Monday 16 December 2013

Why Cllr. Kevin Madge should resign over the Scarlets car park land sale deal

I would like to first make it clear that I am asking Kevin Madge to resign as Leader of Carmarthenshire County Council because of his responsibility over the decision to sell an overflow car park, leased to the Scarlets rent free, providing considerable funds for the club. The Leader is expected, like all councillors, to always display openness and accountability. Although informed of the deal, he chose not to disclose the details. The sale of public assets to benefit a private company should surely be discussed openly?
I understand that the council, under EU regulations, is only allowed to give private companies, active in the EU, the equivalent of 200,000 Euros or £169,000 over every 3 years, and one off grant of 50% to build, for example a stadium like Parc Y Scarlets. So as I understand it, any informal grants, as the “allowable expense” may well be, or other financial help has to be less than this amount per three years.
We appear to have financed the Scarlets beyond the limits of this law. In this desperate economic situation we are reducing services and asking hundreds our own council staff to leave their jobs and, I believe, giving away too much money to the rugby club.
It is a matter of record that in July 2012 the council executive board, headed by Mr Madge, instructed an officer, Jonathan Fearn to take sole charge of the sale and consult Cllr Jeff Edmunds, executive board member for finance. Prior to that time it was planned that the car park would be an out of town shopping area, not a pub, but that deal fell through and the land lease was later sold on to Marstons.
The area was sold for £850,000 according to the land registry. The Council’s accounts showed they got £200,000 and the fate of the rest of the money was not disclosed to ordinary councillors like myself, and then refused under the Freedom Of Information Act.
Jonathan Fearn told me by email that following “normal negotiation and the agreement of allowable costs, the remaining proceeds were shared equally between the club and the council”.
Now Cllr Madge tells us that an independent District Valuer assessed the value of the land and advised as to how the remaining proceeds of the sale could be divided.
Cllr Edmunds asked to see me when I had asked him for information, and told me that he wished to be open and transparent and give me the full facts about the sale. Indeed the costs of the sale were very high. The original deal involving a retail use, he told me, had been suggested by developers Henry Davidson Ltd, the owners of the Llanelli Eastgate Centre. They had asked the Scarlets to take up some units in Eastgate to set up their shop and café bar. The developers loaned them, I was told, £280,000 to fit up the shop units and start this new business venture. As the Scarlets needed to pay this back, Cllr Edmunds and Mr Fearn were persuaded to call this £280,000 an “allowable expense” of the car park sale.
Other payments deducted from the £850,000 were around £50,000 for architects and agents fees, £70,000 for compensation to the club for the car park lease, a £30,000 finder’s fee to the Scarlets for finding a buyer and in the end, I was told, more than half the “official “proceeds of £420,000. The Scarlets got £220,000, the council £200,000.
I have no objection to the sale of unused council land to provide money for the people of Carmarthenshire and council services. However, as the Scarlets had not ever paid a penny of rent for this lease the split seems very generous. They have had around £600,000.
They may be entitled to compensation for the lease and a finder’s fee and a profit share but do they really qualify for over half the profit plus the cost of setting up their private shop and café bar??
Councillor Edmunds informed me that he had told the Leader of the result of the decision delegated by the executive, but was not aware that the information had been passed on. This means that the other executive board Councillors, who recently granted the club more financial support by reducing the interest on the Scarlet’s loan from the council, may not have known that a grant already given from the sale may have exceeded the whole 3 year quota under the EU rules.
I find it disturbing that the legal explanation of how we can give all this money to the Scarlets is never disclosed. I suspect all may not be in order.
I thank Councillor Jeff Edmunds profoundly for being open and honest about where this particular sale money went and why. I think he has acted bravely and with integrity. He was under considerable pressure not to talk about this sale.
It is Councillor Madge as Council Leader who has ultimate responsibility for the County Council. If he or the Executive Board he leads, instructs an officer to take over the Councillors’ responsibility for a major financial matter he is still responsible for that decision. Cllr Madge has not denied that he did not inform other councillors about the money from the sale and he has not made it clear why State Aid Law does not apply to the Scarlets.
Cllr Madge says he is “extremely proud” to be associated with what has happened and there is no need to consider resigning. I disagree.

Cllr Sian Caiach
Hengoed Ward