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TAXPAYERS shelled out a grand total of £22,600,000 to buy Alexandra House but the external auditor required that it be recorded at it's true and fair value, of £10,100,000.
Last week's Haringey Council Corporate Committee meeting included discussion on the apparent £12,000,000 over-payment for the purchase of the office block near Wood Green Tube station (pictured above).
One of the many remarkable aspects of this deal—to acquire the freehold interest—was that it included buying a shell company at a cost of £6,000,000. The shell came without assets, but with an option to buy the offices, occupied by the council as tenants for some years. Nice work if you can get it. Or, as the council's external BDO Auditor Leigh Lloyd-Thomas put it, «somebody’s done quite well out of the transaction».
Remarkably, a new Corporate Committee (and former Deputy Leader of the Council) Cllr Kaushika Amin described the committee's established wish for further investigation as, «just a pursuit in a vendetta manner».
There is no indication or suggestion whatever that Cllr Amin was involved in the original arrangements or in the subsequent deal. However, her call for transparency makes it all the more surprising that she appears to be opposed to further investigation of the huge loss.
This deal—and other peculiar property transactions—subtract from our Council's Capital Account and will have ramifications for the public for years to come.
VENDETTA ? ~ the transcript
Or, probing the wasting of £12,000,000
Cllr. Mitchell Cllr Berryman, was there anything else you wish to raise?
Cllr. Berryman Thank you Chair. At the last meeting we were, discussing the audit report including the Alex House, and there was a discussion about a second audit. A Part Two, and a working group being set up and things around that. So I just wondered if Minesh would update, perhaps on that?
Cllr. Mitchell Yes, so that there was one response given on the Alex House issue in the email but, I do think there are some further issues that still need to be examined. Minesh do you wish to have any comment on that?
Minesh Jani Thank you Chair. As regards Alex House, just by way of a very quick background. At the last meeting there was a discussion on the Mazars report, which set out the opportunity to acquire Alex House which was not taken up. The committee then asked whether internal audit could carry out a further review of the circumstances when Alex House was purchased later on in the year. We received an update from the external auditors, who gave some assurances around that process. So I’ve accepted what they've said, specifically around the steps or the process for acquiring Alex House, but if there are further matters and as the Chair has alluded to, I'm happy to consider those, as part of any subsequent review.
Cllr. Mitchell Thanks. Can I suggest that perhaps this is something we can pursue outside the meeting as to what further investigations we ought to be doing on this. I mean this is clearly an important issue. Cllr Amin:
Cllr. Amin Thank you. Quickly, if you could try by explaining, Cllr Mitchell, what you intend to pursue outside meeting?
Cllr. Mitchell Well, while the response that we had on the action point dealt with the decision to purchase Alex House, it seems to me there are still some outstanding issues about the earlier decision not to purchase it and what the process there was, which then subsequently resulted in the council paying significantly more to purchase the property and clearly that's a very important consideration in terms of the council's finances that we are clear about what happened and we can provide some assurance that similar mistakes won’t be made in future.
Cllr. Amin Can I just ask how you intend to do that?
Cllr. Mitchell What I'm suggesting is that I have further discussions with the Head of Audit [Minesh Jani, present at the meeting] and that we return to this at a future meeting?
Cllr. Amin Unless you have good reasoning why you want to continue this, I'm not happy about this at all. You’ve had a report already from Mr Jani there and the reasons for the report that you have were outlined already; unless you have good reason it seems to me you’re pursuing something that I don't understand.
Cllr. Mitchell It seems to me that as a committee that we should be concerned about good governance and value for money. And I think it's accepted that something went wrong, in relation to Alex House, in that it was offered for sale. A decision was taken not to purchase it. Subsequently a decision was taken that we should purchase it, and as is set out in the minutes and papers you’ve had before, the Council ended up paying significantly more than apparently, it was on offer for at an earlier stage. So this is a big decision. It’s surely important that we are clear about what happened and we can have some reassurance, that systems are now in place that would prevent any recurrence.
Cllr. Amin Surely that can be provided at the committee rather than having a meeting outside the committee?
Cllr. Mitchell Sorry Cllr Amin, I wasn't suggesting that we do it in a way apart from the committee. The Minutes record discussions that were held last time. What I'm suggesting is, we perhaps need further discussion on the scope of any further inquiries and that those would come back to this committee.
Cllr. Amin Um, Councillor Mitchell, I’m a member of this committee I would like, it would be helpful actually if you could just outline what we are looking for [indistinct] and ensure that the officers bring the reports to us, all of us?
Cllr. Mitchell Yes we can be clear that any reports will come to this committee for consideration.
Cllr. Amin [indistinct] be clear that the decisions and the thinking about it needs to be in the meeting itself and not outside of it. Now if you would like to call an officer in, I'm more than happy for that to happen. But I want the discussion to take place in the committee?
Cllr. Mitchell Right. I'm clear we can have further discussion in this committee absolutely; if any member wishes to write to me or to Mr Jani to outline any issues that they would wish to be pursued, then we can look into that.
Cllr. Amin Perhaps you can explain what it is you’re going to pursue and then we can agree those issues before we go ahead with this?
Cllr. Mitchell I’m keen to move on; this is an item that was in the Minutes of the previous meeting where it clearly expresses that the committee had concerns, and I think we need to explore those and have further discussion, as a committee, so that we have the confidence, that the sorts of mistakes that were made, on the purchase of AH are not going to happen again. I would have thought that every member of this committee would be keen to see, that we’ve got those processes in place.
Cllr. Amin I wasn't in this committee then. So, other people were obviously in the committee and had those concerns. I don't have those concerns and I feel I'm reasonably informed about this matter. So, I think it would be helpful if you could outline what those concerns are so that we're all clear, exactly clear, what those concerns are and you ask officers now, to bring that information to the committee. I'm not happy about any meetings outside the committee because I'm not happy about meetings taking place in that way. It should be transparent, all information should be here, and should be transparent in the first place. If you want to go back to the committee’s decisions, I can happily do that. And go back to, for example, Black Boy Lane. I’d happily go back to that one if you wish. But I'm thinking, really all meetings, these are meetings public meetings or rather meetings in public of this committee, so discussions need to be had here and they are matters that you're concerned about, so you could outline them please, Cllr Mitchell and ask Mr Jani to get the information for, for you at this committee.
Cllr. Mitchell Thank you. Cllr. Berryman, you wish to come in?
Cllr. Berryman Thank you. As probably one of the only ones in the room who was on the committee when this was discussed, I think the idea was, we had an audit report that highlights some quite serious failings, in terms of business cases and why decisions weren't taken, and it seemed natural, having had an audit report like that, for a committee such as the corporate committee where, it is part of our remit to look into the council's finances, to pursue, why these things took place. Now we haven't had a subsequent corporate committee meeting, since that one, and we've obviously had a change in Chair and change in members. So I would just suggest that the committee has already had a discussion and an audit that raised concerns and has already taken the decision that we should look into those concerns and that is what the Chair is suggesting. It would be an item at the next meeting for this discussion with a report on whether we need to make some recommendations to officers on how we would pursue things like this in future. What should be done and also whether we want to have a follow up audit of the second part of the process. And I think it's normal for a Chair to have meetings outside, with the officers to discuss an agenda. I don't know if you Chaired a committee, probably you have in your time?
Cllr. Amin [indistinct]
Cllr. Berryman … well you’d know that it’s normal for a Chair to have meetings outside of the actual meeting to plan the agenda. So I just suggest that this goes on the agenda for the next meeting.
Cllr. Mitchell Thanks very much. Can I draw your attention to the Minutes on page eight. It says clearly that the committee agreed they would like to see a follow up audit, around Alexandra House looking at the decisions taken in relation to the subsequent decision to purchase the property, at an additional cost. So what I would suggest is that we have a further report around those issues at the next meeting. Can we please move on?
Cllr. Amin No, I'm not happy about this. I think it would be helpful, Cllr Mitchell, if you can outline exactly what those concerns are or bring them, that report back to committee and then we can take it from there because it's actually quite important and um, serious issues that you're raising.
Cllr. Mitchell I would have thought that every member of this committee would accept that. Please Cllr Amin, if I can just be clear, that I would have thought that every member of this committee, indeed every member of the Council would be concerned about the issues around the purchase of our AH. It attracted unfortunately a lot of negative publicity. Therefore, it is important that, as the local authority, we are clear about what happened; the committee, the previous committee said that they would like to see a follow up audit, so I think we should do that we should have this on the agenda so we need to move on. This is an item. Cllr Amin, this is an item about—
Cllr. Amin [indistinct]
Cllr. Mitchell That’s fine. Yes!
Cllr. Amin [indistinct] … I have said before I want this, the discussion here first and as you said, the discussion was with the previous corporate committee. Unfortunately the previous corporate committee is no longer here and we are new members of the corporate committee and we would need to be informed about the first report to go on forward to the second report, Cllr Mitchell.
Cllr. Mitchell Right. If we can move on. This was about approval of the minutes and those, those—Cllr Amin please, we need to move on with the Agenda.
Cllr. Amin Can you Minute my opposition to that?
Cllr. Mitchell Yes.
Cllr. Amin Also my concerns that this is just a pursuit in a vendetta manner.
Cllr. Mitchell There is no question of a vendetta.
Cllr. Barnes Sorry I just want to say I don't believe that this is a vendetta. This committee exists as my understanding goes is to look at the governance of the council and to make recommendations and to learn from possible mistakes and to mitigate for future, similar issues to make sure it doesn't happen again, or we’re left open or vulnerable in such situations. It is not to pursue a political vendetta, it's to try to ensure that the officers aren’t put in a position again where this can happen, because, we are ultimately responsible for the governance of the council and for its procedures.
Cllr. Amin Can I just say that—
Cllr. Mitchell Councillor Amin, we need to move on—
Cllr. Amin Councillor Mitchell can I just respond to Councillor Barnes please? It isn't about whether officers, um it isn’t about a political vendetta because I know these are officer decisions that were taken, before this administration came in, in fact. So, it seems to me this is an exploration about the decisions made by officers, fine, I understand that. And I know that Cllr Mitchell has received a briefing. And I know Cllr Berryman has received a briefing. And so has everybody else for that matter, But I know that it is not about political decision-making it is about officer decision-making and I know that because it was a decision that was made before this administration came in.
Cllr. Mitchell Right. We need to move on. So the Minutes to have been approved we now onto …
YESTERDAY, Haringey released a redacted version of the Building Inspection Report for Alex House dated 2 March 2020 (attached, below).
This was about a month before the council purchased the building for more than double the price at which the external auditor later required it be recorded in the council's books. As Leaseholder Haringey has of course occupied Alexandra House for many years.
"a below average state of repair"
Although the council imposed more than 30 redactions of unknown size in the document, it is still clear that a number of problems were identified. It is unknown if these were rectified before the purchase, at a cost of £22.6 million. The more serious matters involved asbestos and fire precautions, whose cost of rectification is not yet known.