Revealed: How struggling enterprise agency Nwes paid public cash to directors’ firms
Serious questions were today raised about the previous management of the region's publicly-funded enterprise agency after it emerged it spent cash on two of its directors firms, while it racked up millions of pounds in debt.
A joint investigation by the EDP and the BBC reveals a web of conflicting interests at the heart of Norfolk and Waveney Enterprise Service (Nwes) while it was led by chief executive Kevin Horne and strategic director John Balch.
The agency gets millions of pounds in public cash each year to boost small businesses in east England.
But from 2011 onwards large sums of Nwes money went to organisations which Mr Balch and Mr Horne had personal and financial interests in. In response, the men said all payments were approved by the Nwes board.
The two directors retired from the agency in April 2018 and the new leadership is now investigating some of the allegations raised in this article.
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Our investigation has found:
Nwes paid a firm owned by Mr Balch almost £900,000 over four years
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•EU grant money handed out by Nwes to support the offshore energy industry was awarded to a firm Mr Balch was chairman of and had shares in
•An MP alerted the Government about a fraud allegation at Nwes in 2018
•EU cash promised to offshore energy businesses by Nwes has never been paid
•A company owned by Mr Balch and Mr Horne retained ownership of a city centre car park which was meant to be transferred to Nwes in 2015
•A council is investigating how it loaned £2.75m to Nwes which was never paid back
•Nwes paid a firm owned by Mr Horne and Mr Balch money to rent a French holiday villa belonging to the two ex-directors - despite a board member's concerns
Norwich North Conservative MP Chloe Smith, who is the government minister for ethics and transparency, said: 'I'm concerned to see this series of allegations and the up to date findings should be fully investigated for any misuse of public funds.'
Chief executive of the Norfolk Chamber of Commerce Chris Sargisson said: 'I am shocked and very concerned about the nature and seriousness of the issues now being raised.'
Norwich South Labour MP Clive Lewis added: 'This just gets worse and worse. Questions really do need to be asked about how this kind of alleged behaviour can go on under the noses of funders and accountants - bodies we all reasonably would expect to blow the whistle on this kind of thing.'
Nwes' debts more than doubled between 2014 and 2017 to £12.5m and the not-for-profit agency was unable to pay back a £2.75m loan from King's Lynn and West Norfolk Council last year.
Ex-staff have also told of financial problems at the agency.
Its new chief executive, Jo Clarke, said she was working hard to put Nwes back on a sound financial footing.
Ms Clarke said: 'I'm most concerned that allegations relating to historic issues in Nwes continue to surface.
'These matters could impede the excellent work that the current, entirely professional Nwes team are successfully delivering in the community and we take such allegations very seriously.'
Mrs Clarke said the board had already carried out an investigation into some issues raised which had led to Nwes repaying one funder £3,000.
And she said further allegations would be investigated.
She added Mr Horne, a director at the agency from 1997, and Mr Balch left after 'significant differences of opinion over the management and strategic direction of Nwes'.
But in response the ex-directors hit out at 'malicious' and 'false rumours'.
'We are very disappointed that there seem to be unfounded allegations made by anonymous disgruntled former/current staff members of Nwes,' they said. 'John Balch and Kevin Horne took the decision to retire from Nwes after a long and distinguished service which saw the company win many awards and accolades.'
•The mystery of the city centre car park
An MP flagged up concerns with the Government last year about Nwes' purchase of a Norwich office block, we can reveal today.
In 2015 the property arm of Nwes, called Nwes Property Services Ltd, bought Rouen House on Rouen Road.
But the car park attached to the building was not transferred to Nwes Property Services in 2015, despite it being stated in its accounts that it was.
Instead it remained in the hands of a firm which came to be owned by Nwes directors John Balch and Kevin Horne.
Nwes bought the building from a company called RA Jones & Sons Limited by buying all its shares and RA Jones & Sons then became a dormant company, Nwes' 2015 accounts said.
The accounts also state all of RA Jones & Sons' property was transferred to Nwes in 2015.
But documents show those statements are false.
Instead Mr Balch and Mr Horne became the shareholders of RA Jones & Sons in February 2015 and the car park of the office was kept by RA Jones & Sons, according to Land Registry documents.
The company was renamed Beacon Property Investments in April that year and Companies House records show the company is still active and owned by Mr Balch and Mr Horne.
Mrs Clarke agreed the Nwes Property Services accounts from 2015, which were audited by Lovewell Blake and signed by the then Nwes chairman, did appear to 'contain inaccuracies'.
She confirmed the car park had remained under the ownership of RA Jones & Sons and then Beacon Property, but three years later it was transferred to Nwes.
Concerns about the car park ownership were raised with Norwich North MP Chloe Smith last year.
She said she referred the case to the Cabinet Office in Westminster which referred it to police.
But Norfolk police said they could find no record of the report.
Ms Smith said: 'The government rightly takes allegations of fraud against taxpayers very seriously.
'When allegations were first raised with me, I alerted the department in central government that looks at fraud.'
Mr Horne and Mr Balch did not respond to specific questions over why car park was not registered to Nwes until 2018.
But Mr Horne said 'neither Nwes or Beacon Property Investments has any dispute relating to this matter'.
He said it was 'a private transaction between private companies' and Nwes had received all the rent from the car park.
•£900,000 to director's firm
The region's enterprise agency spent hundreds of thousands pounds of public cash on a private firm owned by one of its directors.
It shelled out almost £900,000 from 2011 to 2015 on services with energy consultancy firm, Nautilus Associates, belonging to its strategic director John Balch.
Mr Balch, who retired from Nwes in 2018, is the majority shareholder in Nautilus and its former managing director.
In 2015 alone the publicly-funded enterprise agency spent £267,658 with Mr Balch's firm.
Mr Balch and Nautilus did not answer our questions about what work it did for Nwes, but projects on Nautilus' website include support for Nwes' offices at Rouen House in Norwich.
Nautilus also said it carried out project management for building the King's Lynn Innovation Centre (KLIC) for Nwes.
It also produced a 'feasibility study' for an enterprise centre in north Norfolk.
In 2016 and 2017 Nwes spent another £600,000 on companies and groups in which its directors had an interest, according to its accounts.
But the accounts do not state what those organisations were. We have asked Nwes to provide that information.
A joint statement from Nautilus, Mr Balch and Mr Horne said: 'Nwes has enjoyed a long relationship with Nautilus who have provided services over 15 years to support the growth of Nwes.
'Contracts were tendered where appropriate and often bids were made in partnership.
'All related party transactions were shown in the accounts. This arrangement was endorsed annually by successive boards of Nwes.'
•Help from the EU
Nautilus is not the only firm in which Mr Balch has an interest that has benefited from money administered by Nwes.
He is also the chairman and his firm is a shareholder in a company called Scour Prevention Systems Ltd, which prevents scour build-up around marine structures by using old car tyres.
The firm has been given two grants of EU cash – called Score grants – which were administered by Nwes and Nautilus.
In 2014 Scour was given £10,000 from the fund, and in 2017 it received another £7,200.
In response, Mr Balch said: 'All Score grant applications and awards adhered to the terms of the contract with the European Regional Development Fund.
'None of Kevin Horne, John Balch or any other individual from Nautilus were involved in the decision making for the legitimate award to Scour Prevention Systems.
'This went through the normal process application, excluded all interested parties and included the appropriate checks and measures at a senior management level of Nwes. This programme has been audited by the European Commission with no adverse findings.'
Separately, other firms which successfully applied for the EU's Score cash through Nwes have never been paid the money.
Manor Renewable Energy, based in Dorset, was awarded a £50,000 Score grant just before Christmas 2017 to set up an office at the Orbis Energy Centre in Lowestoft.
Managing director Eric Briar said: 'We made the application for payment in the way we had been advised, being transparent with our costs – but to date have never received any funds (from Score) and have just about given up with it.
Last month we decided to pull the plug on the office in the Orbis building (in Lowestoft) and not re-employ anyone locally except for our offshore guys.'
Another firm called CHPV also said it had not had its Score grant.
Owner Alan O'Neill said they were asked to apply in 2016 for the money, and in 2017 were told around £2,500 had been awarded to them to buy drones. They bought the equipment, but the grant money has still not been paid.
'It leaves a nasty taste in the mouth,' he said. 'We've chased it up constantly.'
The person administering the Score grant is based in the same building as CHPV – the Orbis Energy Centre in Lowestoft – and Mr O'Neill said he had repeatedly promised them the money would be paid.
•Trips to directors' villa were 'staff rewards'
Holidays to a French villa belonging to the ex-directors of Nwes were part of 'staff rewards', the former bosses have said.
As reported in December, Nwes staff were given free trips to a villa in the south of France belonging to Mr Balch and Mr Horne - for which the ex-directors then billed Nwes through their company, Beacon Property Investments.
Nick Daubney, who is mayor of King's Lynn and was a Nwes director until 2016, said he raised concerns with the board about the lease of the villa but he said he was 'assured that all was in order'.
But new chief executive Jo Clarke said the arrangement was 'not appropriate'
In a joint statement, Mr Horne and Mr Balch said: 'The villa offer was part of a staff reward structure agreed by the board of Nwes in 2016 as an incentive which resulted in exceptional improvement in productivity.
'Appropriate benefit in kind payments were made to the Inland Revenue.'
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