Thursday 11 September 2014

Meryl's Millions - The story so far and some more questions

Usually murky business involving Carmarthenshire County Council has a very slow burning fuse. The pension and indemnity liability scandals, for example, took more than a year to come out fully.

But things have moved with lightning speed in the case of Meryl's £2.63 million grant to JBCH, and some of the fog at least has now lifted.

Because just about everything involved in this case is under lock and key in County Hall and very few people have access to the information, trying to piece together what has happened is not easy, but let's start with a summary of what we know so far. Some of this corrects information set out in previous posts.

The facts

19 April 2012 - Cllr Clive Scourfield sits down with a large number of council officers in a private "decision meeting" to approve a huge swathe of grant applications. The minutes can be found here. Among the decisions was an award of £1,990,500 to JBCH Developments Ltd for a food grade industrial unit in Cross Hands.

Cllr Scourfield stood down at the local government elections a few weeks later, but he was one of Meryl's right-hand lieutenants in the so-called Independent group. Meryl herself was still Council Leader and would have been aware of this grant, which was one of the largest awarded by the council that year. The money came from the South West Wales Property Development Fund, a pot of EU money which Carmarthenshire administers on behalf of several councils (Swansea, Neath Port Talbot and Pembrokeshire being the others).

It turns out that JBCH Developments was a dormant company which had never traded and which had just £2 of paid up share capital.

Everything then goes very, very quiet for a long time.

25 April 2013 The council's Planning Committee considers and approves an application from JBCH Developments Ltd to build a food grade industrial unit at the site, which is described as an "employment plateau". The application attracts strong objections from local residents concerned about noise and smell.

The planning officer's report notes:

"The unit is speculative at this time as the prospective end user has no interest in the site at this point, therefore speculation of jobs being transferred from Carmarthen and traffic from relocated workforce is not relevant."

This comment is particularly interesting because it shows in the light of subsequent events that the planning officers knew very well who was in the frame to take on this site. Not to put to fine a point on it, members of the planning committee were having the wool pulled over their eyes.


"The application seeks full detailed permission for a speculative industrial unit for meat processing and storage. The unit is speculative as the applicant is a development company and the land owner is the County Council rather than an end user."

Among the conditions attached to the grant of planning permission is a stipulation that the developer will pay £21,540 towards a mitigation scheme for the marsh fritillary butterfly. 


Prior to its use by vehicular traffic, the new access road shall be laid out and constructed with 7.3 metre carriageway, 1.8 metre footways, and 10 metre kerbed radii at the junction with the Industrial Estate road.

Cllr Irfon Jones (Ind) declared an interest in the application on the grounds of "professional and friendship" ties to the applicant.

18 July 2013 Just a few weeks later Edwina Hart pops up in Cross Hands and announces that Celtica Foods is to be given a £1 million repayable grant to finance the development of a meat processing plant. Most of the jobs at the new plant will be existing jobs relocated from Carmarthen - something dismissed by council officers at the end of April as irrelevant speculation.

24 January 2014 JBCH acquires a piece of land from Carmarthenshire County Council in Cross Hands. The purchase is financed by Finance Wales, an entity set up by the Welsh Government to help finance small and medium sized companies, and security for the loan is the land itself and JBCH's contract with Celtica Foods and Castell Howell. As a government-backed loan, we are talking about yet another subsidy.

If there were not already enough subsidies and grants tied up in this project, Carmarthenshire County Council gives JBCH Development a hefty discount on the sale of the land. 

The land was sold to JBCH for £252,000 plus VAT, but from this sale price were deducted £21,540 for the marsh fritillary butterfly (plus VAT) and a further £76,200 for the roadworks. The net payment to the council was just £154,260 (source FOI request).

The risk to JBCH Developments Ltd in all of this is nothing, unless you count the £2 share capital.

6 March 2014 Time for the spin machine to go to work. The council's press office releases a story featuring Council Leader Kevin Madge (Lab) wearing a hard hat and fluorescent jacket pretending that he is about to dig a hole.

The cost of the project has escalated from £2.8m in July 2013 to £4.4m, and the new plant may now eventually employ "more than 100" people compared with "more than 80" according to the Welsh Government a few months previously. Kev acknowledges the role played by the South West Wales Property Development Fund in making all this possible (that would be the grant approved 2 years earlier by Cllr Scourfield).

25 June 2014 In another of those private "decision meetings", Cllr Meryl Gravell, acting with just two officers, signs off a further grant of £2.63m to JBCH Developments Ltd from the SWWPDF in just 15 minutes.

This grant is also for a food grade industrial development at Cross Hands, but is apparently not linked to the £1.99m previously awarded to Celtica Foods.

In an interview on Radio Cymru, it emerges that this is also a speculative development (i.e. there is no client and no land as yet). 

This brings the total awarded to JBCH Developments Ltd, which was still showing up as a dormant company after the first grant of £1.99m, to £4.62 million. On top of which is the subsidised Finance Wales loan, the discounted land deal and the £1 million awarded by Edwina Hart to Celtica Foods.


Perhaps, just perhaps, the truth will come out as a result of the current WAO investigation into the affair, but among the questions which need to be answered are the following:

1. Why does the Council appear to making a habit of awarding very large grants for speculative projects? In the case of the first grant, there was a gap of around 2 years between the grant award and the start of work.
2. Is it not unusual, to put it mildly, for a company with no assets to speak of and which declared itself dormant to receive so much public money?
3. What are the links between the council and the owners of JBCH? There clearly seems to be a relationship in the case of Cllr Irfon Jones.
4. Is it acceptable to earmark and commit so much money from the SWWPDF for non-existent projects so far in advance?
5. Why did council officers tell the planning committee that suggestions Celtica was about to up sticks from Carmarthen were "irrelevant speculation" when they were almost certainly aware that this was precisely what was in the pipeline?
6. How does the extremely favourable treatment of JBCH compare to other businesses? EU competition rules exist to ensure that there is a level playing field. Is the playing field really level when one business is receiving so much backing from the council that there is no element of risk for the owners?
7. Not least, why is JBCH receiving the grants rather than the companies for whom it is building these plants? Presumably Celtica/Castell Howell will be paying for the meat processing plant, so is JBCH being paid twice for the same work? Or is this just a way of circumventing the rules on what SWWPDF funds can be used for?


Anonymous said...

Who are the directors of the 3 named companies are there any links ?
Gareth Scourfield lives near CrossHands any links ?
Some investigative journalism

Cneifiwr said...

Anon@10.10 Clive (not Gareth) Scourfield was the councillor who approved the first grant.

The neames of the directors are easy to find. Simply go to a site such as Duedil and type in the name of the company.

It is important to stress that there is nothing to suggest that the directors of these companies have done anything wrong. If they find that it is easy to tap the council for a few million quid for speculative deals, who can blame them?

But you would expect the normal order of things to be:

1. Conclude a deal.
2. Apply for a grant and planning permission.

Redhead said...

Definitely more questions than answers here. And a lot of smelly stuff. Dig, dig, dig citizens! Definitely something (literally) not adding up.

Anonymous said...

£4,620,000 divided by the total proposed floorspace of 3811 square metres gives a cost of £1212 per square meter. Isn't this rather costly for a food grade industrial unit, or am I just out of touch with these things?

Anonymous said...

What's this in this week's list of planning applications? Yet another speculative planning apllication from JBCH Developments Ltd for a food grade industrial building at Cross Hands business park, dated 23/04/2014. As a dormant company they seem to be quite busy.

Cneifiwr said...

Anon@14.35 Thanks for reminding me. I'd forgotten about this new application what with everything else. The timing is interesting.

When things calm down, expect an update.