Payment of £6.5 million to the contractor who terminated loss making contract for waste.

The request was refused by Dumfries and Galloway Council.

Dear Dumfries and Galloway Council,

This relates to the company, Renewi, who terminated a PFI contract with them early as they were making losses on this contract. Dumfries and Galloway Council paid them an amount of £6.5 million of Council Tax Payers' money which looks suspicious in these circumstances.

Please provide copies of all communications and documents between Dumfries and Galloway Council and Renewi, or anyone acting for them, in relation to the termination of the contract and payment of £6.5 million. These should include letters, E-Mails, transcripts of telephone calls and any other form of communication.

Was this matter discussed in council and , if so, when?

Yours faithfully,

James Plant

Dumfries and Galloway Council

FREEDOM OF INFORMATION (SCOTLAND) ACT 2002

Thank you for your request for information which was received on 15/04/2019 which we are dealing with in terms of the above legislation. We have given your request the unique reference 405261 and we would appreciate it if you could quote this on all correspondence to us.

Under the terms of the legislation, we have an obligation to respond to your request within 20 working days from the day after your request was received. We will therefore aim to respond to your request by 16/05/2019.

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If your request for information is considered and deemed as a 'business as usual' request, it will be responded to by the appropriate Service within the Council.

If you have any queries in the meantime, please contact [email address].

Kind Regards

FOI Unit
Dumfries and Galloway Council

Any email message sent or received by the Council may require to be disclosed by the Council under the provisions of the Freedom of Information (Scotland) Act 2002.

Dumfries and Galloway Council

Please find below the Council's response to your request 405261 which was received on 15/04/2019.

Details of request: Dear Dumfries and Galloway Council,

This relates to the company, Renewi, who terminated a PFI contract with them early as they were making losses on this contract. Dumfries and Galloway Council paid them an amount of £6.5 million of Council Tax Payers' money which looks suspicious in these circumstances.

Please provide copies of all communications and documents between Dumfries and Galloway Council and Renewi, or anyone acting for them, in relation to the termination of the contract and payment of £6.5 million. These should include letters, E-Mails, transcripts of telephone calls and any other form of communication.

Was this matter discussed in council and , if so, when?

Response:

Dumfries and Galloway Council can confirm that the Council holds the information that you have requested, however the information is withheld under S30 (c) of the FOISA 2018. In line with the Local Government (Scotland) Act 2003, a Committee Paper was considered by Committee as an exempt item as the report contained: ? Information relating to the financial or business affairs of any particular person (other than the authority). ? Any terms proposed or to be proposed by or to the authority in the course of negotiations for a contract for the acquisition or disposal of property or the supply of goods or services. Information is exempt information if its disclosure under the FOISA would otherwise prejudice substantially, or be likely to prejudice substantially, the effective conduct of public affairs, and so for the reason above, the information you have requested is withheld from disclosure. S30 (c) of the FOISA is a qualified exemption and so is subject to a the public interest test. In this case, having taken account of whether disclosure would enhance the scrutiny of Council decision making processes and thereby improve accountability and participation, it is concluded that the public interest in disclosing the information does not outweigh the public interest in withholding it. Consequently the public interest lies in maintaining the exemption.

It is commonplace in most contracts for the supply of goods or services to have clauses in the contract that set out the conditions for the early termination by either party. This is almost a prerequisite for long term PFI contracts which often run for up to 25 years as things can change significantly over such a long period and all parties need clarity around their obligations in the event that a contract is to end early.

In such long term, large scale contracts, contractors often put in place infrastructure, erect buildings etc under the terms of the contract and the contract will set out what becomes of these assets at the end of the contract. Where a contract ends early there will be arrangements to calculate (subject to negotiation) what payments are due when the contract ends. How early a contract ends affects the level of payment due.

In the interests of clarity the following assets transferred to the Council on the termination of the contract; the Ecodeco Mechanical Biological Treatment (MBT) plant at Lochar Moss, Dumfries; 2 transfer stations with HWRCs at Annan (Corsehill) and Caste Douglas (Abercromby Industrial Estate); 8 HWRCs (Lockerbie, Beattock, Lochar Moss; Lincluden; Thornhill (Gatelawbridge), Sanquhar; Dalbeattie, Whithorn); and 5 closed landfill sites (Corsehill, Lochar Moss, Gatelawbridge, Sanquhar and Black?s Plantation). These facilities are in addition to the facility at Stranraer Zero Waste Park (transfer station and HWRC) and Newton Stewart HWRC which the Council already owns and operates.

The information requested has been published by Audit Scotland as part of the Dumfries and Galloway Best Value Assurance Report and I attach a link to it here http://www.audit-scotland.gov.uk/uploads...

The Full Accounts of Shanks Dumfries and Galloway Ltd have been published on the Companies House website which are viewable. The accounts confirm a payment to the Company of £6,873,434.

Please be aware that the Council holds the copyright, where applicable, for the information provided and it may be reproduced free of charge in any format or media without requiring specific permission. This is subject to the material not being used in a misleading context. The source of the material must be acknowledged as Dumfries and Galloway Council and the title of the document must be included when being reproduced as part of another publication or service.

If you require any further clarification, please contact us. However, if you are not satisfied with the way in which your request has been dealt with, you can request us to carry out an internal review of the decision by emailing [email address] or writing to us within 40 working days of receiving this response.

If you are dissatisfied with the outcome of the review, you have the right to apply to the Scottish Information Commissioner for a decision. Appeals to the Commissioner can be made online at www.itspublicknowledge.info/Appeal or in writing to: The Office of the Scottish Information Commissioner, Kinburn Castle, Doubledykes Road, St Andrews, Fife, KY16 9DS.

Kind Regards

FOI Unit
Dumfries and Galloway Council

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Dear Dumfries and Galloway Council,

Please pass this on to the person who conducts Freedom of Information reviews.

I am writing to request an internal review of Dumfries and Galloway Council's handling of my FOI request 'Payment of £6.5 million to the contractor who terminated loss making contract for waste.'.

Thank you for your response of 9 May 2019.

I have examined information on, and the accounts of, Shanks Dumfries and Galloway Ltd. The accounts show that on 26 November 2004, the company entered into a 25 year PFI Contract with Dumfries and Galloway Council for the provision of waste management services. As part of this contract the company was committed to building new waste management facilities which it will operate until the end of the contract, when the facilities will revert to council ownership.

Shanks Dumfries and Galloway Ltd has an immediate holding company, Shanks Dumfries and Galloway Holdings Ltd. Shanks Waste Management ltd holds the sub contracts for operation of the facilities and the disposal of waste. It is stated that John Laing Environmental Assets Group (UK) Ltd owns 80% of the shares in Shanks Dumfries and Galloway Holdings Ltd. Shanks Waste Management Ltd is said to be a fellow group undertaking of Shanks PFI Investments Ltd which owns 20% of the shares in Shanks Dumfries and Galloway Holdings Ltd. It is clear there is a complicated group company structure and numerous inter company transactions (loans etc).

Accounts for Shanks Dumfries and Galloway Ltd show that it was insolvent for the years ended 31 March 2016, 31 March 2017 and 31 March 2018. I haven't looked at earlier years but the indications are that they were the same. Given there are numerous inter company transactions it would need more investigation to establish whether the insolvency of Shanks Dumfries and Galloway Ltd is a result of these transactions.

On 28 February 2017, Shanks group was marged with Van Ganswinkel Groep BV, then creating Renewi PLC.

In October 2018, Dumfries and Galloway Council paid Renewi £6,873,434 to Renewi after they terminated the contract with what had been Shanks Dumfries and Galloway Ltd. The accounts for this period would be submitted by Renewi and have not been sent in as yet (they are not due for some months). It is impossible to verify the circumstances which show this in their accounts.

It appears that:

Renewi acquired the Shanks Group of companies in the knowledge losses had been made by at least one of them, namely Shanks Dumfries and Galloway Ltd. This company had been insolvent for some time judging by accounts submitted. This company entered into transactions with related parties and at 31 March 2017 it owed £3,412,500 in loans to the immediate parent company, Shanks Dumfries and Galloway Holdings Ltd. Outstanding interest on this amounted to £205,000.

The ownership of the waste management facilities was to revert to Dumfries and Galloway Council at the end of the contract anyway.

Renewi took the decision to purchase this group of companies despite the fact at least one of them was loss making. That this was a commerical decision and in full knowledge of the facts.

It is possible the losses were created artificially but this hasn't been established for certain and would require further investigation.

Renewi must have thought all its Christmases came at once when they were paid £6,873,434 by Dumfries and Galloway Council.

In the circumstances I request an Internal Review and that you provide the information requested.

It would be helpful to know the terms under which the termination of the contract was agreed. How the amount of £6,873, 434 was calculated and who negotiated this.

A full history of my FOI request and all correspondence is available on the Internet at this address: https://www.whatdotheyknow.com/request/p...

Yours faithfully,

James Plant

Dumfries and Galloway Council

ENVIRONMENTAL INFORMATION (SCOTLAND) REGULATIONS 2004

Thank you for your request for a formal review which was received on 13/05/2019 and is being dealt with. We will respond within 20 working days from the day after the request was received. A response to your request will be sent promptly, and in any event not later than 10/06/2019.

If you have any queries in the meantime, please do not hesitate to contact [email address].

This email, from Dumfries and Galloway Council, and any files transmitted with it, is confidential and intended solely for the use of the individual or entity to whom they are addressed.

If you are not the intended recipient of this email (and any attachment) please inform the sender by return email and destroy all copies. If you are not the intended recipient or responsible for delivering it to the intended recipient, you are hereby notified that any use, disclosure, review, dissemination, distribution or reproduction of this email is strictly prohibited. Please be aware that communication by internet email is not secure as messages can be intercepted and read by someone else. Dumfries and Galloway Council do not accept liability for any loss or damage which may result from this email or any files attached. It is your responsibility to scan this email and any attachments for computer viruses or other defects.

Any email including its content may be monitored and used by the Council for reasons of security and form monitoring internal compliance with the policy on staff use. Email monitoring or blocking software may also be used.

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Dear Dumfries and Galloway Council,

Please include the following points in relation to the request for Internal Review:

1) That it is in the public interest to provide the information requested. Dumfries and Galloway Council has a history of refusing FOI requests and this gives cause for concern.

2) The fact that Dumfries and Galloway Council Tax payers footed the bill for the £6,873,434 payment to Renewi means that they have a right to know the full circumstances under which this was paid. The council has a duty to be transparent in such matters. There has been a failure in this approach to date.

3) Renewi took on these companies presumably in the knowledge they were insolvent. The contract with Dumfries and Galloway Council was on a commercial basis as far as can be established. Since the ownership of the waste facilities reverted to the council at the termination of the contract, plus the fact Renewi was responsible for terminating the contract, then there appears to be no reason for the council to pay Renewi such a massive amount.

4) The fact Renewi terminated the contract would have had repercussions for the council and involved this in additional costs.

Yours faithfully,

James Plant

FOI, Dumfries and Galloway Council

Response: Thank you for your request dated 13 May 2019 for a review of the
way in which the Council handled your request for information under the
Freedom of Information (Scotland) Act 2002 (FOISA).
 
Your request for a review concerns the Council's application of exemption
Section 30(c) of the Freedom of Information (Scotland) Act 2002 under
which the Council states that the information is exempt from disclosure
under the FOISA as it would prejudice substantially, or be likely to
prejudice substantially, the effective conduct of public affairs.
 
I have now concluded my review and I am satisfied that the Council has
applied, and appropriately withheld this information as it is exempt from
disclosure under 30(c) of FOISA.
 
In addition, and in line with the Local Government (Scotland) Act 2003,
the Committee Paper was considered by Committee as an exempt item as the
report contained:
 

* Information relating to the financial or business affairs of any
particular person (other than the authority).
* Any terms proposed or to be proposed by or to the authority in the
course of negotiations for a contract for the acquisition or disposal
of property or the supply of goods or services.

 
The Council's position is that the public interest in disclosing the
information is not outweighed by the public interest in withholding it.
 
I trust that you are satisfied with this response and that the Council has
appropriately considered and dealt with your Review. If you are not
satisfied with the outcome of the Review, you have the right to appeal to
the Scottish Information Commissioner for a decision.
 
Appeals to the Commissioner can be made online at
[1]http://www.itspublicknowledge.info/YourR...
 
or in writing to:
 
The Office of the Scottish Information Commissioner
Kinburn Castle
Doubledykes Road
St Andrews
KY16 9DS
 
Subsequent to the appeal process and the Commissioner issuing their
decision, you also then have the right to appeal to the Court of Session
on a point of law against the Commissioner's decision.
                
Kind Regards
 
FOI Unit  
Dumfries and Galloway Council                   
 
 
 
 
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Dear FOI,

Thank you for you reply dated 29 May 2019.

This is disappointing but typical of the attitude in such matters exhibited by Dumfries and Galloway Council . The public interest requirement is overwhelming as is the need for transparency for the Council Tax payers who foot the bill. An appeal will be submitted to the Scottish Information Commissioner.

Yours sincerely,

James Plant

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