As predicted by the Salford Star, Salford Mayor Ian Stewart is set to backdate by a year the `missing' decision to gift Salford Red Devils up to £164,000 in match day costs at the AJ Bell Stadium (which it jointly owns with Peel Holdings).
The decision for Salford Council to subsidise match day costs for the rugby club was taken in secret and never reported as an official `decision', which meant that it could never be challenged.
After the scandal came to light an internal audit was ordered, the whitewashed results of which were reported to the Council's Audit Committee on 27th August – and the Committee voted to accept them, thanks to six Labour councillors. Three others voted against acceptance - Tory chair Councillor Robin Garrido, and, tellingly, the two independent community representatives (see previous Salford Star article – click here).
After the whitewash, Stewart insisted that the secret £164,000 subsidy to the Reds was down merely to "errors made in the completion of paperwork". And he's now set to put that right by backdating the formal decision by over a year at a Cabinet meeting on 15th September...
"The Governance Review Report, to the Audit and Accounts Committee on the 27th
August, incorporated a recommendation that a decision notice should be raised to
cover the decision that was made in July 2013 in relation to the payment of match
day costs to the value of £164,000 relating to Salford City Reds (2013) Ltd" states the Cabinet report
"The overall driver in relation to the July 2013 decision was to maintain the Salford Reds' tenancy of the stadium in order to protect the Council's long term investment in the stadium" it adds "In securing a new owner and resolving the financial situation of Salford City Reds and its potential impact on the investment made by the Council and its partner were key elements in securing the future of the stadium and the planned regeneration of the area.
"As part of the successful takeover of Salford City Reds the new owner as part of the agreement took on old debt to which the Council was carrying a risk, if not recovered (up to £1.5m) transferred risk from the council" it adds.
From the outside, it seems that this £1.5million debt to the Council that Salford City Reds new owner Marwan Koukash took on, after the old Salford Reds company's demise, is actually being paid by the Council itself through the back door.
As well as the £164,000 `match day costs' being gifted by the Council, the Reds are playing rent free at the AJ Bell Stadium for two years – worth hundreds of thousands of pounds. Also, according to the latest draft Salford Council accounts, to April 2014, not a penny of the £1.5million debt had been paid off.
The original Reds debt should have been paid by 2017 with interest 1% above the bank rate. According to reports, Koukash has to pay back only £240,000 within five years from taking over, and has twenty years to pay the other £1.26million, interest free (see here).
Meanwhile, Salford Council also had the loan secured from the directors of the old Salford City Reds – part of which was based on land at the Reds' former ground The Willows in Weaste, via another bizarre secret deal with former Reds director Iain Watson and his company Godliman Watson (see here).
The weird deal - which even the Council's own legal team called `creative' - allowed a payment back on the loan for every future house built on the land. The housing development never happened and, instead the land was taken in receivership as a result of the Co-op Bank instigating a payback of its multi-million pound loan to Godliman Watson.
Incredibly, the land was bought from the receiver by Iain Watson's sons, Robert and Michael Watson via their company, Watson Construction Ltd.
Now, City West Housing is planning to build houses on The Willows land owned by the new company – thanks to a share of £7.404million of more public money subsidies from the Homes and Communities Agency (HCA).
When approached, neither City West Housing, nor the HCA, would tell the Salford Star how much of the £7.404million was earmarked for The Willows – and it is now subject to a Freedom of Information request.
The whole series of loans and deals has at its centre Salford City Council and Salford Red Devils/Salford City Reds. If anything needed investigating in-depth it is this issue.
Now, Salford Against The Cuts is calling for such an Independent Inquiry, led by Salford citizens. It is backing up its call with city-wide petitions.
"We call for an Independent Inquiry into the Council's dealings with Salford City Reds" says Salford Against The Cuts secretary Kevin Corran "We do not propose a judge-led inquiry but an Inquiry of local people – trade unionists, service users, and community organisations - who themselves can democratically decide the remit and process of the inquiry.
"The committee of inquiry should have access to all the necessary documentation, and be able to call for evidence from key players" he adds "It should be convened as soon as possible and examine the issues thoroughly before publishing a report in due course."
Salford Against the Cuts has drafted a motion which it is asking community groups, trade unions, campaigns and political representatives to pass...
The Motion reads...
"Salford against the Cuts is appalled at the recent revelations about the City Council's relationship with Salford City Reds / Salford Red Devils.
The City Council's generosity towards a rugby club owned by a multi-millionaire is in stark contrast to the cuts they are making in services to the most vulnerable – the withdrawal of transport to disabled adults, the reductions in the welfare rights service and in the mental health service, cuts to Care on Call, to name but a few.
Contrary to the Mayor's claims, there is more to this matter than a simple administrative oversight in the failure to record a significant loan. The recent Audit Committee report raised more questions than it answered. Key players have left the Council's employment and were not questioned; the Mayor himself did not attend to take questions.
We note that Labour councillors on the Audit Committee closed ranks behind the Mayor to prevent discussion of recent press revelations and to forestall any further investigation. We note also that the only two independent members of the Committee both voted for further examination of the issues involved.
We oppose the call for involvement of the government, Communities ministers and the like. This government has stolen too much money from the people of Salford for it to be trusted. It is the people of Salford who must judge the actions of the Council.
In the light of this we call for an Independent Inquiry into the Council's dealings with Salford City Reds.
We do not propose a judge-led inquiry but an Inquiry of local people – trade unionists, service users, and community organisations - who themselves can democratically decide the remit and process of the inquiry. The committee of inquiry should have access to all the necessary documentation, and be able to call for evidence from key players. It should be convened as soon as possible and examine the issues thoroughly before publishing a report in due course."
The motion will be backed by city-wide petitions which Salford Against the Cuts is asking people to sign.
See also previous Salford Star articles...
* Paperwork Error - by flying pigs? click here
* Expect A Whitewash From Audit Committee - click here
* Massive Public Money Scandal Rocks Salford Council - click here
* Martin Vickers Wins `Something Stinks In Salford Award' - click here
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