Tuesday, 10 September 2013

Thanet Ferrygate Stench of Blocked Khazis

The awful stench which has lingered over Thanet  for the past week, is not related to the tons fertiliser being dumped on the fields as the  Thanet Gazette would have us believe but rather, as  my reliable Council "insider" tells me,  the result of the excessive use of the khazi by  senior council officers and  political bosses brought about be the rapid unravelling of the FerryGate scandal.

For the uninitiated this scandal results from a secret 2010 deal between Thanet District Council and Transeuropa Ferries and its 3 associated companies to defer payment of its fees and charges for the use of the port of Ramsgate. This deal was overseen  by the Council's Section 151 Officer, the Monitoring Officer and Director of Operational services and approved by Councillors Bob Bayford and  Martin Wise the Leader and Finance Portfolio holder of the then Conservative administration.

Apart from one or two minor players  this deal was kept secret from officers, councillors and the public. When Labour took control of the Council in 2012 the current leader Councillor Clive Hart was  briefed about the secret deal and debt mountain  which by this time stood at £1.7million. Like Bayford and Wise before him  Hart chose to keep the debt top secret in the forlorn hope that  the failing ferry company would miraculously begin to make  money and repay the Council this Kings ransom.  To keep the awful  truth hidden the Council's constitutional rules and some  statutory financial requirements were,  shall we say, creatively or carelessly applied. 

The fist anyone knew about this  nautical naughtiness  was when Transeuropa collapsed in April of this year. It quickly emerged that  the Council was owed  a staggering £3.3million in unpaid fees and charges  run up by Transeuropa and its associated companies between 2010-13.

Once they had been  rumbled  senior council officers and council leader Clive Hart reassured the public that the Council would vigorously pursue Transeuropa in the courts to recover as much of the £3.3 million as they could. In fact this was the main reason why the Council refused to allow me to see the Transeuropa documents and debt deferral agreement, because releasing the information would, so they argued,  prejudice TDCs legal action to get  the money back.

Well the first test of TDCs resolve to use all  legal means possible to recover the £3.3 million is on Saturday 14th September when the ferry Gardenia comes up for sale to cover creditors bills. . Among the creditors set to benefit from this sale is Ostend Port Authority - our cross channel opposite number - who also agreed to allow Transeuropa  to defer payment of its fees and charges for using its port. 

Sadly Thanet Council is not one of the creditors listed to benefit from the Gardenia sale because Thanet is an unsecured creditor. Unlike Ostend,  TDC felt that there was no need to insist on Transeuropa providing security against its  failure to pay back the £3.3 million.  My council "insider" tells me that this is probably  because  there is a strong likelihood that TDC never had a formal written payment deferral agreement with Transeuropa Ferries - no agreement no security. This is something which I have been asking about for months but which council officers still remain silent about.

So there you have it a secret deal only known  about by a handful of top council officers and political leaders from both main parties which led to Transeuropa ferries running up a debt of £3.3million. And to cap it all it now looks likely  that this secret deal is not a formal written agreement and that the Council failed to insist on Transeuropa providing  some security against payment default.

I've said it before and I will say it again,  this is one of the most appalling examples of financial mismanagement and incompetence I have come across. £3.3 million of taxpayer money has been recklessly gambled in a secret bet which has been lost. This scandal  merits serious investigation and  I believe several resignations as well.
Here is a letter I have written to the Council's Chief Executive

Dear Ms McGonigal
I understand the ferry Gardenia is being sold by the creditors of Transeuropa Ferries on Saturday 14 September and that the proceeds of the sale will be used compensate some of the organisations who are owed money by Transeuropa Ferries. I have been advised that one of the organisations to benefit from this sale will be the Ostend Port Authority who, like Thanet Council,  agreed a fees and charges deferral arrangement with Transeuropa.
I was extremely surprised to learn that Thanet Council is not included on the list of creditors who will benefit from the sale of the Gardenia. Apparently this is because Thanet Council, unlike our Ostend equivalent, is an unsecured creditor.
I would be grateful if you could tell me why, at the time the Council  negotiated the fees and charges deferral agreement with Transeuropa Ferries and its associated companies,  no security was sought to mitigate the risk of  Transeuropa  failing to pay off debt. This is something which the Ostend authorities, who were taking similar risks to Thanet Council,  thought was a prudent thing to do, but which Thanet did not.
Could you also tell me if Thanet District  Council and Transeuropa Ferries and its associated companies actually drew up a formal fees and charges deferral  agreement which is set out in writing.  I have asked this simple and straightforward question of Harvey Patterson and Sarah Martin and it has not been answered.
Finally, could you tell me if Thanet District Council intends to legally pursue the money owed to it by Transeuropa Ferries, or if  you will be recommending as the Section 151 Officer that this money is likely to be unrecoverable and should be written off.
 I look forward to hearing from you on these matters.
  Yours sincerely
 Cllr Ian Driver    



  1. Ian, I assume that because our professional financial adviser Bayford didn't think it necessary to have a written agreement, that the list of creditors disclosed does not even show the amount of indebtedness of Transeuropa Ferries to TDC as an unsecured debt? Do you know if the list shows the total indebtedness of Transeuropa Ferries to secured debtors?

  2. The list set against the Gardenia is comprehensive, but that's just one of the TEF companies. Each ferry was incorporated separately. You can find the full details on the link to the auction notice on my blog. Luckily the Belgies have provided an English translation!

    1. As usual Mr E you have stepped up to the mark. Kind regards