Mutually Acceptable Arrangements for The Lennoxtown Initiative to run up Uncapped debt
This excerpt is from the year ending 31 March 2011 Lennoxtown Initiative charity’s accounts on page 4. The key sentence reads:
“Mutually acceptable arrangements have been entered into between the company and the Council and these sums will be reimbursed to the Council once the capital receipt fro the disposal of land at the former Lennox Castle Hospital site are received.”
Again in the following year’s accounts, the year ending 31 March 2012 Lennoxtown Initiative charity’s accounts page 4:
I can understand the Lennoxtown Initiative board finding it mutually acceptable because their debts would not be called in and the charity sent into Administration. But East Dunbartonshire Council giving a charity an uncapped licence to go into debt? Not sure if the ratepayers of EDC would find that acceptable.
Given by whom? Obviously an East Dunbartonshire Council representative on the Lennoxtown Initiative board.
Under the Tripartite Agreement signed in 2002 by:
East Dunbartonshire Council
NHS Greater Glasgow & Clyde
The Lennoxtown Initiative
Each member, EDC and NHSGGC, would have a ‘Partner Member’ director on the charity board. The rest of the board would be comprised of ‘Community Member’ directors.
The ‘Mutually Acceptable Arrangement’ was a licence to the charity to hand out money they did not have from 2010-2011 onwards and the EDC ratepayers would bail the charity out.
It is this debt ‘guarantee’ arrangement that allowed both the Celtic Service Level Arrangement to pay out more to Celtic than charity had and go into deficit and for the whole charity to go into insolvency but still limp on until now.
BUT it was firstly in debt to the EDC on 31 March 2011 so it has gone on another 5 years. It had to be kept alive to overpay the Celtic Service Agreement until September 2013 which appeared in the charity’s 31 March 2014 accounts.
Latest Debt Figures
From the latest Lennoxtown Initiative accounts from Year Ending 31 March 2015:
So on 31 March 2015 East Dunbartonshire Council ratepayers were owed £310,903.
Likelihood of the East Dunbartonshire debt being repaid
Very unlikely since the council agreed to not to seek repayment.
Again from the latest Lennoxtown Initiative accounts from Year Ending 31 March 2015:
See where it says ‘East Dunbartonshire Council will not seek repayment of sums due to it by the company’. Incredible.
So, EDC after coming to an ‘arrangement’ to allow the charity to run debts, is now just going to write-off the debt owed.
Surely East Dunbartonshire ratepayers should not lose out because of grandiose over-payments plans of councillors or council employees? Where is the accountability?
Did East Dunbartonshire Council follow correct protocol?
The arrangement was not a written agreement and it doesn’t appear that there is a paper trail for it’s approval. Here we have someone putting the council ratepayers on the line for the charity’s debts with no oversight.
EDC claim they only paid Celtic the final Celtic SLA payment seen in 2014 accounts:
They also claim there was no ‘Mutually Acceptable Arrangement’ and that the Lennoxtown Initiative was a separate company.
Yes a separate company, but one without staff and being run by EDC and having 2 directors on the board who approved those accounts in 2010-11 and 2011-12 which stated there was ‘Mutually Acceptable Arrangement’. So who is lying here?
It’s not very arms length for the EDC to agree not to call in it’s debts with another company. Without this agreement in place and it had to be agreed by the EDC then the charity would have been closed from 2010-11 when the Celtic SLA was barely running 2 years. So what was the purpose of keeping it limping along in debt? Embarrassment at the mismanagement? Or wilful corruption?
Here’s the ‘Current Situation’ in the charity’s accounts at year end 31 March 2011:
From that point the charity was in deficit and remains so till today. Repeating the display of the first Mutually Acceptable Arrangement paragraph again from the charity year ending 2011 accounts:
Strange that EDC is owed a historical salary deficit of £242,000 in 2011 and nowhere in the future accounts has it been repaid yet they claim there was no ‘arrangement’.
Which EDC representatives were on the Lennoxtown Initiative Board during 2010-2011 and are they still there?
From the latest charity accounts available for the year ending 31 March 2015 there are two candidates:
From Companies House website both Thomas Glen and John Dempsey were also Lennoxtown Initiative directors in the period 2010-2011 when the ‘Mutually Acceptable Arrangement’ was made.
Mr Dempsey, as we highlighted before, has been on the Lennoxtown Initiative board from the start and we know his Celtic shareholding information.
However Mr Dempsey, although an EDC Councillor, has always been a ‘Community Member’ director and not a ‘Partner Member’ director directly representing EDC interests on the charity board. And as it says in Related Party Transactions above he’s “not involved in the decision making process in respect of funding to the Lennoxtown Initiative”.
Mr Glenn became a ‘Partner Member’ director on 8 July 2009 and is still a director:
With Mr Dempsey being ruled out, only Thomas Glen could have given the Mutually Acceptable Arrangement ‘guarantee’ that put the council ratepayers on the line for the charity’s uncapped debts from 2010-2011 onwards.
In his title he’s responsible for Corporate Assets. And I presume that Corporate Assets includes the funds collected from East Dunbartonshire Council ratepayers and taxpayers through direct transfers from the Scottish/UK government.
In a period of cuts to budgets and services it looks like £310,903 has been written off the East Dunbartonshire council’s Corporate Assets.