The complicated, brain-hammering web of controversy, nepotism and "creative financial manoeuvres" looks set to reach its conclusion this week, with no residents being any wiser about £1million of Salford City Council public money which ended up as a car crash loan to Salford City Reds, now the Salford Red Devils.
Back in 2011, Salford City Reds rugby club received a £1million loan from Salford City Council, secured with a bizarre and secret deal (subsequently leaked) on both the land at The Willows, owned by Godliman Watson Homes Ltd (GWH) - Robert Iain Watson was a director of the doomed club - and personally by Salford Reds directors, John Wilkinson and Robert Iain Watson.
The problem was that the land deal was absolutely worthless as The Willows ground was already in hock to the Co-op Bank for £2.2million and the Wilkinson Pension Fund for £1.7million and had "clearly no value" left in it, according to the leaked Salford Council report.
As further security, attached to the deal was a development agreement whereby "as each new house is developed and sold on the Rugby Ground site, GWH Ltd will use part of each sale receipt to pay an agreed proportion of the outstanding club debt until fully repaid".
The confidential Council report noted that "There appears to be some creative financial manoeuvres here" and "there are clear risks for the Council in seeking to re-coup its lending to the Rugby Club by linking debt repayment to these property transactions, particularly in weak market conditions".
The `risk' backfired when Godliman Watson Homes went into receivership in 2013 and the land was put on the market to pay back the Co-op's £2.2million (see previous Salford Star article - click here). The official receiver makes no mention of any sale but companies of which Robert Thomas Watson and Michael Richard Watson are directors seem to have acquired the land – and hocked it again.
The pair, trading as Watson Homes and based at Spark Studio, are directors of three companies – Watson Construction Ltd (with charges over property at Spark Studio and Albert Park View); WC Investments Ltd (with charges over leases and property on Great Clowes Street) and WC Development Two Ltd – which has three charges against it over land at The Willows, registered in September last year.
Watson Homes and City West Housing are applying for planning permission tomorrow (Thursday) to build 82 houses and 21 apartments on The Willows. While the properties are all for `affordable rent' and shared ownership, the companies should be paying a Section 106 fee for open space and towards the provision of education, in the form of the expansion of St Luke's School. However, Council officers are proposing to waive the fees as it would make the scheme `unviable'.
On top of the `waived' fees, City West Housing has also been handed a £2.75million grant by the Government's Homes and Communities Agency (HCA) towards the scheme as part of the Affordable Homes Programme.
The Salford Star asked both Watson Homes and City West which company actually owns the land, and whether the development agreement negotiated by Salford Council under the secret deal with Godliman Watson Homes still applies. Neither company responded.
One would have to assume that the development agreement died with Godliman Watson Homes, which still leaves the £1million loan to Salford City Reds outstanding.
The new owner of Salford Reds, or Salford Red Devils, Marwan Koukash, initially promised to pay back the debt but told a press conference earlier in the summer (see here)... "The Council has personal guarantees from those directors but the Council has chosen the easy route and have come to the club, our club, my club, to collect that money...That's not going to bloody continue. `Mr Mayor and Mr Deputy Mayor you have personal guarantees against the people you've loaned the money to – go after them. Stop taking money out of our club'..."
Since then, Salford Council has, in another secret deal, re-negotiated the CVA agreement with Koukash under which the debt would be paid back – but still seems reluctant to go after the directors' personal guarantees.
In the meantime, while Watson Homes presumably makes profits from the new Willows development, which is backed with more public money, Salford residents are no nearer to re-claiming the £1million loan - as cash-strapped Salford Council is due to announce another near £10million of cuts...
• At the time of £1million loan, Salford Council also bought back the lease on The Willows car park from Willows Variety Centre Ltd (which later went bust), for £250,000, even though the Council already owned the freehold to the car park. The money was paid "to enable a recycling of the £250,000 into the Rugby Club, reducing the Club's borrowing needs…". In March this year, David Lancaster, Deputy City Mayor, authorised the sale of a `250 years Long Leasehold interest' in the car park - although the decision notice doesn't state for how much and to whom it was sold.
** The Salford Star continues to call for a Public Inquiry into all loans to Salford Reds and the Salford City Community Stadium
*** See also previous Salford Star article - The tangled web of loans and deals - click here
**** See also Salford Council loans Stadium £857,000 and re-negotiates Koukash CVA - click here
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