September 29th, 2016

Coventry council accused of ‘absurd’ Ricoh secrecy and new misleading Ricoh claims

Coventry council accused of ‘absurd’ Ricoh secrecy and new misleading Ricoh claims Coventry council accused of ‘absurd’ Ricoh secrecy and new misleading Ricoh claims
Updated: 4:40 pm, May 07, 2015

COVENTRY City Council has been accused of ‘absurd’ new levels of secrecy and more misleading claims over its Ricoh Arena deal with Wasps after an angry speech by leader Ann Lucas.

She told a broadcast council meeting last week the loan for the now Wasps-owned Arena Coventry Limited had come from council “borrowing”, suggesting it was a “lie” to claim otherwise.

Yet, in a contradictory statement, the council in mid-January this year re-iterated in answers to the Coventry Observer we published that the £14.4m taxpayer loan had NOT come from borrowing.

In January 2013, when the loan was privately agreed, council executives Martin Reeves and Chris West said the money had come from the council’s “cash balances” – money waiting to be spent on capital projects.

In response to Coventry Observer questions this week seeking clarity, a council statement read only: “Legal proceedings are still ongoing and so we are unable to comment further about any aspects or details of this issue.”

The council’s code of conduct commits councillors to be “open” and “transparent” with the public.

Last week, an open letter to government communities secretary Eric Pickles and Coun Lucas calling for an independent inquiry into the Wasps deal argued the council had got the balance wrong between ‘openness’ and ‘commercial and legal confidentiality’, amid legal disputes with the club’s owners Sisu.

The open letter, published on the Coventry Observer website, was signed by 25 prominent Coventry City Football Club fans and professional people – including lawyers, academics and business people.

Among them was Peter Ward, a businessman and chairman of the Coventry City Supporters’ Consultative Group, who said of this week’s developments: “The council’s lack of transparency has reached absurd new levels.

“It strikes me the council are hiding behind the legal proceedings in an attempt to get their story straight.

“Ms Lucas and the council appear very inconsistent on this issue.”

Politics professor Andrew Russell, another signatory to the open letter, said: “Transparency is the life blood of democracy – particularly if trust between elected officials and the people who put them there is to be maintained at the local level.

“I find it troubling that the council are now declining to provide information on matters that they have previously provided briefings for.

“It’s unfortunate that when asking for an explanation for apparent contradictions in previous statements about ‘borrowing’ from the ACL loan, they are citing ‘legal proceedings’ as justification for not providing one when a simple explanation should be easy to provide.”

Coun Lucas’s broadside last week, as ruling Labour councillors voted through a £15million cuts budget, was a response to Socialist ex-councillor and ex-MP Dave Nellist.

He had pointed to the Ricoh loan in arguing the council had the ability to use “reserves” of cash to stave off cuts to council services this year.

The council executives in January, 2013, had said cash balances used for the loan would eventually be replenished by borrowing.

In January this year, they confirmed that had still not happened, in stating: “The council loan to ACL was capital expenditure by the council, that will ultimately be funded by borrowing.

“The council has not yet needed to borrow to fund the loan because of its overall cash position.”

A private report by council finance officer Barry Hastie on January 15, 2013 to councillors, recommending they approve the loan, stated cash balances would be used for the loan in the “initial years” before the council used its prudential borrowing powers.

The open letter calls for an inquiry with wide terms of reference, including over inaccurate public claims surrounding the deal last October to sell loss-making ACL to loss-making London Wasps Holdings Limited; why the same terms including a massive 250-year lease were not offered to the loss-making football club on which the Ricoh financially depended; and tactics deployed in the council/ACL’s communications strategy, including the hiring of a London PR firm.

Newly published London Wasps Holdings Limited accounts for 2013/4, prior to the Ricoh Arena move, reveal £4million operating losses (up from £3.1million the previous year), despite a one-off “negative goodwill” company transaction of £10.6million.

The accounts record total liabilities owed by London Wasps Holdings Limited of £22million.

This is in addition to the £13.4million that ACL, 100 per cent owned by London Wasps Holdings Limited, owes to Coventry City Council under the taxpayer loan.

Council sources say it is due to be paid back within 20 years plus interest, currently amounting to around £1.3million a year in total.

As we have reported, London Wasps Holdings Limited’s immediate parent company is Moonstone Holdings Limited and the ultimate parent company is MGI Fiduciary Services Limited, based in offshore Malta and controlled by Wasps owner Derek Richardson.

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