'Mystery objector' blocks Son of Avocet's demise

by LESTER CROSS

The planned dissolution of the last remnants of the failed Avocet 'wonder' fuel project has been stopped dead in its tracks after a shareholder or creditor of the worthless business lodged an objection with the UK Companies Registrar.

At the same time, another Avocet entity which had total assets of more than £10 million, according to its last published accounts, has been dissolved via compulsory strike off, presumably for repeatedly failing to lodge financial information on time.

It had been expected that Genfro Ltd, or Son of Avocet, would be struck off the register of companies after the firm's joint life president Dr James R Jennings applied to have it terminated. He signed a Declaration accompanying the application dated March 26th of this year.

As a result, the companies regulator gave notice on April 16th that unless cause was shown to the contrary, Genfro, which never got round to manufacturing chemical products or anything else, would cease to exist two months later.

However, there have been claims that Jennings' application is invalid. Although he is listed as the sole director of Genfro, the company's Articles of Association specifically state that he and fellow joint life president Martin Frost cannot be directors and will play no part in managing the firm's operations.

Mr Frost remains disqualified from holding company directorships since he was declared bankrupt in 2021. A judge in a Leeds Court subsequently ruled that Frost breached his fiduciary duty as a company director by using £425,000 of the firm's cash to help buy two upmarket flats in Scarborough.

Meanwhile, the administrators of another insolvent Avocet business have been seeking to recoup £1.25 million from Jennings.

In a notice concerning Genfro which was published today, Companies House state: "Voluntary strike-off action has been suspended. Action pursuant to Section 1003 of the Companies Act 2006 for the striking off and dissolution of the above company has been suspended as an objection has been received by the Registrar".

The grounds for the objection have not been made public.

According to Government guidance for objecting to a voluntary strike-off: "You can object to a limited company being struck off the Companies Register if: you are a shareholder or other interested party, such as a creditor: you have a reason to stop the company being removed from the register - for example, you have a legal claim against them or they owe you money".

The hundreds of investors in the mythical Avocet project - it has been estimated they have lost more than £30 million - may well have been better advised to concentrate their attention on Avocet IP Ltd., another of the countless subsidiaries. 

At one time it was in control of Frost and Jennings' collection of "extremely valuable" patents, intellectual property which attracted interest from global corporations and mystery investors, according to Frost. These exaggerated assertions may well have persuaded individuals to part with their cash.

Companies House has announced it will dissolve Avocet IP on May 21st by compulsory strike-off.

The business had not produced annual accounts since the end of 2019 when Frost was the signatory to the figures. The report claimed fixed assets of £13.060 million, and total assets less current liabilities of £10.1 million.

Then, in July 2021 shareholders were told that 90 per cent of the patents linked to the Avocet companies had been "lost" since 2019, reducing the value of intellectual property from a possible figure of £400 million to just £69 million.

Correspondence said to have been sent by Jennings to Frost at the time warned: "Dear Martin, This is not good news. We have filed some 120 cases in various countries and the majority have lapsed.

"Some others are still live pending further checks, but will need completion fees to be paid by June 30th. All of the rest have lapsed, with little chance of reinstating. The June date is absolute and must be paid if we are to recoup some value."

When told Avocet IP was to be killed off, an observer of the collapsed business 'empire' pointed out: "The intellectual property consisted of only four patent applications, not patents, and these applications had not been approved after four years despite the average approval time in the UK being 2.5 years".

Our source also commented: "Selling shares based on an impending purchase offer from imaginary investors is investment fraud. This is very serious. There have also been lesser offences such as an illegal name change (which requires shareholder approval that was not sought) and, of course, Jennings acting as a director of Genfro for two years despite being prohibited from doing so by the Articles of Association..

"The UK authorities' failure to act to protect investors despite numerous complaints made to them over years and their consistent failure to prosecute wrongdoers no matter how egregious the offence is appalling."

Former Borders Council Leader suspended for standards breach

by OUR LOCAL GOVERNMENT EDITOR

Tory councillor Mark Rowley, who briefly served as leader of Scottish Borders Council, will be unable to attend meetings of the local authority for a month after a Standards Commission panel found he breached the elected members' code of conduct on three separate occasions.

Mr Rowley, who holds a top job with South of Scotland Enterprise as well as representing constituents in the Mid Berwickshire ward of SBC failed to declare an interest during council debates although he claimed at a Standards Commission of Scotland hearing today there had been no subterfuge nor personal benefit. Four other allegations levelled against him were not sustained.

The breaches related to Mr Rowley's failure to declare his employment as a Strategy Manager with South of Scotland Enterprise at three council meetings held between February and August 2022, when matters linked to, or that could have impacted on the work of South of Scotland Enterprise, were being discussed.

Following the hearing at Borders council HQ,  Ashleigh Dunn, Standards Commission Member and Chair of the Hearing Panel, said: “The Panel found that Mr Rowley failed to declare an interest in relation to agenda items relating to matters in which the South of Scotland Enterprise was involved and, instead, took part in the discussion and decision-making.” 

The Panel acknowledged that Mr Rowley had recorded promptly his employment on his Register of Interests and, as such, was satisfied there was no attempt to conceal it.

Panel members nevertheless considered that, having applied the objective test, as required by the Code, Mr Rowley should have reached the view that his connection, being his paid employment with a local enterprise agency, would reasonably be regarded as being so significant to the agenda items in question as to be likely to affect his potential discussion and decision-making on those matters. 

It was decided that Mr Rowley should have declared an interest, withdrawn from the meetings and taken no part in the discussion and decision-making on the specific matters in question. The Panel further found that on one occasion, having declared an interest in relation to an item being discussed,  Rowley emailed a fellow elected member and suggested that they could comment on a particular point. 

A Commission statement said: "While the Panel accepted it may not have been the Respondent’s intention to influence anyone remaining in the meeting, it found that by suggesting that a fellow councillor could “comment on the challenges” arising from the item, the Respondent had continued to participate, in breach of the Code.

"In reaching its decision on sanction, the Hearing Panel noted that Mr Rowley had co-operated with the investigative and Hearing processes, and had a previously unblemished record as a councillor. The Panel accepted Mr Rowley had registered his employment and, as such, there was no suggestion he had tried to hide or conceal his interest. 

"The Panel agreed, nevertheless, that it was necessary to impose a suspension in order to reflect the seriousness of the breach, to promote adherence to the Code and to maintain and improve the public’s confidence that councillors will comply with the Code and will be held accountable if they fail to do so."

Ms Dunn noted: “The Panel emphasised that the requirement for councillors to declare interests is a fundamental requirement of the Code as it gives the public confidence that decisions are being made in the public interest, and not the personal interest of any councillor or their friends, family or employer. A failure to comply with the Code’s requirements in this regard can erode confidence in the Council and leave its decisions open to legal challenge.” 

In mitigation, Mr Rowley told the hearing he had been under considerable pressure at the time the breaches took place.

SBC had admitted liability in a "very high profile" child abuse case involving a teacher, and the council was the subject of national media scrutiny. Other challenges included the annual budget process and the departure of the authority's chief executive.

Should Have Listened To Drew Tulley?

by OUR LOCAL GOVERNMENT EDITOR

As Scottish Borders Council sets about its latest self-made outsourcing mess and considers how best to deliver sports and leisure facilities in future it might be useful to recall the events of 2002 and 2003 which appear to have cost long-suffering local taxpayers many hundreds of thousands of pounds. 

Live Borders, the arm's length company developed by the council from small beginnings in 2003 as Borders Sport & Leisure Trust, has struggled financially for years. Hardly surprising when the local authority has consistently cut the annual management fee before sanctioning a series of bail-outs, including three separate sums totalling more than £2.5 million since March 2023.

And over the years, teams of consultants commissioned by SBC to produce business cases for change have trousered wads of cash for schemes that have invariably failed. Remember the debacle that was SB Cares LLP?

Only last month - according to the Border Telegraph - Councillor David Parker, a former leader of SBC, told a council meeting "what is absolutely clear is that the current size, shape and scale of Live Borders can’t continue as it is, unless SBC can grow a magic money tree. I do think that our officers need to be careful that they are making sure that as a council we are properly ensuring value for money and doing the right thing by the public purse."

However, as council minutes testify, it was Mr Parker who led the way down the arm's length route back in 2002 when the first decision to move swimming pools and 'dry' sports facilities out of SBC's control was taken. 

The crucial vote came at a full council meeting on October 8th of that year. This is an extract from the minutes of the meeting: "Motion by Councillor Parker, seconded by Councillor Borthwick, that the recommendations in the report be approved. Amendment by Councillor Tulley, seconded by Councillor Dumble, that the Council should proceed no further in respect of the establishment of a Trust and that the leisure facilities should be retained in Council control. On a show of hands Members voted as follows:- Motion - 21 votes Amendment - six votes".

It is clear the late Drew Tulley - he led the council before Mr Parker took the reins - was not a fan of outsourcing council leisure services. And he was unhappy that so much of the debate was being conducted behind closed doors.

The official record of proceedings at the January 2003 council meeting shows: "LEISURE TRUST TRANSFER - Councillor Tulley, seconded by Councillor Dumble, moved that the report on the Leisure Trust Transfer proposed for discussion as Private Business, should be considered in Public. Councillor Parker, seconded by Councillor Wight, moved as an amendment that, as various elements of the report fell within the definition of Exempt Information under Schedule 7A to the Local Government (Scotland) Act 1973, the item be not considered in Public, but that the appropriate matters be covered in a subsequent Press Release. VOTE On a show of hands Members voted as follows:- MOTION – 11 votes. AMENDMENT – 18 votes. The MOTION was accordingly defeated."

Despite losing both votes, Mr Tulley would subsequently make a last-ditch (unsuccessful) bid to keep the pools and sports centres under council control.

According to minutes from a full session of council on March 26th, 2003: "There had been circulated copies of a report by the Director of Lifelong Care on the progress made with the transfer of leisure facilities management to the Borders Sports and Leisure Trust. The report indicated the further work undertaken by the Council Working Group and the Shadow Board and the outstanding issues, and recommended that the timescales for the transfer be extended. 

"MOTION by Councillor Parker, seconded by Councillor Borthwick, that the recommendations contained in the report be approved. AMENDMENT by Councillor Tulley, seconded by Councillor Dumble, that as it now appeared that the transfer would not be in the overall interests of the Borders, the process should be aborted forthwith and the facilities retained in house. On a show of hands Members voted as follows - MOTION – 20 votes. AMENDMENT – 10 votes. The MOTION was accordingly carried."

There were no dissenting voices in 2014 when cultural services - museums, libraries and the like with 200 staff and an annual budget of over £4 million was outsourced to another trust on the recommendation of two sets of consultants.

Coverage of the issue at the time included this: "The council's priority is to save money, and there have been dire warnings that any alternative solution would involve a cull of halls, libraries, museums and community centres. As many as 13 of them would have to close to comply with lower budgets and the need to deliver £275,000 in savings.

Minutes from a full council meeting of February 27th: - Members discussed the proposals including community use and transfer of assets, consultation, staff, and Common Good properties. The general direction of travel was broadly welcomed. Councillor Davidson, seconded by Councillor Aitchison, moved approval of the report.

But yet another 'restructuring' was under the spotlight a little over a year later later with the recommended amalgamation of the two trusts into one large organisation with a £12 million budget. 

An October 2015 meeting was told: "The specific benefits that would accrue to the organisation [Live Borders] are broadly related to its increased scale. For example, the organisation could benefit from economies of scale associated with managerial and back office functions. In addition, it would immediately have a larger combined customer base. It would also have a greater number of physical contact points with customers, providing opportunities to deliver and promote its services. Officers have also considered the extensive experience gained in 2014/15 and lessons learned in setting up SBCares". Oops!

The integration of the two trusts from April 2016 was agreed unanimously.

Fast forward to last Thursday's private meeting of councillors to consider the "challenges" facing Live Borders.

SBC officers will now bring forward yet another report later this month outlining a number of possibilities for the provision of sport, leisure and cultural services currently provided by Live Borders on the Council’s behalf.

The options will be: continuation of the current trust, an alternative arm's length outfit, or services returning in-house to deliver in part or as a whole.

Transfer of School of Textiles from Borders to Edinburgh 'recommended'

EXCLUSIVE by LESTER CROSS 

The "progressive transfer" of the world-renowned School of Textiles and Design's (SoTD) activities from its Scottish Borders base in Galashiels to the Edinburgh campus of Heriot-Watt University is being examined by a review group following a recommendation from the university court.

Any decision to remove the educational facility from the Borders will almost certainly meet with strong local resistance as there has been a 'wool textile college' presence in the town for over 140 years. The School is a centre of excellence in design and dates back to 1883, when classes in weaving, dyeing and chemistry were introduced to train workers for local textile businesses.

And although the manufacture of cloth and knitwear has declined dramatically in the region over recent decades, the School of Textiles has retained a global reputation with leaders of fashion. It attracts students from all over the world.

Following the recommendation from members of the Court early last year, the ruling body established a Borders Strategic Review Oversight Group chaired by chartered accountant Marta Phillips. She is also a member of the Court. The group is expected to conclude its work (including a final report) by the end of July. 

According to Heriot-Watt: "The purpose of the Borders Strategic Review Group is to provide oversight of the Strategic Review agreed at the Court meeting in March 2023 in relation to the University’s presence and impact at the Scottish Borders Campus, advising on the detailed plans as they are developed. 

"The work sits in the context of Strategy 2025 and discussions about the longer-term future Strategy 2035. The Group will receive reports from the Borders and Global Design Futures Programme so it can oversee progress, consider and advise on risks and issues, and provide onwards reporting to the University Executive, Court and its Committees. The Group will operate with delegated authority from Court for approval of budgets and decisions relating to the delivery timelines."

And under its Terms of Reference the university court has delegated authority to the Borders Review Oversight Group to oversee, advise and report on the Strategic Review of the Borders Campus and the specific plans based on the recommendations approved by Court in February 2023.

These were: "1 - Reshaping and reframing Borders Campus activities to contribute to the South of Scotland, engaging all Schools; 2 - Working across all Schools and Campuses to realise future opportunities to achieve excellence in design, in teaching and research 3 - Consulting the Scottish Funding Council, Scottish Government, local government and people, and other relevant stakeholders, including Borders College, in the development of the plans. 

"The consultation was expected to shape and inform the approach to the three recommendations above and allow the University to develop the more detailed plans that the Court wished to receive in order to fully consider the remaining recommendations. These were: • Progressively transferring Borders Campus School of Textiles and Design (SoTD) activities to the Edinburgh Campus; and • Maintaining SoTD academic identity with planning to include opportunities for integration with a larger School.

Review Group members are also tasked with evaluating and advising on "the planning scenarios brought forward by the Executive on the recommendations, reporting to the University Executive, the Court and its Committees to help assure effective, informed decision making in relation to the Strategic Review and its outcomes."

University Court minutes from December 2023 include the following references to the ongoing review.

"The current focus was on strands of work that were time critical for July 2024, including decisions regarding use of space at the Borders College. The overall aim of the Review was to ensure a better student and staff experience at the Borders Campus, as well as developing a portfolio that was attractive for students, aligned to the local economy in the region and to the University’s global work. 

"The Vice-Principal and Provost reported that the current recommendations focused on teaching activity, with consideration of research activity to follow in 2024. As previously agreed with the Court, the University would not be withdrawing from the Borders and was therefore considering what opportunities there were to better align its offering with local and regional requirements."

In view of the importance of the issue to the Borders, we asked Heriot-Watt University  if the progressive transfer of the SoTD from the Borders Campus to the Edinburgh Campus was still under consideration, or had the idea been dropped? 

And, in addition we asked: "How will the University ‘better align’ its offering at its Borders Campus; and - What was the rationale behind the formation of the Borders Oversight Review Group?"

Today we received the following response:

"Is the progressive transfer of the SoTD from the Borders Campus to the Edinburgh Campus still under consideration, or has the idea been dropped? 

The University has been carrying out a Strategic Review, considering options which will best refine and enhance our contribution to the Borders, and more broadly to the South of Scotland. We have been working closely with the Borders College and will be finalising the outcomes of our Strategic Review in the coming months. 

How will the University ‘better align’ its offering at its Borders Campus?

Our plans are focused on improving student experience, including social engagement and access to support. We aim to ensure that the balance of activities between all our campuses provides a first-class experience and enables staff and students have access to the services required to support a flourishing community.  

As the skills audits for the South of Scotland have also shown, student demand for courses has changed in recent years. We are also considering how best to align our offer with the skills needs in the region alongside preferred study choices of our students while also continuing to work in partnership with Borders College and other FE providers where practicable. 

What was the rationale behind the formation of the Borders Oversight Review Group?

The University’s governing body, the Court, established the Oversight Group to provide oversight, advice and reporting throughout the Strategic Review process."

In an attempt to clarify the situation regarding the proposed transfer of SoTD to Edinburgh we contacted Heriot-Watt again to suggest the recommended re-location remains an option under consideration.

We were told: "For guidance, the University is not planning an immediate change to its Borders Campus".

As well as the historic site in Galashiels, SoTD operates in a new state-of-the-art campus in Dubai.

The Borders facility received a £31 million refurbishment in 2009, and the 50 staff and 500 students have studio space, workshops and dyeing and chemistry laboratories. The campus is jointly used with Borders College although the two institutions maintain their independence.

The SoTD website declares: "Described by Dame Vivienne Westwood as “The best in the UK”, our facilities have been tailor made to help students thrive." 

Borders council has already borrowed £46 million in 2024

by OUR LOCAL GOVERNMENT EDITOR

Scottish Borders Council which has warned of a double digit rise for local taxpayers next year borrowed a further £6 million from the Public Works Loans Board (PWLB) last month, adding to the £40 million already acquired in loans since the beginning of 2024.

Figures for April from the UK Treasury's Debt Management Office show the Borders local authority took the additional £6 million on the 23rd of the month with an interest rate payable of 5.4 per cent. The loan has a maturity date in April 2026.

As we reported previously, SBC had racked up £40 million of new debt between January 2024 and the end of the 2023/24 financial year on March 31st. 

These were separate loans from the PWLB of £30 million on January 30th with an interest rate of 5.35% and a maturity date of January 30th 2025, followed by a further advance of £10 million taken on March 27th at 5.39% and with a maturity date of March 27th 2025.

The council confirmed it would pay interest of £1.605 million on the £30 million loan, and a further £539,000 on the money borrowed in March. 

In 2022/23 total annual costs of loan charges linked to 46 PWLB loans together with LOBO loans and PPP financing stood at £16.1 million, equivalent to 7.6% of the overall revenue budget.

The PWLB loans are used to pay for capital expenditure projects.

The revenue expenditure to pay for council services in 2024/25 [including interest charges] required a £10 million raid on balances together with savings of £4.4 million with at least £5 million to be trimmed from spending in 2025/26.

According to a statement issued in February: "Significant financial pressures, including inflationary pressures of £6.7 million leave us in the stark position of having to both increase council tax rates and make permanent service reductions in the future to balance the books.

"Budget plans include an indicative increase of ten per cent (in council tax) for 2025/26 followed by five per cent increases in the three subsequent years. These will however not be formally set until the annual budget is considered each year as normal".

The Debt Management Office has also provided all public authorities in England, Wales and Scotland with audit statements showing the outstanding balances and year end values on their PWLB loans as of March 31st, 2024. It shows SBC owes the PWLB £213.736 million.

This is the data for Scottish Borders Council's 46 loans. The first column shows the year the loan was taken; column two indicates the maturity date; then the outstanding balance in each case; and finally the so-called year-end value or fair value of each transaction.

1993    2053           £507,816           £834,793

1993    2053           £60,839             £98,726

1994    2053           £1,354,176        £2,002,246

1995    2024           £381,114           £402,770

1995    2055           £2,031,264        £3,412,901

1996    2055           £2,031,264        £3,395,661 

1996    2055           £1,692,720        £2,895,476 

1996    2055           £1,692,720        £2,895,476 

1996    2055           £1,692,720        £2,895,476

1996    2055           £1,692,720        £2,895,476

1996    2054           £667,088           £1,134,683

1996    2054           £667,088           £1,134,683

1996    2053           £1,963,556        £3,154,484

1997    2051           £2,288,994        £3,484,444

1997    2057           £1,354,176        £2,072,768

1997    2057           £1,354,176        £2,072,768

1997    2057           £1,354,176        £2,072,768

1997    2057           £1,354,176        £2,072,768

1997    2057           £1,354,176        £2,072,768

1997    2057           £1,354,176        £2,072,768

1997    2027           £1,291,858        £1,450,520

1997    2026           £3,385,441        £4,749,084

1997    2026           £1,608,589        £1,742,327

1997    2057           £1,354,176        £1,889,755

1997    2047           £2,350,104        £3,085,537

1997    2047           £1,354,176        £1,777,947

1998    2052           £1,481,383        £1,930,334

1998    2058           £2,708,353        £3,270,966

1998    2054           £2,031,264        £2,268,670

1999    2057           £1,692,720        £1,905,898

1999    2057           £1,692,720        £1,905,898

2000    2054           £2,031,264        £2,406,181

2000    2054           £1,354,176        £1,570,671

2001    2061           £3,031,233        £3,589,540

2007    2052           £10,000,000      £10,347,132

2007    2052           £24,000,000      £25,638,166

2007    2052           £24,000,000      £25,638,166

2007    2057           £2,000,000        £2,108,566

2016    2026           £4,000,000        £3,790,797

2017    2027           £8,000,000        £7,604,304

2017    2027           £10,000,000      £9,433,494

2018    2048           £10,000,000      £7,728,433

2019    2034           £7,500,000        £6,121,689

2022    2032           £20,000,000      £18,245,852

2024    2025           £30,000,000      £30,493,169

2024    2025           £10,000,000      £10,098,005

NOTE: The £6 million loan was arranged after the end of financial year 2023/24 and is not included in the table above.