Apologies for the lack of posts: I’ve been settling into a new job.
It’s full council tomorrow night and it’s likely that the two commissioners, Sir Ken Knight and Max Caller will be there for a bit of midweek comedy. I’m sure everyone will try to be on their best behaviour but at some point councillors are bound to visit the playground.
One subject which might provoke a reaction is Rich Mix, which is based in what traditionalists call Bethnal Green but which is increasingly known (incorrectly) as Shoreditch.
Rich Mix opened as a £26m arts and cinema centre in 2006 with a specific remit to tap into artistic interests in the Bengali community. From memory, I think it launched with a working display by an artist from Dhaka who was assembling an old car in full view of the public. Art can be a bit like that..
Rich Mix relied on various strands of public funding, including from Tower Hamlets council and the Arts Council. It was very much a Labour project, driven by the likes of Oona King, Michael Keith and Denise Jones…and a certain Mayor of London Ken Livingstone.
One of the early board members in fact was a certain Lutfur Rahman when he was cabinet member for culture under Denise. I don’t remember and I can’t find any record of him ever opposing or being critical of the project back then.
I did. The place was a management disaster in its early days. Its business plan was flimsy and it had bosses who loved spending other people’s money.
It’s worth reading that piece from nine years ago again because it provides some background for a row that I think will feature tomorrow.
Here’s what I wrote in 2006:
SERIOUS concerns have been raised about the financial viability of a major new national arts centre that is due to open in the East End later this year.
The Advertiser has obtained a secret report revealing that the Rich Mix Cultural Centre, which is being built in Bethnal Green Road, needs extra taxpayers’ help to meet soaring costs. Tower Hamlets councillors have been asked to top up loans to the project and some are now deeply worried the borough’s £3.5m investment in the £26m centre is at risk.
They are angry that costs have spiralled and are concerned more money is being sucked into what could become a huge white elephant draining the public purse for years to come. One councillor has branded the project ‘scandalous’ and a ‘bottomless pit with no proper business plan’. But his claims have been angrily rejected by the centre’s bosses.
The prestigious arts complex, whose board members include former Bethnal Green and Bow MP Oona King, is seen as crucial for the regeneration of the deprived area around Brick Lane. Concentrating on ethnic cultural projects, it will house BBC London, a three-screen cinema, art galleries, a Sunday market place and music and dance studios.
Ms King dubbed it the East End’s ‘very own Tate Modern’ and it is Mayor Ken Livingstone’s flagship arts project.
With most of the six-storey structure completed, designers are currently working on the internal fittings with the centre due to open in the spring. However, the project, run by the Rich Mix Cultural Foundation and funded by backers including Tower Hamlets council, the Arts Council, the London Development Agency and the Millennium Commission, has been dogged by delays and cash problems.
A new management team was put in place last year and since then cost controls have improved markedly, but some councillors still fear a future financial crisis.
It is expected that by the time the centre opens, Tower Hamlets taxpayers will have paid into it some £3.6m. The council has also pledged a further £300,000 to contribute towards the annual £4.6m running costs in the first three years of operation.
Bosses at the centre are currently trying to attract sponsors but if crucial income from the centre’s cinemas fails to materialise, a council loan of £850,000 could be at risk.
In a confidential report for last week’s council cabinet meeting, Chris Holme, head of resources, wrote: “It will take robust cost and income management to prevent the centre falling into deficit on an annual basis.
“Failure to generate levels of income identified will have a significant impact on the sustainability of the centre.”
However, Lib Dem councillor John Griffiths said: “The whole thing makes me want to cry. Because the foundation itself is the accountable body for the project, there’s no proper scrutiny of the spending. They keep coming back to us asking for more money, but I’m really worried we’re walking right into a debt trap here.”
But Nick Kilby, chief operating officer for the centre, described the councillor’s remarks as political posturing. “There are no substance to them at all. This is a well-run project, costs aren’t out of control and there is no crisis. This is a terrifically exciting project and we look forward to persuading the councillor how it will benefit the East End.”
I’ve changed my mind about Rich Mix.
I suppose it was inevitable that such a politically driven project would become a political football but there does seem to be something spiteful and illogical in the way that Lutfur’s administration appears to be hounding the organisation to a point where closure is a real risk.
For the past four years, the council has been pursuing legal action (at an undisclosed cost: maybe we’ll be told tomorrow night how much) to try and force Rich Mix to repay that initial £850,000 loan. In that legal process Rich Mix argued it was in fact owed another £1.6million by the council as part of an agreed s106 planning gain fee from a nearby development.
The parties went to court and a judge ruled partly in favour of the council late last year on what some might say was a technicality. Because the wording of the s106 agreement deal was so vague, it was unenforceable.
The upshot is that Rich Mix has offered to repay the £850k in instalments. For whatever reason, Lutfur has demanded it be repaid in one go.
The East End Review, an offshoot of the Hackney Citizen, wrote a decent piece about the issue here.
That article was based on an interview with Rich Mix’s chief executive Jane Earl. Jane is a former chief executive of Wokingham Borough Council who has strong views on good governance. She’s the reason I’ve changed my mind about Rich Mix (and I’d have her as one of the Tower Hamlets commissioners).
She’s made Rich Mix sensible, popular and relevant.
The area has changed massively and maybe this part of the problem. As I said, it’s no longer regarded as the old Bethnal Green; this is now hipster country and it will eventually spread into the southern stretches of Brick Lane. Maybe it’s better to embrace and accept than be a bunch of King Cnuts.
Here’s one event that’s worth seeing next month, for example.
Perhaps Lutfur should attend.
Or perhaps his “cabinet member for culture”, Cllr Shafiqul Haque (another former Rich Mix director when he served under Denise), should go. He’s paid an extra £13k a year on top of his £10k a year basic allowance for doing that job.
But apart from pocketing his cash and posing in the odd photo looking at a book, I have absolutely no idea what he does or what he’s done. I can’t wait to see him explain that tomorrow.
Culture? What culture? Is there actually a council culture strategy?
Here’s a thought for the council: get Rich Mix to write one for the borough. I bet they could easily do it for £850k… .
Given the heat and potential significance of the sale of Poplar Town Hall, it was a bit surprising to see just one member of the press at the specially convened Overview and Scrutiny committee meeting in Mulberry Place last Tuesday: me.
And yes, I got a seat.
And I also won a minor battle with the council’s communications department, who had initially told me I wasn’t allowed to film the proceedings. The committee’s chair, Cllr Josh Peck, agreed to my request, although because at least one (anonymous) senior officer objected, filming the officers’ contributions, including that of development director Aman Dalvi, was banned. A battle for another day.
I apologise in advance for my iPhone camerawork (you try holding one steady for an hour), and the discussion is just about audible with the sound turned up. I’ve had to compress the quality so it can go on YouTube.
I’ll introduce the characters in a bit, but first a bit of background.
Dreamstar bought Grade II listed Poplar Town Hall after a rather unusual purchase process for £875,000. Within weeks Mujib applied for a change of use on the building from B1 (community/educational) to C1, which meant it could become a “boutique hotel”. It is thought this change of use, which he finally secured in 2013 (under planning officers’ delegated powers–no committee needed apparently), means the property is now worth millions.
Understandably, there have been allegations of cronyism, and worse.
Tory leader Peter Golds demanded an investigation in January 2014. Among the matters he asked for in the motion passed by full council was a valuation report to show what the building was worth in 2011, and what it would have been worth if it had been marketed as a hotel.
It is that last aspect which is troubling people.
Auditors from the Mazars accountancy firm produced a final report this month. Actually, unknown to opposition councillors, they did produce an interim report in February but somehow the council executive managed to kick that stick of dynamite to this side of the mayoral election. Funny that.
I wrote in detail about the Mazars report earlier this month, here. To say it raised a number of serious questions is an understatement. They found that key records on the bid process had either gone missing or didn’t exist at all; that a council lawyer predicted it would end in litigation; and that Dreamstar’s final bid was not only late (and therefore should not have been accepted, but also it was not even the highest. They also found evidence to suggest the mayor himself was involving himself in the actual sale process, which would be highly unusual. And much more.
The report was damning.
But when two of their senior managers appeared at the committee on Tuesday they provided what Lutfur will regard as a killer line to those accusing him or his administration of fraud.
They said:
“If we thought there’d been any dishonesty, we’d have reported to this to the police or external auditors. There’s a big difference between a few missing records and dishonesty.”
I apologise to Lutfur because as I was taking notes at that stage, I wasn’t actually holding the camera. So he’ll never be able to watch that moment.
However, I suspect more than a couple of the committee members weren’t convinced. And it was clear on Tuesday night that even non-political/lay members of the committee (who were actually the stars of the show) thought there had been at least some negligence, perhaps wilful
So here’s some more relevant background. Poplar Town Hall was first mooted for sale in March 2008 under Denise Jones’s leadership of the council. At a cabinet meeting in March 2008, one of the proposed options for sale and marketing was a small scale hotel.
However, nothing further happened until January 2011, three months into Lutfur’s mayoralty. In the intervening three years, the property was used as a temporary venue for the Ian Mikardo School. That use was coming to an end and Lutfur’s cabinet member for finance and resources, Alibor Choudhury, was concerned about the costs of securing a potentially empty building.
So in January 2011, Lutfur’s cabinet discussed the latest situation. Officers produced a report (as an update to that March 2008 decision) saying they estimated the value of the building at £1.5million. Officers were told to proceed for a quick sale.
Officers asked bankers from BNP Paribas to carry out a marketing exercise. Paribas valued the site at £750k-£950k. The offers that finally came in from bidders in June 2011 fell mostly within that range, although Mazars noted one officer remarking the narrow range of the bids looked “odd”.
Mazars also noted that none of the bidders, including Dreamstar or its shareholders, declared any interests with respect to the administration’s officers or elected representatives.
At Tuesday’s hearing, we were not, sadly, graced by the mayor’s presence. In fact, Josh told the committee he was still awaiting answers to a series of emailed questions.
Meic Sullivan-Gould, the interim monitoring officer, showed up and declared everything was fine. But he still got his knuckles rapped when he admitted he and other officers had “forgotten” to carry out the work demanded by Peter Golds’ January 2014 council motion. He said he and other senior officers had “overlooked” it, that they’d been unable to determine whose responsibility it was.
Sullivan-Gould also said the council would be able to claim a slice of the windfall profits Dreamstar will make from converting the building to a hotel, although no negotiations on that have yet taken place.
Aman Dalvi, the development director, also showed up and seemed to feel the pressure under some pretty intense questioning.
But the strangest exchanges came when Alibor Choudhury took centre stage. He does have an unfortunately bizarre manner when he’s performing in public, as this memorable “black cardigans” exchange showed earlier this year.
He may regard the committee’s motives on this subject as purely political, but he really should maintain the moral high ground and treat the body with a little more respect. Perhaps he’s copying his boss’s attitude.
His performance oozed contempt for almost every single person questioning him, so much so that he must have misheard or misunderstood the questions; otherwise, he seems to have told outright lies.
Several times he was asked if he knew any of the people who’d submitted bids for Poplar Town Hall. And repeatedly, he said No. “Absolutely, categorically not,” was his first answer. He then tried to explain he was unable to answer fully because Josh hadn’t put an actual name to him. Bafflingly, Josh was banned by the committee’s lawyer, David Galpin, from mentioning Mujib Islam by name, even though it’s a fact he was at least a director of Dreamstar, it’s a fact that Dreamstar owns Poplar Town Hall, it’s a fact he was named in the Sunday Telegraph, and all this is documented at Companies House and via other open sources.
Mr Galpin said he could only be named in a closed session of the committee, from which the press and public are banned.
And because we were banned from seeing those further exchanges, all we have to go on at the moment is Alibor denying in general terms that he knew Mujib, a man I thought he’d at times worked closely with in the 2010 election campaign.
Oh well, I’m sure that will come out in the wash..
Whether the committee will conclude there was any dishonesty or abuse of process is yet to be seen, but I think they’ll have an easier job saying value for money was not obtained on this historic property.
The two stars of last Tuesday night’s hearing were probably the two lay members: Nozrul Mustufa and the Rev James Olanipekun. They’re both parent governors in the borough. And they both asked the best questions of the night.
Nozrul was visibly incredulous and angry that neither the mayor nor any of his cabinet bothered to ask the obvious question at the outset of the sale; namely, what could the property have fetched if it was sold as a possibly hotel. He pointed out that this was in 2011, a year before the Olympics and when “hotels were popping up all over the place” in Tower Hamlets.
Nozrul said this is what we elect councillors and mayors to do: to ask these questions.
Alibor at first tried to argue his way out of that hole but then realised he couldn’t. So he blamed BNP Paribas. How responsible.
The full exchange lasts for 32 minutes; I think the best bits start just after 16 minutes with Josh and Alibor’s argument. However, the anoraks will want to view the whole lot.
I’ve also transcribed the exchanges from about 16 minutes onwards below. It all helps to give a full record.
As for the people you’ll see…by this point the two Mazars accountants had left, so their seats are empty; Meic is just to the left of the frame and he comes into shot towards the end. Straight ahead is Josh Peck, with David Galpin on Josh’s left. On Josh’s right are two other officers, the three Tower Hamlets First councillors, Maium Miah, Abjol Miah and Suluk Ahmed.
On the right as you look, you see the opposition councillors: Labour’s John Pierce, Denise Jones and Asma Begum; then Tory Cllr Craig Aston, the Rev James and Nozrul.
Alibor is right in front of the camera, with his back to us.
Here’s the video:
And here’s the selected transcript:
Josh Peck: Did you know any of the people who submitted bids for Poplar Town Hall?
Alibor Choudhury: Absolutely, categorically not.
JP: really?
AC: …give me an assertion.
JP: You don’t know any of the people who submitted bids for poplar town hall?
AC: Test me, throw me a name. I’ve told you no.
JP: I’m not going to bandy names around.
AC: That’s ok, I’ve told you no.
JP: Your evidence to us is that you knew no one who submitted bids for poplar town hall.
AC: Back in 2010, 2011..when the bids were being marketed and when the bids had come in, I did not have a clue
JP: That’s not the question I asked you.
AC: You were asking about the people and I’ve told you already, I didn’t know any of the people.
JP: You don’t know anyone who submitted…?
AC: Well name me a name, give me a name, it might jog my memory
JP: There’s a clear allegation in the media that someone pretty closely associated to the mayor [and..] his campaign ended up purchasing the Poplar Town Hall.
AC: You can’t use the media; in the media, they say that you cost the council £26,000 recently for rejecting Lovebox’s licence, which they got overturned in court. £26,000 of our money, taxpayers’ money. Now, if we go by the media, there’s a lot of things I can say to you, and you can say, so please be factual and stick to council records.
JP: I’m asking you a question; there’s an allegation in the media that names an individual and I’m not going to name that individual in open session..
AC: You have to, you have to; otherwise I can’t answer the question. Cllr Peck, it’s like sending me to a dark room and you know..
JP: Ok, we’ll go into closed session after this and we’ll go through some names.
AC: We don’t need to…this is public…Ted has every right to know. I think you should give us the name then test me. So I can then answer properly can’t I.
JP [turns to head of legal services David Galpin]: Mr Galpin, are you happy for us to name individual names?
David Galpin: I am concerned about it in open session, only because it concerns personal data from a third party; I don’t know who that third party is, so for that reason I’d be concerned about it.
AC: He’s concerned but it’s not illegal and I think journalists here have a right to know who this individual is. You don’t know how I will answer; it might be music to your ears, Cllr Peck. We don’t know.
JP: I’m asking you a general question about whether you knew, whether you know any of the people involved in the bids for Poplar Town Hall. You’ve said ‘no’ repeatedly, so that’s fine.. .
AC: Yeah.
JP: So we can take that answer from you.
AC: But you seem to know otherwise, you seem to be probing me thinking you might get a different response if you chuck a name at me, so why don’t you chuck a name at me.
JP: Given what I’ve read in the papers recently and given what I know, I am surprised..so we’ll leave it at that.
AC: What kind of interrogation is that?
JP: Do you know if the Mayor knew anyone who submitted bids for Poplar Town Hall?
AC: Give me a name and I’ll tell you..
JP: Did the Mayor know any of the people involved..?
AC: As far as I’m aware….No.
JP: As far as you’re aware, the Mayor knew no one who bid for Poplar Town Hall?
AC: Unless you give me a name, Cllr Peck, it’s very difficult for me to answer that question.
JP: We’ll go into closed session later. Did you declare any interest in the process?
AC: I wasn’t involved in the process apart from the decision-making part in cabinet
JP: Did the Mayor declare any interest in the process?
AC: I’m sure he would have if he’d had an interest….We’ll have to check our records
JP: Are you happy that a public building sold for £875,000 could now become a boutique hotel worth millions of pounds?
AC: I’m not sure I’ve got an opinion on that really.
JP: Any other questions?
Nozrul Mostafa: You’ve made reference that the £1.5million was an..estimate….at some point the value from BNP Paribas..was up to £950,000. When that was eventually founded (?), was there no question asked why the value was so low?…I know the officers made that decision; at some point cabinet, even the Mayor, I can’t believe the cabinet didn’t know that this building was going to be sold for X amount of pounds.. below even if it was an estimate and not a valuation..Ok, what is the reason why it was so much off the mark…even if the answer was that that was an estimate up in the air. Was that question ever asked: why are we selling it so cheap compared to the estimate? No one, not even the mayor or cabinet even raised it?
AC: It did come back to cabinet. We had the update report in January saying…that we needed to progress and officers would do that, and officers would report to the mayor at some point in time
NM: And in January, that valuation from Paribas would have been there?
AC: With all due respect, I think I’ve answered this already. We were satisfied that the decision made by officers on the basis they made those decisions, that decision was good enough for us. We were satisfied; therefore we did not question it.
Rev James Olanipekun: How closely does Resource and Development work together, given the fact they should be working in tandem?
AC: There is a relationship, Reverend. Resources and asset management work very closely together especially when it comes to disposals because disposals yield money and money comes into our coffers, which then forms our budget or the financial activity of the council..so there is clearly a hand in glove relationship.
JO: Given your submission, isn’t there the necessity to ensure true value for money?
AC: There has to be a degree of trust; these are our officers, they are experts in their profession; we rely on their advice and guidance. We have our political knowledge; we have the grassroots intelligence that we bring to the table. But ultimately, it’s about working together with these officers about coming to an understanding. And I believe we got there. Our job is to challenge officers as well, don’t get me wrong, we’re elected to advocate and represent our communities and challenge officers when the need arises but I felt it was robust enough and it got us where we needed to be. Otherwise the building could be empty still now, bleeding us hundreds of thousands.
NM: That’s the reason why I was asking. As an elected member, I find it quite disheartening that any councillor wouldn’t challenge their officers with reference to the price that they were selling it or marketing it for. This £1.5m was an estimate, but it was out there. That’s what the cabinet decision was based on to sell it. Now when it came, as the Cabinet lead member for resources, it was £1.5million and there’s a discrepancy there..why were no questions asked?
AC: There’s a simple answer to that.
NM: But was the question asked?
AC: There was a guestimate of £1.5million; at the time, the market determined we weren’t going to get that, you’ve got your eight hundred or whatever it was thousand pounds. That wasn’t because officers didn’t try, or the process was flawed, or anything else. Everything was there to ensure we would get the maximum. Clearly we didn’t achieve the £1.5m guestimate..
NM: Was the question asked? You keep saying guestimate? Was the question asked: it was at cabinet for £1.5million; I could understand if the answer came back that that was a guestimate, and that’s the answer, that’s fair enough..
AC: Let me put it another way…
NM: You keep saying the question wasn’t asked and you didn’t know.
AC: ..Say wed said this wasn’t enough and put it on the market again, and re-market it and revalue it, it doesn’t really help our situation does it? Given that officers clearly demonstrated they’d tried to get us the maximum value for that property, and the circumstances were what we foudn ourselves in at the time, we felt that would suffice. You keep asking me about questions, we could question…
NM: With all due respect, with 2012 coming up..in 2008, we had this policy of this being a hotel. This was marketed as an educational as a B1 use, which wasn’t a hotel use. I can’t believe there wasn’t anyone who asked for a valuation if this is being changed to a hotel, what would the valuation would be? I’m not sure if Paribas did that…
AC: ..that was after the fact though..
NM: ..they valued it at £850-£950k ..
AC:…that’s ‘as is’ though..
NM:…yes, as is…with a B1 use. With the Olympics around the corner, that we were having, did no one ask whether there was an element of this from 2008 when it was marketed as a hotel bid, what would the cost be as a hotel use?
AC: Fist of all, I’m not sure whether officers pre-empted it would be a boutique hotel at that time. It was marketed as a former town hall that had a range of uses, for education and community as one, and given that they followed their noses when it came to getting that valuation. If they’d have pre-empted it was going to be a hotel then who knows? But correct me if I’m wrong, the hotel proposal came after the sale.
NM: I’m saying with the various criteria that were there, I’m trying to understand why weren’t different scenarios put out there. If this happens at C1 use, if this has a B1 use, if this has a D1 use, these are the price valuations we get can get for this town hall. I know the planning application came in afterwards and it was agreed by whoever made that decision…My point is when Paribas gave the valuation why was it just valued at a B1 use and educational use? Why weren’t whatever permuations there could be, this is what it should be marketed as?
AC: We used highly skilled professionals to give us the best value for that property and to do whatever necessary to achieve that. Clearly, if you’ve found a weakness in that, we should take that to BNP Parnabus, Barnabus, Paribas, or whatever they’re called. I can’t sit here and preempt the future and assume things. We had to work with what we had; we had to work with an asset as is. And our job is to make that asset didn’t become a burden or a liability for the council. And that’s my job.
NM: Well, personally, we vote for councillors and cabinet members to ask these questions of their officers, so ultimately..it’s up to you to ask these questions and like I say, the bottom line is…it’s relevant it went to a hotel use afterwards, there was a hotel element when it first went to cabinet for disposal in 2008. I can’t understand why – given there were hotels popping up all over the place, in Commercial Road, on Cambridge Heath Road, Holiday Inns, hotels were coming everywhere–that we didn’t have an element where Paribas..well, I’m just going over it again.
AC: I think you’ve got a valid point. It’s a learning curve. Next time, we might not use BNP Barnabus, Paribas, because if they’re that useless and made oversights of that nature, maybe a recommendation that comes from this is that we strike them off and not use them again.
JP: One of the questions we asked of BNP Paribas is whether they’d been passed a planning brief that included a possible hotel use and they didn’t think they had.
AC: I can’t answer that, I’m not aware of that at all.
Here are the list of questions the Labour group will pose to Mayor Lutfur Rahman at next Wednesday’s full meeting of Tower Hamlets council.
None of them will be answered by him of course.
Denise Jones has an intriguing angle.
Councillor
Question
Cllr Rachael Saunders
Is the Mayor prepared to be honest about how his re-election campaign is being funded?
Cllr Carlo Gibbs
Why has the Mayor suspended the community chest and transferred the funds to the community events fund?
Cllr Shiria Khatun
Why has enough not been done to reduce ASB on the brownfield estate in my ward?
Cllr Abdal Ullah
What has the Mayor done about the decimation of Safer Neighbourhood police teams?
Cllr John Pierce
What has the Mayor of Tower Hamlets done to improve cycle safety in the borough?
Cllr Denise Jones
Does the mayor agree that fraud has no place in our politics?
Cllr Ann Jackson
Can the Mayor enlighten us on the allocation of social housing in the Olympic park on a per borough basis and the rationale used for allocation?
Cllr Joshua Peck
What assessment has the Mayor made of the supply of large family homes (over three bed) in the open market in the borough and what does he plan to do to ease the shortage to allow growing families to stay in the borough?
Cllr Anwar Khan
What is the current vacancy rate in each of the borough’s town centres?
Cllr MA Mukit
How many incidents of anti-social behaviour in Weavers over last year?
Cllr Marc Francis
Can the Deputy Mayor and Lead Member for Community Safety services tell us what action is being taken to improve the safety of residents in Fish Island using the Hackney Cut and Hertford Union canal towpath?
Cllr Zenith Rahman
Why does the Mayor think almost 20,000 incidences of anti-social behaviour in one year is acceptable? If he doesn’t, why hasn’t he acted?
Trial by Jeory 