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Revealed: How council handed over millions of pounds without carrying out checks

PUBLISHED: 08:15 21 March 2019 | UPDATED: 08:35 21 March 2019

The opening of the KLIC building in King's Lynn in 2016. Picture: Matthew Usher

The opening of the KLIC building in King's Lynn in 2016. Picture: Matthew Usher

© ARCHANT NORFOLK 2016

Failures by a council in handing over almost £5 million to build a new business centre have been laid bare.

A council report has revealed concerns into the way the council handed £5m to Nwes to build the KLIC. Picture: Matthew Usher.A council report has revealed concerns into the way the council handed £5m to Nwes to build the KLIC. Picture: Matthew Usher.

King’s Lynn and West Norfolk Borough Council (KLWN) gave the cash in grants and loans to enterprise agency Nwes from 2012 to 2016 in a deal which was “heavily weighted” against it and on which it carried out no due diligence, a report found.

Nwes then failed to pay back a £2.75m loan from the council for the King’s Lynn Innovation Centre (KLIC) last year.

A council report has now revealed a litany of concerns.

Legal agreements between the council and Nwes were “inappropriate”, heavily favoured Nwes and were not signed by the council.

The Duke of York visiting the King's Lynn Innovation Centre last year with then chief executive of Nwes Kevin Horne. Picture: Ian BurtThe Duke of York visiting the King's Lynn Innovation Centre last year with then chief executive of Nwes Kevin Horne. Picture: Ian Burt

It added that “strong personalities” on the group overseeing the scheme meant agreements could not be reached on major decisions.

Council staff, meanwhile, raised concerns that Nwes used a company of one of its directors to manage the project.

John Balch was a strategic director of Nwes while also the managing director and shareholder of Nautilus Associates, the project managers.

But those concerns were never addressed.

When some of the money was approved, meanwhile, the council leader, Nick Daubney, was a director of Nwes.

Mr Daubney did, however, declare his interest and left meetings.

Labour councillor Charles Joyce, who wants the council to hold an independent investigation into what happened, said: “I don’t know if there were cowboy or bullying tactics from Nwes, or if the council was just negligent.

“Someone from outside should come in and look, but either way the report looks bad for all involved.”

The council report added, however, that the building was now fulfilling its function of getting new jobs and businesses into the town.

Council chief executive Ray Harding said: “This investigation has identified problems with our procedures which may not have come to light if the loan had been repaid.

“Importantly, despite reports to the contrary, millions of pounds of taxpayers’ money have not been ‘lost’ as the town has a full and functioning innovation centre, an iconic building, and businesses that are growing and developing as a direct result of its existence.”

Nwes, Mr Balch and Mr Horne have been contacted for comment.

•What happens now?

Nwes and the council are still thrashing out details of what will happen next.

When Nwes defaulted on the loan last year, the KLIC building was repossessed by the council.

The council will see a return on some of the money it put in through business rates and rent.

A meeting of all councillors will be held on Tuesday evening to discuss the report’s findings.

A group of councillors are also going to investigate what action should be taken from the report.

In terms of future projects, council chief executive Ray Harding said: “We will work hard with councillors and the audit team to review and tighten up our processes to ensure we are not exposed to this level of risk in the future.”

Meanwhile, the directors of Nwes from the time, Kevin Horne and John Balch, were subject of a joint investigation by this newspaper and the BBC in January.

The report also revealed Mr Harding had received an anonymous email alleging financial impropriety at Nwes, in spring last year.

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