Scotland's top judge dismisses Frost debt appeal

EXCLUSIVE by OUR COURT REPORTER

The latest attempt by bankrupt businessman Martin Frost to have responsibility for a £3.25 million debt shifted from one of his Avocet companies has failed after a ruling in a Court of Session appeal case delivered by Scotland's leading judge Lord Carloway.

In an Opinion published on the Scottish Courts website today it was confirmed that Lord Clark's earlier decision to approve a so-called Petition of Rectification - the correction of a legal drafting error - from United Kingdom Agricultural Lending (UKALL) Ltd would not be overturned.

Mr Frost, the former chairman of the Avocet "disruptive technology" group of companies, had repeatedly claimed the £3.25 million was owed to UKALL by another firm, Hamilton Orr Ltd., and not by Orrdone Farms Ltd., one of his insolvent businesses which is now in administration.

Lord Clark, in a judgment handed down in May, also rejected Mr Frost's allegation that the appointment of joint administrators to Orrdone Farms had been "illegal and invalid".

The new Opinion shows Mr Frost was not in court for the appeal hearing on December 17th "on grounds of ill health". There was no appearance either from his wife Janet Orr Frost while Hamilton Orr, the first reclaimers (appellants) were represented by Paul Newsham, the Lancashire-based accountant who has served as a director of several Avocet companies.

In his judgment, Lord Carloway (the Lord President) sitting with Lord Malcolm and Lord Turnbull explained a loan facility for Orrdone Farms had been created with UKALL.

"Unfortunately, and as was admitted by the drafter, namely Russell Spinks, a solicitor, in an affidavit lodged with the court, the standard securities were in error framed in respect of the indebtedness of Hamilton Orr and not Orrdone Farms" said the judge.

The Lord Ordinary (Lord Clark) granted the rectification petition. Hamilton Orr and the third and fourth respondents (Mr and Mrs Frost), who are personal guarantors of the debtor, reclaimed (appealed) the Lord Ordinary’s decision. They contended that the standard securities reflected the true picture - that the loan was to be made to Hamilton Orr, not Orrdone Farms.

Lord Carloway states: "In the respondents’ joint grounds of appeal, joint note of argument, and in written submissions for Hamilton Orr and the fourth respondent, which were presented at the hearing, it was argued that the Lord Ordinary erred in failing to draw various conclusions from the productions which were before him, and generally in failing to prefer the respondents’ submissions.

"The respondents made particular criticisms of the Lord Ordinary’s acceptance of the evidence contained within Mr Spinks’ affidavit; alleging that Mr Spinks had acted unprofessionally. The respondents criticised the Lord Ordinary for failing to take into account that Orrdone Farms was a wholly owned subsidiary of a parent company with “no commercial benefit” at the time of the transaction. Criticisms in relation to the manner of the appointment of administrators to Orrdone Farms were also made."

The judgment goes on to say: "The fourth respondent’s [Mrs Frost] submissions detailed complex family relationships between various actors involved in the farming business of the group of companies owned by the Orr family and their associates. She alleged that the present dispute arose as a result of both certain members of her extended family and the lawyers involved in the transactions telling lies."

In dismissing the appeal, Lord Carloway adds: "There is no merit in any of the respondents’ arguments. In order to grant their rectification, the Lord Ordinary required to be satisfied that the standard securities did not accurately reflect the intention of the parties at the date when they were executed. The weight of evidence contained in the productions and the affidavit of the principal solicitor involved in the transactions overwhelmingly pointed to the conclusion that the identification of the debtor in the securities did not reflect the parties’ intentions.

"It demonstrated that the parties’ intention at the time was that the loan relative to the securities would be made by the petitioners to Orrdone Farms and not Hamilton Orr. That loan was to be secured by a number of means, including standard securities over the farms owned by Hamilton Orr. The court has not been provided with the commercial reasons for that arrangement, but it is not unusual for related companies to provide security for debts owed by one another."

And according to Lord Carloway: " The court is not persuaded that it would be contrary to business common sense for it to find in the petitioners’ favour. The allegations made against the lawyers involved in the transaction and the fourth respondent’s various family members are unsubstantiated and largely irrelevant. There is no reference to a loan by the petitioners to Hamilton Orrin any of the productions, with the exception of the standard securities themselves. The court therefore accepts, for the reasons given by the Lord Ordinary, that the securities were drafted erroneously in that regard. No substantial basis for interfering with the Lord Ordinary’s findings in fact on the central issue have been presented.

"The third and fourth respondents do not have title and interest to resist this petition. Their only interest is in their capacity as guarantors of the debtor. The basis of that liability is contained in the terms of personal guarantees and a facility letter. The rectification of the standard securities will have no bearing on their personal obligations to the petitioners. The standard securities do not require to be rectified in order to enforce the guarantees. The arguments regarding the appointment of administrators to Orrdone Farms do not add anything to this. The appointment, as highlighted by the Lord Ordinary, has not been challenged."

Destroying information and an "amicable divorce"

by DOUGLAS SHEPHERD

Newly released documents reveal how senior Borders council officials and top brass from a debt-ridden waste management company discussed the possible need to destroy sensitive information following the decision to pull the plug on a multi-million pounds treatment project.

One of the last acts in the disastrous relationship between Scottish Borders Council and New Earth Solutions Ltd. (NES) was the signing of a six-year confidentiality agreement which kept hundreds of documents and items of correspondence under wraps from 2015 until this year. But now the vast collection of paperwork is being made public for the first time after a Freedom of Information request to SBC. 

At the centre of the abandoned £80 million contract between SBC and NES was a £23 million project for a "state of the art" waste treatment plant to deal with the region's black bag rubbish at Easter Langlee, Galashiels.

But as most locals know the 24-year contract, signed in 2011, had to be shelved four years later when NES could not come up with the money for the treatment facility while the company's much trumpeted New Earth Advanced Thermal [NEAT] technology simply would not function.

The decision by council officials to terminate the contract was conveyed to NES executives at a private meeting on February 10th 2015. The notes of proceedings at that meeting are among the documentation obtained via FOI. The identities of a number of the participants have been redacted so that only initials are used. But the names of council representatives are included.

This paper shows the council had already drafted a press release before telling NES of their intention to deem the project agreement (PA) dead in the water.

At a pre-meeting before New Earth directors were called in, CS from law firm Brodies, the council's legal advisers for the project who collected more than £650,000 in fees, said he would talk them  through/show them [NES] the relevant parts of the PA that set out that no compensation was due.

The council's Rob Dickson (RD) told colleagues that on funding NES were in a far weaker position than they were at signing of the PA or the Deed of Variation (2012). He added that the financial model was only marginal and was based on a lot of assumptions and on this basis NES were overly optimistic on funding.

When the two sides did get together and the decision was conveyed to the NES team their man DS commented that this was "not a complete surprise". He added that NES were looking for an “amicable divorce”.

But after reviewing the council's draft press release DS said that while the general flavour was OK there was too much detail in the middle section. He added that NES want to emphasise that the project was an innovative project that NES and SBC had been working on for some time and that the market landscape had changed.

The meeting note then goes on to show: "DS asked whether there were any termination obligations on the transfer of information/documents between NES and SBC.

"CS said that there are provisions in the PA regarding “confidential information” and that Brodies would advise on this.

"RB said that NES considered the financial model and NEAT technology documents confidential.

"CS, having consulted the PA, confirmed that while there was no obligation on either party to return confidential information there was an obligation to maintain records for five years after the termination of the PA. He added that the parties could reconfirm or restate these obligations.

"RD said that if NES thought that there was information SBC held that NES wanted returned or destroyed to let SBC know.

"RB highlighted that NES would like the NEAT data that had been passed to (consultants) SLR returned/destroyed and asked about Freedom of Information/Environmental Information matters.

"RD said that this was a good point and that SBC needed to establish a party line on this. He also said SBC and NES should agree between them what information was “confidential” and how to deal with it.

"CS mentioned that Freedom of Information/Environmental Information legal requirements could trump confidentiality provisions.

"RD said that SBC’s base position was not to release any information from the PA or Deed of Variation and if they were under pressure to release any such information they would speak to NES first."

The so-called 'amicable divorce' cost Borders taxpayers more than £2 million while NES - soon to be dissolved with huge debts - also spent several millions on the doomed project.

A confidential report on the fiasco submitted to SBC councillors on February 19th 2015 also referred to the possibility of a PR disaster.

The document, written by Ewan Doyle, the Easter Langlee project manager, says: "There is an obvious risk that the decision to terminate the New Earth Solution contract, after the Council has spent circa £2M to get it to this point, will be the opportunity for press to create a negative story that will be published locally and there may also be national press interest. 

"The Project Team will endeavour to get a joint statement prepared with New Earth Solutions to proactively go to the media with, otherwise the Project Team and Corporate Communication have drafted a press release to answer the anticipated media enquiries."

Later the published statement told readers: "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, the council revealed."

There was no mention of the substantial loss of public money which had to be subsequently written off by the council.

£30 million "Mayo pot" for sale on Frost company website

by OUR OWN REPORTER

A 'rare' 18th Century Chinese three-legged pot, said to have been stolen when the country's Imperial Palace was ransacked during the second opium war is being offered for sale online with a price tag of £30 million by a company with close links to bankrupt businessman Martin Frost.

The recently developed website of Frost Books & Artifacts (FBA), a business concern with premises in Bar Street, Scarborough, offers 3,500 rare and antique books for sale as well as over 500 tapestries, weapons and ancient artifacts.

But the undoubted star item of stock is that Oriental relic which carries the description: "Chinese. Three legged pot. 'Mayo'. Date: 18th Century; size (cm) 25 X 25 X 25. Condition, Excellent. £30,000,000.00. History & Background. Commission sale by FBA on behalf of a third party".

Shareholders in the Avocet group of companies, formerly chaired by Mr Frost, will already be familiar with the so-called Mayo Pot for it was featured in a letter he sent to investors only three months ago.

On September 21st - a month before his bankruptcy hearing - Mr Frost wrote: "The Frost family is donating one million pounds to the crowdfunding entity being setup by my colleague Dr. Bob Jennings. This crowdfunding entity is non-profit making and will give money to deserving individuals caught up in any web of insolvency practitioner deceit.

"The Frost family is donating a further one million pounds to promote a commercial enterprise to offer third party finance which overcomes the difficulty a claimant might have in bearing the often-high costs of litigation. Further publications shall explain.

"The Frost family is donating ten million pounds to an Irish institution to seed corn finance the Avocet ‘hydroponics’ & ‘heathy beef’ concepts."

He then went on to describe how this largesse would be financed.

The newsletter stated: "Frost funding to the above derives from the ‘Mayo Pot’ sale. By arrangement, on Thursday 23rd September 2021 the ‘pot’ will be lodged with a Leeds solicitor. Subject to internal agreement, the Frosts have mandated its sale subject to an export license. 

"Note: an Irish ancestor of my mother, Lord Mayo, basically stole it from a mate who had physically sacked China’s Imperial Palace during the Second Opium War. 

"Some years ago, Sotheby’s valued the ‘pot’ at over £30 million – two similar pots have recently gone to Chinese collectors for over £40 million.  In 2018 & 2019 the family discussed the ‘Mayo pot’ sale with accountants Ryecrofts of Newcastle who thought the wisest thing for the Frost family to do was to tax efficiently sell the ‘pot’. Bottom line if sold tomorrow one should expect net of tax and fees some £20 to £30 million depending on who turns up to the auction."

It appears the extremely valuable artifact did not sell in September although presumably it remains in the ownership of the Frost family.

Companies House records show the sole director of Frost Books & Artifacts Ltd. is Lancashire accountant Paul Newsham who has also served on the board of a number of Avocet businesses. The shareholders in the book selling and antique business are two of Mr Frost's relatives.

A Facebook post by Advantage Web Designs, of Scarborough, the firm which designed the FBA website gives further details about the Bar Street operation.

Advantage state: "We'd like to say a big thank you to Martin and Janet Frost, of Frost Books & Artifacts for asking us to work with them on a brand new website. They have taken their first step in to selling rare books and artifacts online.

"They already have a small shop and see this as a way of expanding their business and drawing in customers from all over the world. They stock a wide range of rare books and artifacts from around the world. Prices range from £30 to £30 million with free shipping for all items costing £150 or more."

"Avocet" farmhouse haul under the hammer

by OUR BUSINESS STAFF

A vast treasure trove of antiques, paintings, furniture and books recovered from the Berwickshire headquarters of the troubled Avocet empire overseen by bankrupt businessman Martin Frost is being auctioned off by agents for the liquidators of one of the failed companies.

Representatives of specialist firm Eddisons removed the valuable contents of Harcarse Hill farmhouse, the former home of Mr Frost where plans were laid for a number of ventures, including the development and production of a so-called revolutionary fuel alongside "ground-breaking" agricultural methods.

However, none of the projects produced an end result before Harcarse owners Orrdone Farms Ltd collapsed into administration. A second firm in the Avocet stable, Omega Infinite PLC was the subject of a compulsory liquidation last year, and the house contents will be sold on behalf of liquidators Begbies Traynor.

A progress report by Omega's liquidators explained: "Assets at Harcarse Hill Farm: Eddisons attended the premises owned by Orrdone Farms and recovered assets.

"As there is some ambiguity regarding the ownership of the items an arrangement has been reached with Orrdone Farms administrators that the net proceeds from the sale of the items are held jointly by solicitors to Omega Infinite PLC (in liquidation) and Orrdone Farms Ltd (in administration) and not released to either party without prior agreement or court order".

Mr Frost, who was made bankrupt by a judge in October has repeatedly claimed in letters to Avocet's hundreds of shareholders that personal family items kept at Harcarse Hill had been stolen.

A report in today's Scotsman newspaper includes details of some of the more notable and usual items among more than 600 lots which will go under the hammer.

According to the newspaper: "Among the art and antiques, Mr (Paul) Cooper, [a director of Eddisons] said that the picture section was particularly exceptional and featured work from a number of Scottish artists including "six watercolours by the Berwick-born marine artist, and Royal Family favourite, Frank Watson Wood."

"Mr Cooper said the book, furniture and ceramics sections also had several priceless pieces, including items that originated from China.

"He said: "There are more than two dozen lots ranging from vases and urns to chargers, plates and decorative pots."

"The farmhouse also yielded well over 2,000 books including numerous rare and collectable volumes that are being sold individually."

He added: "The furniture ranges from George III right the way through to IKEA.

"There are some particularly fine early-19 century pieces that were bought at considerable cost from well-known Edinburgh antiques emporiums."

Mr Cooper told The Scotsman that it was an extraordinary" find. He said: "The place was quite extraordinary, absolutely rammed with stuff.

"There were so many pictures that you could hardly see the wallpaper.

"Every room was crammed with furniture, some antique, some not so antique. "On top of that, there were Oriental ceramics, books, militaria and collectables of every description, everywhere."

The sale catalogue can be accessed here: https://auctions.eddisons.com/auctions/8022/eddiso11213

Truth behind abandoned £23 million Borders waste project

EXCLUSIVE by EWAN LAMB

Leading members of Scottish Borders Council continued to put a positive public spin on a planned £23 million waste treatment centre on the outskirts of Galashiels during October 2014 even though the project remained entirely unfunded while contractors were unable to make their embryonic technology perform satisfactorily.

But though council leaders remained convinced the "state of the art" facility which was designed to convert household waste into energy would actually materialise, behind the scenes a very different situation had already developed.

The combination of factors which resulted in the entire project being abandoned just four months later in February 2015 have been disclosed for the first time following the release of a large collection of commercially sensitive documents which had been inaccessible under a six-year confidentiality agreement signed by SBC and New Earth Solutions Group (NESG) in 2015.

The paperwork shows how councillors granted New Earth a six-month 'moratorium' - despite the project already being behind schedule - from February to October 2014 to see if the company could resolve its funding and technology issues. But at the end of the six months the state of the scheme was "significantly weaker" than when the original deal was signed in 2011, according to the documents.

A revised project with completion pushed back to 2017 included the incorporation of the so-called New Earth Advanced Thermal (NEAT) gasification technology to convert waste into electricity.

This conversion technique was still being trialled by NES at its Avonmouth plant, near Bristol where a large deputation of elected members and officers from SBC made a site visit in October 2014,

An article published by the waste management trade magazine Let's Recycle that same month revealed a further delay to the Borders plans.

But Councillor David Paterson, executive member for environmental services, told letsrecycle.com that the Galashiels plant would implement the technology on a ‘smaller-scale’ than in Avonmouth, which he visited as part of a 16-strong delegation to the site earlier this month.

And Councillor Paterson added that the live demonstration of the technology had been ‘very informative’ and an ‘insight into what we could have in the Borders’.

Meanwhile council leader Councillor David Parker said the Avonmouth visit was “valuable and illuminating”.

“The integrated WTF [waste treatment facility] 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 Border Telegraph following the Avonmouth trip.

However, a report compiled after the six-month standstill concluded: "Overall, the project team do not believe that NES have submitted satisfactory proposals following the moratorium period. The financial proposals are significantly weaker than submitted at contract signature, without a ‘funder of last resort’ and the marginality of the financial model is a major concern if NES wish to obtain financial close without a change to the gate fee [the cost of treating the waste].

And the newly released report on which the council decided to abandon the entire £80 million 24-year deal with NES also reveals that many of the goals set by the company had not been met. It states: "During the moratorium period NES did not achieve all of the targets set out and out of 30 tasks: only 15 tasks were 100% complete, 5 tasks were between 20-80% complete and the remaining 10 tasks had not started.

"Three of the major tasks that were not complete during the moratorium were the testing of the gas engine on full load, the installation and commissioning of the gasifier and the continuous operation of the syngas clean-up for 120 hours (100 hour test have been recorded subsequently). This delivery performance aligns with previous experience of the Research & Development plant, where, although progress has been made New Earth Solutions have not fully met their own expectations of technology development."

NES executives remained convinced the NEAT technology would become commercially viable, given time and further work at their R&D facility.

FOOTNOTE: The NEAT system merits a brief mention in a technical paper recently published by the UK Government's Department for Business Energy and Industrial Strategy (BEIS). The publication is called Advanced Gasification Technologies – Review and Benchmarking Review of current status of advanced gasification technologies Task 2 report BEIS Research Paper Number 2021/038 – Oct.2021.

Here is the NEAT entry in full which can be found at Page 151:

"New Earth Advanced Thermal technology description New Earth Advanced Thermal (NEAT) gasification system is a modular air-blown system. Each module has a thermal input capacity of 4.2 MWth. According to NEAT the process can be fired on biomass or waste feedstocks. The syngas produced is burnt in a combustor to raise steam for generation of electricity in a steam turbine.

"Reference plants - NEAT had a single operational reference plant at Avonmouth, UK which was closed in 2016.

"Conclusion - New Earth became insolvent in 2016 and the NEAT gasifier was discontinued. The NEAT process has not been proven and will not be considered in any further detail in this study."

Council's forced U-turn on transport of rubbish

EXCLUSIVE by DOUGLAS SHEPHERD

Councillors in the Scottish Borders were advised six years ago that dealing with the region's household rubbish locally represented better value than hauling vast quantities of waste to distant locations for treatment.

But following this week's revelation that 10,000 tonnes of Borders 'blue bin' recyclables will be shipped to Ulster each year for sorting alongside the 2019 decision to haul 42,000 tonnes of residual (black bag) garbage by road to a facility in central Scotland, the 2015 advice has been well and truly turned on its head.

Scottish Borders Council's entire strategy for handling waste had to be completely reassessed following the catastrophic collapse of a 24-year £80 million treatment contract with the now defunct New Earth Solutions Group [NESG] in 2015. The deal had included the planned construction of a £23 million state of the art treatment centre at Easter Langlee, Galashiels.

But the council contractor's inappropriately named NEAT technology could not be made to function in time to allow SBC to comply with Scotland's prohibition of untreated waste going to landfill. To compound matters the debt-ridden NESG was unable to source the money for the Easter Langlee facility.

When the council sensibly abandoned their partnership with NESG in February 2015 much of the background which led to the decision, and reports and correspondence linked to the contract's issues and failures were buried under a six-year confidentiality agreement signed by the parties at the time of termination.

But following the expiry of that agreement earlier this year SBC has been asked via a Freedom of Information request to release copies of the confidential and sensitive documentation so far hidden from public scrutiny.

Among the minutes and reports so far provided by the council is a copy of the 18-page private report submitted to councillors back in early 2015 after it became clear the deal with NESG was doomed.

The report from Project Management Team Leader Ewan Doyle traces the four-year saga of SBC/NESG with the recommendation to pull the plug on the entire venture which cost taxpayers at least £2.4 million.

However, the report  explains that in 2014 the project team commenced the consideration of alternative options to evaluate whether there were viable alternative solutions if NES failed to provide a satisfactory way forward, or decided to walk away from the contract. 

"As part of the consideration of alternative options, the project team developed several solutions that demonstrated that it is better value to treat waste in the Scottish Borders and “offtake” the products produced than to transport large volumes of untreated waste out of the Scottish Borders for treatment."

The alternative solution analysis demonstrated that it would take four years to deliver a waste treatment solution by the Council. But the time allowed for NES to deliver the waste treatment facility had already been extended with a six month moratorium handed to the company to see if it could overcome its major technical and financial difficulties.

By this stage time was not on the council's side. 

The first legislative date and target that the Council had to meet was to treat black bin waste before any residues could go to landfill was January 2021, with the introduction of biodegradable waste restrictions to landfill as required by the Waste (Scotland) Regulations 2012.

In the end SBC had no alternative but to resort to road haulage to solve its waste disposal problems in time to meet the deadline.

We hope to feature further disclosures from the confidential files in the coming weeks.

Borders rubbish heading for Ulster

by EWAN LAMB

The award of a £5.6 million local authority contract to a Northern Ireland waste treatment company will see 10,000 tonnes of recyclable rubbish from the Scottish Borders being hauled the 230 miles to Newry in Ulster each year to be sorted.

Re-Gen Waste Ltd was the only bidder for the Scottish Borders Council 'blue bin' recyclable refuse contract which was up for grabs after being under the control of J & B Recycling, of Hartlepool, Tees-side since 2005. At the last renewal in 2017 that contract was worth £1.35 million over three years.

The new arrangement is scheduled to last for three years with the option of four one-year extensions, so potentially a seven year contract

A spokesman for SBC told Not Just Sheep & Rugby: "This contract is on a different pricing mechanism to the previous one. This one is more strongly linked to market prices for materials. The final cost will vary depending on market rates – right now, they are in our favour. The cost on the contract notice is based on an average of recent cost incurred under our previous contract."

After confirming that the material would be transported by road to Newry, the spokesman explained "We are working with the contractor to maximise the tonnage for each journey to minimise haulage impacts. The contractor also undertakes backload trips so the vehicles are not running empty on either leg of their journey from Northern Ireland.

"It is important to note too that it is a global market for the end products once sorted, so whether going to Hartlepool (as before) or Northern Ireland the end product from the contractor is then being transported all over the world."

Ross Sharp-Dent, Waste and Passenger Transport Manager for Scottish Borders Council, said: “Following the expiry of our previous contract for the transport and processing of dry mixed recycling, a procurement exercise was undertaken by the Council with the available contract put out to tender.

“The successful company, Re-gen, a Northern Ireland based recycling and waste management specialist is a market leader in the processing of and recovery of recyclable materials and currently works for a number of other Scottish local authorities.

“The contract will see Re-gen provide the same service as our previous contractor and process all of the same materials for recycling. As a result there will be no change experienced by the public in terms of what can be put in their bins.

“In 2019 SBC achieved a total recycling rate of 49%, representing an increase of over 10% from the previous year and the largest increase of any local authority in Scotland.

“This is significantly higher than the national recycling average (44.9%) and positions SBC as the highest performing rural local authority in Scotland.

“The increase in recycling performance also coincides with a significant reduction in the amount of waste reaching landfill and a reduction in carbon emissions of 11,000 tonnes CO2e between 2018 and 2019.

“Recycling is one of the easiest everyday actions we can take to reduce our carbon footprint and I would encourage members of the public to play their part.

“A new online platform has been created to help people across the Scottish Borders recycle more by telling them what can and can’t be recycled in their area -https://wasteless.zerowastescotland.org.uk/recycling-sorter.” 

Background provided to us by the local authority explained: "Scottish Borders Council collects dry mixed recyclate at the kerbside from all households in the Scottish Borders as well as community recycling centres and traders. Examples of dry mixed recyclate include paper, cardboard, cans and plastic.

This material is all bulked up at the Council’s Waste Transfer Stations before being transported to a materials recovery facility where it is sorted into its separate parts. Once separated the materials are transferred onto the recycling marketplace for their reprocessing."

Borders Common Good register 17 years in the making!

by DOUG COLLIE

Councillors in the Scottish Borders will this week consider newly completed draft asset registers for the region's valuable Common Good funds, a facility which was advocated by external accountants as long ago as 2004.

There have been repeated complaints down the years that no official public records exist listing the lands, buildings and so-called moveable assets belonging to burgh funds, some of them bequeathed for the common good by royal charter hundreds of years ago.

In recent years it has even been necessary to create new funds for towns such as Coldstream after research showed property included in Scottish Borders Council's portfolio actually belonged to the "Common Good".

The funds which were once administered by local town councils prior to the reform of local government in 1975 are now under the control of the Borders unitary authority. Between them the various funds are valued at well in excess of £10 million with a proportion of the assets invested on behalf of the council by financial experts.

A proposal for a Borders Common Good public register was one of the recommendations contained in a report from accountants Scott-Moncrieff which received local publicity in January 2005 following its completion for Audit Scotland the previous year.

The Southern Reporter newspaper of 14 January 2005 reported: "A probe into how Common Good Funds are administered in the Borders has revealed major failings. Experts pinpointed a lack of control and stewardship in how parts of the funds are handled and produced a blueprint for improvements. The report recommended a review of assets; closer working between the council's planners and estate officers and drawing-up of a register of what is owned by Common Good Funds."

The subsequent attempts to compile a register became mired in controversy.

Public spending watchdog Audit Scotland, in a commentary on SBC's 2009/10 annual accounts, wrote: "The council has disclosed common good as a separate fund in the financial statements and established a common good register. However, objections have been lodged against the Council in respect of the completeness of the common good asset register, and associated income and expenditure.

"It is a complex exercise to conclude the provenance of assets, and officers from Legal Services, Estates and Finance have been involved in investigatory work to determine whether certain council assets ought to be transferred to the common good asset register. This work is not yet complete and additional specialist resource will be invested in this area in 2010/11."

The pressure on Scottish councils to produce public Common Good registers has been ramped up more recently by the Scottish Government following the introduction of the Community Empowerment (Scotland) Act 2015.

Government guidance to Local Authorities in July 2018 demanded: "Establishing common good registers. Section 102 of the Act requires each local authority to establish and maintain a register of property which is held by the authority as part of the common good (a “common good register”). Before establishing a common good register, the Act requires a local authority to publish a list of property that it proposes to include in the register, and to consult on this list.

"The Act provides that the list may be published in such a way as the local authority may determine. The local authority should be consistent in how and where it publishes both the list of common good property and the resultant common good register. Both documents should be available in the same place and in the same format. The local authority must ensure that the public can inspect the list of common good property free of charge and access it electronically.

"Members of the public should be able to access the list from the local authority’s own website. The local authority should ensure that members of the public can view the list in person at local council offices, council hubs and local libraries. The local authority should either produce paper copies of the list or ensure that staff in these locations are able to assist members of the public in viewing an electronic version. Advertising the list

"The local authority should publicise the consultation on its website, on social media or in publications which it produces. It may also be possible to invite expressions of interest from the public or have automated notifications. Equally, if the list of common good property is likely to be extensive, the local authority may also wish to place adverts or articles in local papers to reach a wider audience. Length of consultation. The list of common good property should be made publicly available for comment for at least twelve weeks."

In the Borders case, once local councillors have scrutinised their local draft registers the contents are likely to be submitted for public consultation early next year.

No confirmation of $40 million Israeli patent sale

by OUR OWN REPORTER

A number of Israeli Government departments and the country's UK Embassy have told Not Just Sheep & Rugby they have no knowledge of a $40 million intellectual property deal involving their state officials and "disruptive technology" company Avocet Natural Capital.

The identity of the mystery Middle East purchasers of 'revolutionary' fuel additive patents appeared to have been confirmed during a court hearing in October when a finance company successfully applied to have Avocet chairman Martin Frost declared bankrupt.

Our exclusive report on the bankruptcy proceedings included an explosive submission by Jonathan Rodger, counsel for United Kingdom Agricultural Lending Ltd. (UKALL), the firm pursuing Mr Frost and his wife for a £4 million debt.

Mr Frost had claimed he would be in a position to pay off his debts and creditors as he was due to receive some $6 million from the patents sale. The proceeds were, at that time, being held in a Texas bank, he said.

But in a forthright court statement Mr Rodger declared: "There are no transaction documents, by which I mean documents effecting the sale of $40 million 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 [of Texas] to Mr Frost is in progress. There are no minutes of the board of ANC (Avocet Natural Capital) 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 11th October and his assertion that essentially 21st century alchemy is going to put $6.1M in his pocket is fanciful and utterly without substance."

In response, Mr Frost claimed there had been an embargo in place that there should have been no mention of the state of Israel. 

He added that counsel for UKALL had broken that embargo in a public forum. Mr Frost explained 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".

Since the court proceedings ended six weeks ago we have attempted to secure comment from the Government of Israel about their dealings with Avocet Natural Capital. Our efforts have involved fourteen separate email exchanges.

We asked how the technology sold to the Israeli state by ANC would be used, and requested confirmation of the $40 million price frequently quoted by Mr Frost in newsletters to shareholders.

Our quest began with a message directed at Israel's general press office where a member of staff provided a ten-page list of spokesmen and spokeswomen for the various state departments. We were in for a long haul.

An approach to the Israeli embassy in London elicited the response "I can try to find out but the chances are slim". A fortnight later we were told there was no further information available.

We then tried Israel's Ministry of Energy, copying our request for information to the Science & Technology department.

An Energy spokesperson wrote back to say: "This is not related to our area of practice. I'm not familiar with this story at all. I have no relevant information of who is the appropriate person who can help".

Since then we have despatched three emails in the course of the last fortnight to the "Western European media spokesperson" but we are still awaiting a response.

Despite our best efforts, for now the multi-million dollar transaction between ANC and the state of Israel remains as mysterious and as secret as ever.

Fund's collapse referred to Manx High Court

by EWAN LAMB

The offshore investment firm that failed to bankroll the development of a £23 million waste treatment plant for Scottish Borders Council is now the subject of a liquidator's report to the Isle of Man's High Court of Justice detailing factors in the run up to the company's collapse which warrant further investigation.

A team of insolvency experts which is being funded by the island's Financial Services Authority has now spent more than five years probing the affairs of the New Earth Recycling & Renewables [Infrastructure] fund - known as NERR - following its spectacular demise in 2016. 

A year earlier the Borders council and NERR's partners the New Earth Solutions Group (NESG) were forced to abandon their 24-year waste management contract, worth up to £80 million when it was signed in 2011. The Galashiels treatment facility was never even started although the local authority spent more than £2 million on consultants and expensive law firms.

Since the Borders deal was scrapped it has emerged that NESG, which has also been dissolved, owed NERR £39 million while NERR itself had debts and liabilities of £113 million. Questions have been asked about a possible lack of so-called due diligence by SBC before it formed the NESG partnership.

The 3,250 investors in the Manx-based fund had placed a total of £220 million with the managers of NERR, the also liquidated Premier Group (Isle of Man). The NERR liquidators have been scrutinising some 200,000 documents linked to the financial mess.

In a report to creditors issued this week joint liquidators Alex Adam and David Craine reveal: "On 23 August 2021, the deemed official receivers submitted their report to the Isle of Man High Court of Justice, pursuant to Section 176 of the Isle of Man Companies Act 1931, detailing the results of their investigations into the factors leading to the Company’s collapse into insolvency and presenting those matters which require further investigation to be conducted by the relevant authorities. We have sought legal advice as to whether it would be possible to share the contents of the report with creditors and investors however we are advised that, as it is a report to the court, it is confidential and cannot be shared."

And the report also says: "The Joint Liquidators, in concert with our legal advisors, have continued to progress our investigations into the roles of other advisers to the Company. In respect of those investigations, since our last update we have obtained further input from our legal advisers, setting out further steps required to allow for a formal counsel’s opinion to be obtained on the viability of a potential claim which, if successful, has the prospect of resulting in a return to investors. 

"We are currently undertaking that additional work. We are unable to provide further details at the present time due to the risk of prejudicing any possible future action, however we will provide further information as and when we are able to. Funding There is no change to the funding arrangement with the Isle of Man Financial Services Authority (“FSA”). As you are aware, the funding of the liquidation remains subject to ongoing review by the FSA and can be withdrawn at any time."

Section 176 of the 1931 Act says a liquidator/receiver can present a report to the Court "if the company has failed, as to the causes of the failure; and whether in his opinion further inquiry is desirable as to any matter relating to the promotion, formation, or failure of the company, or the conduct of the business thereof.

"The official receiver may also, if he thinks fit, make a further report, or further reports, stating the manner in which the company was formed and whether in his opinion any fraud has been committed by any person in its promotion or formation, or by any director or other officer of the company in relation to the company since the formation thereof, and any other matters which in his opinion it is desirable to bring to the notice of the court."

Section 207 of the same Act  explains that when an official receiver has made a further report under this Act stating that in his opinion a fraud has been committed by any person in the promotion or formation of the company, or by any director or other officer of the company in relation to the company since its formation, the court may, after consideration of the report, direct that that person, director or officer shall attend court and be publicly examined as to the promotion or formation or the conduct of the business of the company, or as to his conduct and dealings as director or officer.

Jedburgh Abbey's horseshoe nail mystery

BY OUR OWN REPORTER

When workmen carrying out a heritage restoration project in the shadow of Jedburgh Abbey disturbed human remains in August 2020 the event made national headlines with the bones thought to be at least 200 years old.

But now an even more intriguing story is emerging from an investigation by archaeologists into the 2020 find. And the inquiries conducted by HARP Archaeology's Ian Hill on behalf of Scottish Borders Council (SBC) and Jedburgh Conservation Area Regeneration Scheme will be discussed at an archaeological conference this weekend.

It has been established that one of the skeletons, a male believed to be aged between 25-35 at death was clutching fragments of corroded metal in his left hand. He was lying alongside a female who was aged between 22 and 30 when she died. The remains were uncovered from beneath the abbey ramparts where thousands of tourists walk during visits to the world renowned monument.

The experts have also discovered that when the ramparts were originally constructed at some point before 1775 large quantities of skeletal remains were disturbed before being discarded with little or no regard for the dead.

Mr Hill told Not Just Sheep & Rugby: "I think it is fair to say that they weren’t treated with a huge amount of respect; we found evidence of at least 22 individuals that had been discarded into the ground raising event during rampart construction, and five disturbed graves, but there were likely several more disturbed during the construction of the rampart"

He also explained that the metal fragments being gripped by the young male turned out to be an unused horseshoe nail being held as some kind of charm. Said Mr Hill: "There are some folk beliefs that horse shoes and their nails held amuletic powers. 

"In terms of significant findings, the two individuals buried together is interesting as there does not appear to be many parallels in the UK although we have not exhaustively researched that yet."

A detailed report on the archaeological work carried by HARP says changes to the ramparts can be viewed in historic maps from the 1700s to 1900s, along with images and prints from the late 18th to early 19th Century. Eighteenth Century maps, including an untitled map from 1775 and Ainslie’s map of 1780 refers to the ground located to the west of a wall on a similar line to the rampart wall as being the ‘High Kirk Yard’. 

The 1775 map also indicates the land adjacent to the east of the wall being the ‘Low Kirk Yard’, however Ainslie’s map notes this area as a ‘Cattle Market’. Both maps indicate a wall to the east of the abbey, which may represent the rampart wall.

The recent repair works at the Jedburgh Abbey Ramparts - part of a £1 million heritage project - were carried out to consolidate, update, repair, and replace different sections of the walls. The works included the careful removal of significant portions of the face of the existing rampart wall in order to re-build the backing wall where required, with the masonry face re-built and repointed in lime mortar to match the existing style and appearance of the rampart wall; replacing three sets of steps leading from street level to the top of the ramparts.

And the report adds: "The articulated remains of the two intact human burials were revealed at a depth of approximately 1.95 m from ground level at the top of the ramparts. On the discovery of the intact skeletal remains, excavation works for the new stairs, and repair works for the wall were ceased."

A total of 496 human bone elements were recorded by the HARP team. "On a strictly context base, this would seem to indicate 28 individuals; however, given the highly fragmentary and commingled nature of some of the remains, it seems that this would over-represent the number of individuals."

In addition: "A total of 378 animal bone elements were recorded. There is a minimum of nineteen sheep/goats three cows, one dog, one cat; one bird; one rodent; and one pig, though these numbers are almost certainly under-estimated."

According to Mr Hill's report: "Whilst it is clear that all human skeletal material uncovered was disturbed during the construction of the ramparts in some way, and therefore predate the construction of the ramparts in the late 18th to early 19th Centuries, radiocarbon dating of the skeletal material retrieved from the intact human burials would help to provide a more accurate date of death of the individuals, and will help to identify at what time period the previous landscape was in use as a graveyard."

Analysis of the DNA of both the intact individuals would help to determine whether there was any familial ink between the two.

The report continues: "Whilst preliminary analyses of the (animal) bones has been undertaken, a more detailed analysis of the animal remains to further identify species and evidence of butchery marks would help to outline what types of animals were being consumed, potentially relating to abbey life. 

"Consideration will also need to be taken on the re-deposition of the retrieved human skeletal material, however the final decision for this process will lie with Historic Environment Scotland and SBC."

Mr Hill will give a presentation featuring the Jedburgh ramparts 'dig' during tomorrow's (Saturday November 20th) online Edinburgh, Lothians and Borders 2021 Archaeology Conference

Avocet firm with £940,000 debts had £15 in bank!

EXCLUSIVE by OUR BUSINESS STAFF

An investigation into the latest financial disaster involving the Avocet Group of 'disruptive technology' businesses has revealed a deficit of £940,000 with just £15 in cash lying in the company's bank account.

The first report from joint administrators appointed to Avocet Faculties Ltd in September shows hundreds of thousands of pounds are owed to associated insolvent companies Avocet Infinite (now called Omega Infinite) and Avocet Farms (Orrdone Farms) with HMRC also listed as a creditor.

Prior to its collapse into insolvency it was disclosed that Avocet Faculties had paid £200,000 for a dilapidated jetty and a narrow strip of land on the shores of Loch Lomond. The same piece of real estate changed hands for just £1,000 five years earlier.

Now administrators Kris Wigfield and Jason Ainge, from insolvency experts Begbies Traynor have instructed agents to sell the redundant pier at Port A Chaipuill and to market the company's only other asset, a pair of farm cottages in Berwickshire.

The sole director of Avocet Faculties is Dr Bob Jennings who replaced the now bankrupt businessman Martin Frost in September 2020. Company secretary is Eirlys Lloyd who fills that role for a number of Avocet businesses. The solitary £1 share in Avocet Faculties is held by another Avocet outfit, Avocet Bio Solutions Ltd., registered in the Irish Republic.

In his report, Mr Wigfield explains that the administrators had been appointed by Omega Infinite as holder of a qualifying floating charge, acting by its liquidators Ashleigh Fletcher and Joanna Hammond, also from Begbies Traynor.

According to the report: "The director has not yet provided the joint administrators with details of the company's history. The director has not yet prepared a statement of affairs of the company as of September 2021 nor provided sufficient information to prepare an accurate one".

Omega Infinite as principal creditor is associated with Avocet Faculties by common directors and shareholders, the report says. Omega was granted several charges against the company's property and undertaking, including security charges over the property and Loch Lomond jetty.

"Cash in the sum of £15 was identified in the books and records located at the company's registered office. This amount has been paid into the administration bank account".

Mr Wigfield estimates Omega Infinite was owed £807,563 at the time of his appointment. HMRC has a claim for £21,860 relating to outstanding PAYE while Orrdone Farms Ltd is due £88,864 - unsecured creditors have claims totalling £111,745. Among those due money is a former employee owed £11,443.

Both Omega Infinite and Orrdone Farms have lengthy lists of creditors owed between them a sum running into many millions of pounds..

The Avocet Faculties report states: "At this stage, in order that potential realisations are not prejudiced, we do not ascribe a realisable value to the properties, although a shortfall to Omega's indebtedness is anticipated".

However, the administrators add that they have been provided with certain information which requires consideration in relation to the validity of Omega's charges, prior to any distribution being made.

But if the Omega security is valid there will be no dividend for other creditors.

"On present information the joint administrators believe the most appropriate exit route from administration is for the company to move into liquidation. There may be matters for enquiry concerning a company's affairs which are not within the scope of an administrator's powers and which can only be properly dealt with by a liquidator".

Pre-administration costs are shown as £18,862, and these are currently unpaid.

Officers to be replaced, promises Frost

by EWAN LAMB

The latest claims by bankrupt businessman Martin Frost that administrators and liquidators of two of his insolvent and debt-ridden companies are to be replaced have left long-suffering shareholders astounded and confused.

In a newsletter sent by email today to Avocet Natural Capital PLC investors Mr Frost also promised that the 'denizens' who are members of the Avocet independent internet Forum would face prosecution with an announcement to that effect to be made this weekend.

There has been growing speculation over the Avocet Group's future following last month's decision by a judge to issue bankruptcy orders in respect of Mr Frost and his wife. But so far there has been no public statement from either Avocet director Bob Jennings or company secretary Eirlys Lloyd.

As a bankrupt Mr Frost is not able to hold directorships in any company although more than three weeks out from the court decision he is still listed as a director of a number of businesses including Avocet Natural Capital.

He now contacts shareholders under the title of joint president of ANC although critics claim he should not be using company data to get in touch with investors.

In today's missive, Mr Frost updates readers on the forthcoming dividend payment plans before informing shareholders: "This coming weekend there will be significant announcements regarding: Omega Infinite Plc – replacement of liquidators; Orrdone Farms Limited – replacement of Ms. E. Porter;  Avocet ‘HATE’ Forum – prosecution of denizens; Genfro Limited – trading platform operations"

Insolvency specialists Begbies Traylor were appointed as liquidators of Omega Infinite in 2020 while Emma Porter is the administrator of another Avocet subsidiary, Orrdone Farms Ltd. Both of those concerns have sizeable debts and separate lists of creditors.

Not Just Sheep & Rugby contacted Edinburgh-based accountancy firm Aver where Ms Porter is based to see if they could comment on Mr Frost's assertion that she was to be replaced.

We were told: "Ms Porter does not consider it appropriate to comment on unsubstantiated statements by Mr Frost."

When we got in touch with Begbies Traynor's spokespersons to see if they could throw any light on the upcoming departure of Omega Infinite's liquidators we were informed: "Begbies Traynor are not able to comment".

But one of the shareholders who is concerned by the insolvency of three Avocet businesses - Avocet Faculties Ltd is also in administration - had strong words to say after reading today's newsletter.

The investor commented: "I do not understand why Frost can freely correspond with shareholders subsequent to his bankruptcy ruling. Surely someone in authority can put a stop to this flagrant breach of legal process?

"It would be interesting if Frost could tell us on whose authority the officers currently investigating the affairs of the failed businesses are to be removed. We already know he and his fellow directors have refused to co-operate with Ms Porter which also constitutes a breach of company law".

Bankruptcies "likely to be annulled"

by EWAN LAMB

Bankrupt businessman Martin Frost has circulated another "newsletter" to shareholders of Avocet Natural Capital PLC even though his new status means he is unable to serve as a company director until he is discharged.

Writing in his capacity as 'joint president' of the self-styled disruptive technology Avocet firm Mr Frost tells his readers: "Janet and I heard today that our bankruptcies are likely to be annulled."

On October 18th Judge Joanna Geddes issued bankruptcy orders on the couple after the Business and Property Court at Leeds was petitioned by counsel for United Kingdom Agricultural Lending Ltd (UKALL). The finance company is seeking repayment of a £4 million sum it advanced in 2016 for the purchase of farms in Berwickshire.

Mr Frost had denied any money was due by him to UKALL, and told the court both he and Janet would be appealing the bankruptcy orders in a higher court.

He had sought an adjournment of the October hearing to allow some £6 million to be paid into his  account from a Texan bank said to be holding $20 million - the first tranche of the proceedings from a $40 million deal in which Avocet Natural Capital had sold fuel patents to the State of Israel.

After reading Mr Frost's latest correspondence, an ANC investor who shared the letter with Not Just Sheep & Rugby declared: "This is absolutely astonishing. Frost continues to use the company's email list to contact us despite being effectively banned from running any company. 

"This looks like 'business as usual' for Frost so where are the other directors? We have received no information from the remaining board about the future or fate of the Avocet Group or its so-called wonder fuel".

Mr Frost's letter, like many of his previous emails to Avocet's 675 shareholders, carries a warning about the transmission of the information to others.

It states: "Please Note: Avocet Natural Capital Plc shareholders correspondence is identified with a tracker so please do not breach your shareholder NDA by passing on the contents of this shareholders communique to third parties without first obtaining permission from Mrs. Eirlys Lloyd [company secretary]."

The correspondence is headed 'Dividend News' and goes on to say: "I am advised that over 60% of ANC Plc shareholders have intimated their IBAN numbers to Mrs. Eirlys Lloyd. To execute the ANC Plc dividend, one needs an 80% consent to be gained either by implication via the receipt of your IBAN or in writing direct to Dr. Bob Jennings (the other ANC joint president).

"If 80% is NOT achieved by 4pm Thursday 11th November, then I am told that ANC Plc will apply for a court order to make this dividend. Providing the court grants the dividend then those of you who have not personally opted will have your dividend paid into an escrow account where it will be held until the next ANC Plc dividend award. A similar procedure may then apply."

On other news, Mr Frost claims: "The Genfro (another company dubbed 'son of Avocet') trading platform is delayed due to a dispute between Google and Microsoft in which Microsoft has backlisted emails from its providers to Genfro. This restraint of trade is being sorted."

And: "As matters settle you shall shortly be in receipt of further good news on the Genfro and Bio Solutions fronts."

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.