Panama Papers law firm linked to failed Scottish Borders Council waste plant deal

Scottish Borders Council. Picture: Stuart Cobley
Scottish Borders Council. Picture: Stuart Cobley
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THE offshore investment fund picked by Scottish Borders Council to finance a £21m waste treatment facility at Galashiels is half-owned by a company registered at the British Virgin Islands offices of the law firm at the heart of the ‘Panama Papers’ tax-dodging scandal.

It is the latest revelation in the aftermath of the council’s decision last February to scrap its contract with New Earth Solutions (NES) for the provision of an advanced thermal treatment (ATT) plant at Easter Langlee and then to write off the £2.4m already spent on the procurement process.

So far, in response to Freedom of Information requests by blogger and retired Borders journalist Bill Chisholm, the council has only released heavily-redacted documents relating to the costly saga, citing a confidentiality clause in the now-defunct contract as a reason for non-disclosure.

And last month, the council declined to publish the outcome of an internal investigation into the affair intended to identify lessons to be learned.

As reported in the Southern Reporter last week, the council agreed in private in May 2011 to a deal with NES for the delivery of a conventional composting mechanical biological treatment (MTB) plant at the landfill site.

Despite interest from a range of established banks and financial institutions, councillors, on the advice of agents for NES, agreed that the MTB project should be financed through the investment fund of New Earth Recycling and and Renewables (NERR) Infrastructure, an investor in all New Earth Solutions Group companies, including the one specially set up to build the Borders plant.

In October 2012, councillors were told NERR could “no longer get bank funding” for the MTB plant without the ATT plant being added from the start of operations and agreed a deed of variation to the original contract.

It is now a matter of record that, nearly four years after the first deal was struck, NERR could still not come up with the money for the Galashiels plant.

When the deal was finally ripped up in February 2015, “insurmountable funding and technological problems” were cited.

Papers obtained by Mr Chisholm reveal that NERR is run by the offshore Premier Group (Isle of Man) and that in November 2013, trading in the Sterling cell of the fund was suspended on the Channel Islands Stock Exchange.

According to NERR’s 2014 accounts – the most recent to be published – 50% of the fund’s shares are held by a company called Premier Group Distribution.

It has a registered address in the Akara Building in Wickham’s Cay on the British Virgin Islands, a property occupied by Mossack Fonseca, the law practice from which 11 million confidential documents relating of offshore businesses and trusts were recently leaked into the public domain, leading to allegations of tax avoidance and evasion.

“It has got to be a matter of concern that the council pinned its hopes for so long on a funding solution which was, to say the least, labyrinthine and which ultimately failed to deliver this major and important project at great cost to the local taxpayer,” said Mr Chisholm.

This story was taken from our sister publication, The Southern Reporter.

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