September 27th, 2016

MP joins calls for council openness on Ricoh Wasps deal

MP joins calls for council openness on Ricoh Wasps deal MP joins calls for council openness on Ricoh Wasps deal
Updated: 4:46 pm, May 07, 2015

AN MP has joined calls for greater council openness with the public over its secretive deal to sell the Ricoh Arena to London Wasps using taxpayers’ money following a Coventry Observer investigation.

The call came from Coventry Labour MP Jim Cunningham as Sky Blues fans’ organisations called for an independent inquiry, and ex-councillor Brian Patton is to lodge an official complaint for the Local Government Ombudsman to investigate the council following our revelations.

We also this week raise questions about Ricoh owners London Wasps Holdings Limited’s seemingly mysterious business structure and a parent company based in offshore, low tax Malta.

We exposed false and misleading public claims by Coventry City Council leader Ann Lucas concerning the financial performance of Ricoh firm Arena Coventry Limited (ACL) before and during its sale to Wasps last October, supported by £14million of taxpayers’ money amid the deepest council cuts.

In accepting the company had not been profitable after all, she claimed two weeks ago that she and councillors had acted on advice which she had believed to be correct from ACL’s “shareholders”, and “advisers”. The main advisers to councillors had included council executives and former ACL directors Martin Reeves and Chris West.

We also revealed leaked documents which exposed her false public claims two weeks ago that the council had always wanted a deal with Coventry City Football Club but the club had ruled out any deal short of the stadium’s freehold, which was not the case. Another leaked council document appeared to show she had in 2012 claimed “hell freezes over” before any deal with the club’s owners, which she and the council did not deny last week.

In response to our investigation, Coventry South Labour MP Jim Cunningham said: “I understand why the public is concerned about this.

“I think that it is important that the council responds to the concerns raised by members of the public as soon as possible and clarifies the situation.

“The council needs to explain to us all why this confusion seems to have arisen and needs to clear up any misunderstandings between the council and the public.”

Many Coventry City fans and city taxpayers angry with the sale of the stadium built by and for the football club to an iternant rugby club welcomed our investigation on social media. It is despite the counter views of other fans’ groups including Sky Blue Trust leaders who have pushed a so far failing campaign to oust the club’s hedge fund owners Sisu, and who did not fight the Wasps deal. Sisu insists it has nothing to sell without a stadium.

Many Sky Blues fans on the internet argued in October that the same deal offered to Wasps should at least be offered to the football club. But the deal was kept so secret that even Coventry Rugby Club complained it had been kept in the dark.

Politics professor Andrew Russell and ex-MP Dave Nellist last week raised concerns following our investigation about secrecy, inconsistencies and an apparent lack of councillors’ diligence over the taxpayer supported deal using £14million from council “cash balances”. They called on the council to open up the decision-making process to full public scrutiny.

Leading Labour councillors have consistently said they would only make loans underwritten by the taxpayer to viable and sustainable companies.

ACL’s accounts for 2013/4 published this month revealed losses of nearly £400,000 despite repeated public claims by Coun Lucas and other council figures at the time that it was profitable and “very profitable” without the football club. The Sky Blues had been playing in Northampton at the height of an acrimonious and litigious dispute over stadium rents, revenues and ownership.

Accounts show London Wasps Holdings Limited, now 100 per cent owners of the Ricoh firm, last reported a £3.2 million loss in 2012/3, when it also reported £10million debt, not due until June last year, to company Canmango Limited.

Accounts state the shares in that company were later acquired by offshore Maltese company Moonstone Holdings Ltd. Its ultimate parent company was Malta-based MGI Fiduciary Services Ltd, with Wasps owner Derek Richardson as the ultimate controlling party.

Wasps publicly admitted just before the Ricoh deal: “We run a high risk of going bust.”

One of Coventry council’s Labour leaders’ long-standing objections to Coventry City Football Club’s owners was a lack of transparency in its complex offshore business arrangements.

The Coventry Observer can this week highlight more evidence which raises further questions over other recent public claims by Coun Lucas.

Two weeks ago, she admitted ACL had not been profitable in 2013/4 without the club, when ACL was owned by the council and Alan Edward Higgs Charity. In apologising to those who felt misled, she attributed the losses to an “incredibly challenging year” due to lost rent from the club, and very high legal bills, even though the 2013/4 accounts do not show this.

In fact, it was the first full year in which ACL had been relieved by council taxpayers of onerous bank mortgage repayments. A confidential report from council finance officer Barrie Hastie in January 2013 advising councillors to purchase the £14million loan to ACL, stated: “The intention of this action is to make ACL viable irrespective of what happens to CCFC”.

Only just over £100,000 of the capital plus interest was repaid on the loan in 2013/14, alleviating ACL’s previous £1.6million annual bank mortgage repayments in capital and interest. ACL was at risk of defaulting on the loan in 2012 with the club withholding what many observers accept were extortionate £1.3million a year rent payments for using the stadium.

Despite Coun Lucas’s assertions, ACL’s accounts would have recorded losses in four of the last five years were they not propped up for accounting purposes by nearly £1million each year in monies received in 2009 from former Ricoh Arena casino owners, US firm Isle of Capri, for quitting its contract, an accounting arrangement which expires next year.

Without the inclusion of that money in the accounts, ACL would have made losses in all but 2011/12, when it received an abnormally high £876,000 in business from the council.

ACL’s losses in 2013/4 also came despite the company halving staffing costs, while unconfirmed reports claimed ACL received a one-off windfall that year of £300,000 in personal guarantees from former CCFC chairmen Geoffrey Robinson MP and Mike McGinnity, under a historic security arrangement in the event of the club defaulting on its rent.

Responding to our investigation, Coventry North west Labour MP Mr Robinson articulated an opposing view shared by the Labour council and others by stating: “Now that a second judge has categorically rejected Sisu’s calls for Judicial Review, it is an appropriate time for all parties to put the wretched past history of the Ricoh controversy behind them.

“Coventry City football and rugby clubs face great challenges to regain their former glories. As MP I will do everything in my power to assist them in the future. I believe Sisu should now devote its energies and money to making a success of the football club. It really is time to move on.”

But the club has throughout claimed it desperately requires commercial revenues from owning a stadium to be sustainable, just as Wasps had sought, and insists it is still seeking land for a new ground just outside Coventry. That would leave Wasps and ACL without crucial rental income from the Sky Blues at the Ricoh.

Mr Justice Hickinbottom, passing judgement PRIOR to the Wasps deal, had ruled out Sisu’s claim that the council’s original £14million loan arrangement had been State Aid and unlawful use of taxpayers’ money. He ruled the council had acted in its interests as an ACL shareholder to prevent the insolvency of ACL under stress from the club’s rent non-repayments.

But no judge has considered the terms of the council taxpayer loan arrangement under the Wasps deal, with the council no longer a shareholder. Neither has any judge been asked to consider whether the public and councillors were properly informed over the Wasps deal.

The code of conduct for councillors requires them to be open and transparent with the public. Council officers are also obliged to follow a code of conduct.

The indebted Coventry City FC and parent company Sisu are considering their position in response to the revelations.

We have today raised further questions with the council, Wasps and ACL.

FURTHER COMMENTS

Brian Patton, who was prevented from re-standing as a Labour candidate in 2007 by the party after he abstained on a key vote on giving ACL a rent-free period, said: “ I personally took the city council to the Local Government Ombudsman when they argued that minutes hadn’t been taken at a council meeting when deciding on whether to re-mortgage the £14.4m loan (in January 2013).”

Mr Patton, who stood against Coun Lucas in last May’s council election on a Get Cov Back To The Ricoh platform, added: “It’s pretty obvious now that they have not only misled the council taxpayers of Coventry but now have further questions to answer to the ombudsman about use of public funds and other matters. After reading the Observer over the last couple of weeks it has made me fully realise that these councillors either weren’t telling the truth, were incompetent, or both.”

Paul Knowles, of moderate fans’ forum GMK Online and the popular Nil Lamptey fans’ podcast show, said: “An independent source should examine and bring out into the open whether the council really got the best deal for the city, given the judicial review heard Sisu had offered to write the loan off with a better deal in 2012 for the shares than the £5.5millon Wasps deal which included the taxpayer loan.

“The council should fully explain why the club wasn’t offered the same opportunity as Wasps. Did they only bring the club back from Northampton last September to secure the Wasps deal?

“There should be an independent review of why we were told the company was very profitable when many fans didn’t believe it. We believed the council’s loan to ACL was to keep a community asset out of the hands of a hedge fund, only for it to now be propping up Wasps and its owner’s Maltese company.”

Rob Stevens, of campaign group Get Cov Back To The Ricoh, which had wide media exposure up until the Wasps deal, said the saga could result in several complaints to the Local Government Ombudsman, and more calls for another form of independent review or inquiry.

He added: “The club and supporters have been left high and dry. In the scramble for ‘anyone but Sisu’, we’ve ended up with nothing and we’re either doomed to rent forever or leave the city, supposedly to build a new stadium. Yet again, the council and charity need to be held to account.”

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