My KCC Election Manifesto & Video

Tuesday, 19 November 2013

TransEuropa Ferries Thanet Council Taken for Suckers

Tonight I attended a meeting of the TransEuropa Ferries Scrutiny Working Group. The meeting did not last long. I presented my credentials which, under the new Council rules, allow me to film but was refused permission by the Chair, Tory  Councillor Jo Gideon. She also refused my request to ask questions.

So much for the  Thanet Council Tory Group's one-day-old promise to promote open and transparent government and  allow filming at Council meetings. The word hypocrites comes to mind.  I therefore decided  to film the meeting secretly, but was discovered. I was asked to leave the meeting but  refused. The Chairman closed the meeting and postponed it to another time. 

During the short time the meeting was in session a Council officer distributed a letter which we were told was written by the Ostend Port Harbour Master. The letter is not dated or signed but reference to the forced sale of the TransEuropa ferry Gardenia would put it about late September/ early October.

The letter says that Ostend Port has lost 3.5 million euros (£2,938,953) by deferring Transeuropa's fees and charges in the same way that Thanet did. The letter also sates that Ostend will be trying to sell the remaining Transeuropa Ferry,  the Larkspur,  to offset some of its losses.  But  just like the case of the of Gardenia which was sold for 750,000 euros in September,  Thanet Council will not share in the proceeds of this   sale  because senior Council  officers  and Labour Cabinet members chose not secure Transeuropa's  mounting debts against its assets.

This astoundingly foolish and incompetent decision has cost the taxpayers of Thanet a share of  about  1.5  million euros which will have been realised by the sale of TransEuropa's assets. This money would have gone a long way to cushion the  blow of a secret gamble with your money which went badly wrong!

But most surprising of  all the letter from Ostend makes some  extremely serious allegations about the owners of TransEuropa Ferries. These allegations are so serious that I have edited them from the letter so that I will not be sued. If these allegations are true then why on earth did the Council agree to defer debts which rose to an astronomic £3.5million in 3 years when there appears to have been  some serious worries on the integrity front

One of the excuses given by the Council Chief Executive is that TransEuropa were in discussions with investors who promised to pay back all the company debts to the Council. However, the Chief Executive is on record as saying that the Council did not perform financial due-diligence on these investors. This is incomprehensible. Surely if someone who owes you several £million tells you they have an investor who will pay off the debt  the first thing you would do is to check if the investor is good to cover the debt. But not Thanet council. Not  good old incompetent,  maladministered Thanet Council. They simply took  the word of  a company which Ostend is now describing  in incredibly strong libellous terms. Sounds a bit  like Pleasurama if you ask me

Some  final comments on this appalling scandal of mismanagement and incompetence is that the Council has allegedly received independent legal advice which says that it has 2 hopes of recovering the £3.5 million debt - Bob Hope and No Hope. Word on the street is that this sad news will be announced before Xmas. Surely this should mean the political leaders (Clive Hart, Rick Everitt, Bob Bayford and Martin Wise) and the senior council offices who managed this scandal should do the honourable thing and resign. But not in Thanet. Things don't work that way here. 

Instead my Council insiders tell me that a fall guy has been set up to save some top honcho arses. The fall guy is now busily clearing his desk for a New Year departure with a large cash settlement and gagging clause perhaps?  But mine and Richard Eastcliff's  imaginary rabbit friend called Harvey  is telling me to be careful what I say.

One thing is for sure Thanet Council's augean stables stink and need a Herculean cleaning out. In 20015 you help to do this.

Here is the edited letter enjoy

To Mr. Mark Seed
Before taking on the issue of Transeuropa, I think I will have to explain the (legal) structure of the Portof Oostende.
There are 4 seaports inBelgium (Antwerp, Gent, Zeebrugge, Oostende) governed by a regionaldecree (Flanders) settingout in great detail structures, authorities, etc., including the possibilities for some government interventions of which the most important ones are the provision of base infrastructure (e.g. approach channels) and the maintenance thereof (dredging). The region of Flandersowns all land and water but gives that in a 99 year lease to the Port Enterprise (see further). From there on the Region is not involved at all in any matters concerning the Port, save for controlling if everything is done legally,on the basis of the Port Decreementioned earlier.
The legal structureimposed by the Port Decree is that of an "Autonomous Municipal Harbour Enterprise". In essence it means that the port is an enterprise, a company governed by the laws on private enterprises, not under administrative law as for government or municipal agencies. This harbourenterprise is fully owned by the city in which it is located. (You could say the City owns 100% of the shares although there is in this case no issued shares as they are inany case never transferable).
Asa result, the port decree states that the harbourenterprise is to be governedby a board of directors, 18 in total.Of these  18, 11 are city councilors from all parties represented in the city council.There is 6 parties in all, a coalitionof 3 form the majority.
The board of directorsof the Port is in a way a reflection of the city council with an additional 7 independent members(from industry, academy, education, and myself). Thechairman is the  mayor of the  city (the mayor in our system is elected and combines your functions of leader of the council and mayor).
Theboard meets in principal four timesa year and is given all relevantinformation, including financial.The fact that Transeuropa didn't pay its bills was mentioned with each financial report. Given the information availablethe board decidedeach time to give it a further chance.If we would pull the plug so to say, it would have meant the immediateend of the line with no - or very little - chance of ever startingagain. It was considered that the continuation of the line was to be given every chance, knowing the risk of failure but at the time not jeopardizing its chances of survival.
At the board meetingof March 2013, for the approval of the accountsfor 2012 (Balance sheet, p/I, etc.) the board agreedto my suggestion to write off all outstanding debts of TEF up to 31/12/2010 as a precautionary measure. This resultedin a extraordinary cost of 655 000 euro for 2012.

The accounts,as in any company, have to be approved at the AGM of shareholders. In our case, that is the city represented by the City Council. The City Council approved the accounts, unanimously (including opposition!) knowinglywriting off old debtsof TEF and was informedabout the debts for 2011 an 2012, still in the accounts as receivable.

When TEF finally failed,the board was informed(again) of an outstanding debt of about 2,5 millioneuro for 2011 and 2012. We had sent, but not booked,invoices for 2013. These are therefore obviouslya loss of income but not to be writtenoff as a bad debt. Through a question officiallyfiled on the meetingof the City Council in June by an opposition member, the Mayor confirmed to the City Councilthe debt of 2,5 millionto bewritten off (which the councilors -board members already knew). Obviously it was then picked up by the press but caused not further commotionother than the community expecting the council andthe port to try its best to attract another ferry line. After all, this was a break in a tradition that had started in 1846 and is understandably an emotional event.

 Our accountsat the end of 2013 will cumulatethe loss of income in 2013 and the write off of 2,5 millioneuro for 2011 and 2012, resulting in a net loss of some 3,5 million euro. Since its creationin 1996, the Port never lost money, quite the contrary, but we will have to seriouslyconsider on how to financethe future runningand development of the port.

I hope the above sheds some light on how the Port of Oostende dealt with the failure by TEF. An additional problemnow is that the ships are abandonedin our port and there is no provision under Belgian law about who should take care of an abandoned ship. As they are in our port, and a threatto safety in our port, we had to take charge. They cost us about 25 000 euro per month with no guaranteewe will be able to recuperate that money.

The Gardenia has now been sold (two weeks ago), the Larkspurwill hopefully be sold towardsthe end of the year.

Allin all  veryunsavory story with the Dias family appearing --------------  rather than the image of distinguished gentlemen they succeeded in making us believe.



  1. If the Ostend port management made the statement to which you refer, namely - If these allegations are true then why on earth did the Council agree to defer debts - would it not be right to state that Ostend made exactly the same faux pas when dealing with this company as TDC did? Doesn't this simply illustrate that Ostend, Ramsgate and apparently the company supplying the fuel for the ferries have all suffered in exactly the same way with the sad demise of this company?

    This would seem to be a very pertinent sentence - If we would pull the plug so to say, it would have meant the immediate end of the line with no - or very little - chance of ever starting again. It was considered that the continuation of the line was to be given every chance, knowing the risk of failure but at the time not jeopardizing its chances of survival. Is that not exactly what was done at Ramsgate?

    On a pro rata basis, if as reported, the fuel company is owed some £20 million, Ostend and Ramsgate £3.4 million each, then if ferries sold for £1.5 million together, that would mean, pro rata that Ramsgate would only receive some £175,000 towards the loss, doesn't really make a dent. If Ramsgate management had impounded the vessels in UK, the money released from any sale would have been virtually all swallowed up by the £25,000 per month to maintain the vessels as stated by Ostend management. As for "due diligence" what outcome would one have expected when an investigation was carried out into a company that had already admitted in was in trouble?

    (please read £ or € as appropriate)

    1. I take your point Ian, however, am I not right in thinking that up to November 2012, TDC had received some payments from TransEuropa towards it's accured debt, a new ferry had arrived (or was arriving, not sure of the exact timescale on that point), and the amount of debt accrued between November and April was surely a fraction of the total debt?

      As TransEuropa had it would seem secured the lease of the larger ferry, which indeed made a brief appearance and Ostend's same approach to TransEuropa as Ramsgate's isn't it fair to conclude that the fuel company, Ostend, P&O - who i believe leased the larger ferry - and Ramsgate were all taking exactly the same action. Is there any evidence to suppose that the backer wasn't in fact ready to come in and support TransEuropa, would "due diligence" have shown otherwise?

      Didn't all 3 entities all carry on down the same path, If circa £3million was owed in November, with payments being received, and a new ferry having turned up, wouldn't you say it was a fair approach to offset the potential loss of income of some £400,000 against the amount owing of £3 million, the other 2 entities thought it was the best appraoch, why do you think, without the benefit of hindsight of course, that Ramsgate's approach should have been any different?

    2. No payments were paid to any of the parties involved, they were taking the same route as Ramsgate, it would seem. So you would agree that the rest of my comments are accurate, given the situation at the time Ian?

    3. And more substantially what about the 15 months April 2011 to June 2012 when the Council allowed nothing to be paid by Transeuropa, in return for jack shit, i.e. no guarantee, no asset backed security, no collateral. Just because those in Belgium were prepared to negligently allow themselves to be ripped off for whatever reason doesn't mean the executives at Thanet Council should have blindly followed them like wethers, and allowed tax payers money to be wasted. The whole point of having a S151 Officer is to protect public money from such shambles. Thanet Council's clearly failed dismally and continually..

    4. Don't forget the fuel company owed some £20million, hindsight is a great thing.