Margate & the Missing Money Mystery

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Public grants, treated like Monopoly money and magically disappeared into private hats.

On Thursday (October 16) Thanet’s taxpayers will be asked by the council to dip in to their pockets to repay a £68,750 EU grant that vanished into thin air and which the police say they are powerless to help reclaim.

You or I would have to pay our council tax for the rest of our working lives to fill the hole left in TDC’s accounts if councillors vote at an extraordinary Cabinet meeting to repay the regeneration money that never got used as intended.

The European Regional Development Fund (ERDF) cash disappeared into the accounts of property developers with a council connection, never to be seen again. Public money. In private hands. And then gone.

The council last year finally asked Kent Police if they could bring criminal proceedings. The police suggested under the Fraud Act it was possible in theory – but given that council lawyers had already settled to recoup just 7% of the money, there was nothing TDC could do. Other than take the remaining 93% from taxpayers.

This is simply not acceptable. And it should not be left to lie. The money was intended to regenerate a Margate High Street property and given to a company called “Melltree Properties” to create jobs. It never happened. The property lay derelict for years until being sold on. It is now the wonderful Sands Hotel (which has no connection to this squalid affair). But the money remains missing. 

Thanet District Council’s record with rotten property deals and crooked councillors is not a small one. A former council leader was last year jailed for misconduct in a public office for using inside information to buy two properties. There are claims lodged with police dating back to the 1980s and involving former county councillors and dodgy property deals that have never been fully addressed. 

My fellow Green Party parliamentary candidate Ian Driver in Thanet South has faced legal threats for exposing an ugly conflict of interests in a multi-million property deal involving a company called East Kent Opportunities, jointly owned by KCC & TDC. (That could potentially also involve the council having to pay back millions in European funding; watch this space).

The directors of Melltree Properties were Wade Barker and Richard Freeman. Former Thanet councillor Judith Russell was a shareholder. She also went on to sit on the council’s planning committee. She is also Wade Barker’s wife. (The local press have their names; why haven’t they named and shamed? Or at least knocked on their door to ask questions?)

Now, astonishing documents recently released under the Freedom of Information Act to local campaigner Louise Oldfield detail how quickly they pounced on the grant money and squirrelled it out of the account into which it had been placed. Here’s a letter from Thanet District Council’s assistant litigation solicitor, Colin Evans (one of the few people who seems to have genuinely tried to chase up the funds), written on the 3rd of December, 2012, in which he lays out the evidence against the company.

I converted the PDF to Word to publish the text. Here, without amendments and published publicly for the first time is the letter, addressed to the two directors of Melltree Properties.

3rd December 2012.

To

Mr Jonathan Wade Barker 4 Braeside, 8 Western Esplanade, Broadstairs Kent, CT10 1TF

AND

Richard Anthony Mackenzie Freeman  The Well House  Oye House Road  Thursley Godalming  Surrey GU8 60D. 

Dear Sirs, 

Thanet District Council v Melltree Properties Limited 

Thanet District Council (“TDC·) commenced a claim against Melltree Properties Limited (“MPL”) on 9th September 2011 for the repayment of £68,750 which was paid to MPL on 30th November 2007 and credited to MPL’s bank account at NatWest Bank on 4th December 2007.

We enclose a copy of the Claim Forn and the Particulars of Claim. We also enclose a copy of MPL’s Statement of Defence dated 7th October 2011. Each of you was a director of MPL at the time when application was made for a Site and Buildings Opportunities Fund Grant for works to be carried out to properties at 42 High Street and 16 Marine Drive, Margate and when the sum of £68,750 was paid to MPL, and you are still shown at Companies House as the directors of MPL. 

As you will doubtless be aware, TDC’s claim against MPL has been brought on the basis that MPL did not apply the grant for the purpose for which it was obtained and that TDC is accordingly claiming repayment of the grant. Mr. Malcolm Fillmore of Atherton Bailey LLP chartered accountants has since shortly after the issue of the claim corresponded with TDC in an apparent attempt to persuade TDC not to pursue the claim as MPL is insolvent and unable to repay the sum claimed. 

Much of the correspondence has, as you will doubtless also be aware, concentrated on whether or not the money received was subject to a special purpose trust (also known as a Ouistclose Trust). 

Mr. Fillmore as part of that correspondence has provided us with copies of the bank statements for MPL’s account with NatWest for the period 30th November 2007 until 31st December 2008. It is clear from a perusal of the statements that the account was overdrawn to the extent of £4,572.53 immediately prior to the receipt of the grant from TOC. Following receipt of the £68,750 from TDC and also a further credit of £400,000 payments were made out of the account so that by 31st December 2007 the account was overdrawn in the sum of £1,207.26

The sum of £68,750 received by MPL was on TDC’s case impressed with a special purpose trust and MPL was obliged to apply the money exclusively for the purpose for which it was obtained from TDC. MPL held the money subject to the trust. It is however dear from an analysis of MPL’s bank statements that the money was  simply treated by MPL as being at its disposal and paid out of the bank account without any regard to the special purpose for which the grant was obtained from TDC. 

A payment of £25,023 was made on 6th December 2007 from MPL’s bank account and out of the money received to Mr. Freeman, which we understood to have been the repayment of a loan which he made to MPL on or about 19th October 2007 when MPL completed the purchase of the properties. Mr. Fillmore provided us with a copy of the completion statement and we attach a copy. Such a payment was quite clearly not made for the trust purpose and was made in breach of trust. 

A further payment of £25,021 was made on the same day to Margate & District Investments Limited (“M & D”) out of the funds received from TDC. [Ed’s note: Month’s later, Judith Russell became a director of this company, since dissolved]. We have been informed by Mr. Fillmore that the sum was a repayment of a loan to [Ed: sic? From?] M & D. Such a payment was quite clearly also not made for the trust purpose and was made in breach  of trust. 

In respect of the remainder of the sum received by MPL from TDC and not used to clear the overdraft and make payments to Mr. Freeman and M & D, no evidence has been provided by MPL and/or Mr. Fillmore to show that the money was used for the trust purpose. Such relevant invoices that have been provided appear to predate either the completion of the sale of the property at 42 High Street and 16 Marine Drive or predate the grant. 

The sum of £68,750 was not applied by MPL for the works to properties at 42 High Street and 16 Marine Drive, Margate but applied in part to payoff an existing overdraft and in part to make other payment not connected with the proposed works. We deny that the matters set out in the Statement of Defence amount to a defence to the claim by TDC against MPL. 

Each of you in your capacities as directors is personally liable to TDC for knowingly assisting MPL to breach the trust upon which it held the sum received from TDC by making the payments for purposes other than the works to the properties. The payments were made under circumstances that amount to you assisting MPL to breach the trust. In the case of Mr. Freeman, the receipt of the £25,023 was additionally knowing receipt of money held on trust by MPL. 

Unless you either pay the sum claimed together with interest from 31st December 2007 at the judgment rate of 8% on or before 17th December 2012, we intend to make application to join you as Defendants to this claim.  Yours faithfully, 

Colin Evans Assistant Litigation Solicitor 

Many questions still need to be asked. There is a paper trail and I am going to be among the people on it; because this is a tree full of rotten fruit that none of our useless politicians have shaken despite questions having been asked for years and they are festering and spawning in the branches of our civic space.

Here are a few questions I would dearly like to know the answers to for starters though: Why was no charge placed on the property? (A charging order secures debt against a building or other property of the borrower). And why on earth did the council settle for just £5,000?

Melltree Properties appears still to be trading. It has reported liabilities of just under £1 million. And it has current listed assets of £67,715. Nearly exactly the figure of that grant it received so many years ago. (A coincidence? You be the judge).

And if companies intelligence website DueDil is any guide (the site provides Companies House information) Wade Barker and his colleague have built up a sweeping property portfolio in Margate and Cliftonville. Some of it at the time they were telling the council they had no way of paying back that grant. 

The shop that the grant was given for used to be a sweet shop called Humbug. Someone clearly dipped their hand in the cookie jar. Others got a gobstopper.

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3 responses to “Margate & the Missing Money Mystery

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