after claiming dissidents in the ranks were planning a demonstration while some investors had been asked to pose as members of the press.

Long suffering shareholders with up to £30 million invested in the Avocet concept had been expecting a collection of documents from management in the lead up to the aborted meeting.

In a communication issued on September 23rd Mr Frost said he would be sending the following paperwork on September 29th, the day before the General Meeting:

"Video links together with voting slips; draft ANC Plc accounts; the Directors Report; review of proposed litigation; and details of a proposed dividend."

As reported here the planned dividend details did materialise in a 'newsletter' announcing the cancellation of the long awaited meeting. But so far there has been no sign of the long overdue accounts.

A contributor on the Avocet Shareholders' Independent Forum commented: "Instead today we get another fairy story from him (Mr Frost) which puts the brothers Grimm to shame."

A shareholder who got in touch with Not Just Sheep & Rugby commented: "Some of us believe the meeting was to be stage managed. But then the directors got cold feet in case there were awkward questions.

"We've now been told that Martin Frost and Bob Jennings plan to remain in post for a further four or five months until an annual general meeting is held next February. No doubt that event will be cancelled too for one reason or another. I agree we are being fed fairy stories".

Avocet Natural Capital's 2019 accounts should have been lodged at Companies House by December 28th 2020 at the latest. Failure to lodge accounts and other company filings on time constitutes an offence under company law.

A notice on the Companies House website explains that the Corporate Insolvency and Governance Act 2020 granted automatic extensions for filing deadlines between 27 June 2020 and 5 April 2021 to relieve the burden on companies during the coronavirus (COVID-19) pandemic and allow them to focus all their efforts on continuing to operate. 

The notice adds: "Automatic extensions were granted for accounts, confirmation statements, event-driven filings and mortgage charges. There will be no further automatic extensions for confirmation statement filings, accounts filings and event-driven filings after 5 April 2021. After this date, you’ll need to file your documents by your usual deadlines."

We asked Companies House if this was the case why were some businesses such as Avocet Natural Capital able to ignore deadlines - in this case by nine months without being struck off the register.

In response, compliance case officer Lyndon Jones told us: "I can confirm that director(s) have been reminded of their statutory duty to file up to date accounts and/or confirmation statements in accordance with the Companies Act 2006.  This may lead to prosecution action being taken against the directors when, if found guilty, they would receive a criminal record and a fine

"However, if it appears that the company is defunct, our prosecution action will cease and action will be taken to remove it from the register."

In a separate development this afternoon Mr Frost revealed to shareholders that Scotland's Sunday Mail newspaper had decided "to write an article on our companies" for publication tomorrow.

He provided investors with a copy of the correspondence which had passed between him and a journalist from the paper.

When asked if he agreed that shares in Avocet were worthless, Mr Frost replied 'No. Omega Infinite Plc shares relate to a company in liquidation, nevertheless it is unique that even these Omega shares on exchange are realising money".

 

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