Spectre of legal action rears its head in Liverpool Direct Limited negotiations
Today we report the latest in the ongoing negotiations between the council and BT over the controversial Liverpool Direct Limited.
The spectre of legal action has reared its head in what is a highly complex set of negotiations.
Council leader Joe Anderson says that critics should take comfort from the fact he has been critical in the past and that he will get the best deal possible.
It is a shame that the council has chosen to keep much of the detail secret.
Last year we revealed the contents of a consultancy report that claimed the city was being overcharged by £10m a year.
LDL is probably the single most controversial topic at the council and I am told the council is keen to draw a line under the story.
One way to do that would be to nail on the head why exactly the £10m rip-off report was wrong. Instead a side and a half of A4 is the only document that is made publicly available, and a couple of paragraphs is dedicated to the consultants claims. Read the public report HERE.
The secret report goes into more detail.
The council wants the public to judge it in June, once/if the deal is done, on whether it represents good value for money.
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David Bartlett
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I'd have thought the Council, no matter who is in charge, would be obliged to keep details of the contract and subsequent negotiations wholly under wraps. BT would almost certainly demand that as a condition of commercial confidentiality. Otherwise the basis of its bid would be freely available to business competitors. Likewise, the City Council would not be best placed in future dealings with commercial partners if it reveals its hand in this case. Freedom of information is fine in principle. But in practice, while sometimes exposing wrongdoing, it can also disrupt the orderly conduct of good business for public benefit
David is right, Ronnie, we need to be certain that any future deal is much fairer and more transparent. There is a compelling public interest argument for providing information to demonstrate this, together with a proper explanation of what has gone wrong so far that more than outweigh the commercial confidentiality point - which is moot anyway, since it's not a tender, and no competitors are actually in the running, and won't be for a while.
The article quotes the report as stating that âThere is the potential for... costs arising from legal claims which LDL have offered to waive as part of the refresh proposal,â and âA preliminary review of these claims suggests any potential damages awarded would be significantly less than the amounts intimated."
This supports the contention that the governance of LDL has been awful. If, contrary to appearances, LDL has not actually been run in a way that is unfairly prejudicial to the interests of the council, then they now need to show this. But I believe that this aspect is part of the reason why the damages "would be significantly less than the amounts intimated".
Whether or not last year's report was right in its estimates of the amount of overcharging, it certainly made clear the unwillingness of the LDL management to provide proper information for effective scrutiny and proper governance. And how have such different conclusions been reached by two different reviews - in what way were the benchmarks different? The District Auditor has approved the "approach" used - has he also approved the work done ?
With this background,the only way to draw a line under all this is a thorough explanation now and a lot more transparency and far better governance in the future.
There is a commitment to "open book accounting" in the joint venture agreement. Let's see some. Proper full accounts and regular audits would go some way to ensuring this - the "small company" format should go, it's just a way of avoiding providing proper information. Then we could actually judge the "concessions" made about profit-sharing, be certain that current prices for goods and services are competitive, etc. etc.
This would be a start.
@Katie: we do indeed need to be certain about the quality of any future deal. That's what we elect Councillors to ensure. They call officials to account on our behalf. But we do not negotiate commercial deals. We don't mandate journalists to do it for us either. So I maintain that commercial confidentiality is a reasonable grounds for limiting public access to the details. If not, then every business arrangement involving the Council would be conducting under full disclosure, making life impossible. That is not to defend the conduct of either BT/LDL or the Council to date. Both have been appalling in keeping people informed. Nor do I argue against your own efforts, and those of FoTP, to open some windows and shed light and fresh air on this sorry affair. That is a crucial part of ensuring those we elect do not 'go native' and accept any old claptrap from the likes of LDL
Ronnie are you suggesting that LDL, BT & Liverpool City council have somehow been disrupted in "the orderly conduct of good business for public benefit?" Have I got this right: the Lib Dems set up a public/private monopoly (JVC)which is often accused of ripping off the rate payers without any scrutiny; Labour complain, come to power yet also fail to scrutinise; BT threaten legal action if the venture does not continue for another SIX YEARS, whilst offering a few million £s to sweeten the deal? Public benefit or private profit?
Business is also about trust & this appears to have been abused throughout the LDL tenure through a lack of openess & clarity.
Now is the only opportunity to question this deal & sadly I'm not sure this would ever have happened if it wasn't for journalists. I think voices like Katie would be lost on the wind rather than blow away the cobwebs of inactivity down at LCC.
Ronnie, I am not suggesting for a second that "we" should be involved in the commercial negotiations, or that the press should either. And neither is anyone else.
But it is pretty obvious that neither our elected councillors nor the officers accountable to them obtained anything like a quality deal. Quite the opposite. They have been horrendously incompetent and need to be held to account. So far no-one has.
Just to put things in perspective, yet again, this is not just a very big contract with a supplier, this is a company which is part-owned by the council, and this is why it was given a monopoly, and was able to take over more and more services, with no need to demonstrate best value in a public tender, no competition, no accountability and no real scrutiny.
The rationale for this was that it is a joint venture, in which the council holds a minority stake. Influence its strategies and operations. even though they represented the minority shareholder, their approval had to be obtained for all sorts of things - it's all there in the joint venture agreement and its various schedules.
But the series of LibDem politicians appointed as directors to represent the interests of the council on the board - the ultimate decision-making body, did nothing at all. Worse than nothing, they appear to have simply rubber stamping everything. This is one of the aspects of this whole business that I still find astonishing every time I think about it - what on earth did they think they were doing? BT is not a charity - it's legal purpose is to make profits.
None of these fools appear to have understood or even thought about their responsibilities as directors. They are legally responsible for the conduct of the business of the company, for ensuring that the interests of all the shareholders are properly considered.
But it looks as if they considered a place on the LDL board an ego-boosting but otherwise toothless appointment(and possibly that's how they look on the appointments that are made to serve on other bodies, too), but certainly none of them can have bothered to find out what their legal duties were, read the joint venture agreement or even the articles of association of the company they were supposed to be directing. Supposed to be.
Whether they neglected their duties through stupidity, laziness or even corruption - but neglect it they did.
Maybe they thought it was enough to create jobs with LDL (except, of course, LDL is not actually the employer, with all the duties, costs and obligations this entails).
But in reality this meant that BT could set up a subsidiary call centre and IT operation with a huge turnover without having to submit proper accounts to its minority shareholder or to Companies House. Who ever heard of a company with a turnover the size of LDL's that is only worth its initial 10,000 share capital - no assets, not a penny in profits, no employees.
With a chief executive who is appointed by and accountable to BT, not the council, which pays his salary. And by all accounts a manipulative bully.
All of this has gone on for 10 years, and cost hundreds of millions of OUR money.
Forgive me if I don't rate our elected members very highly.
Apologies, BTW, for the dodgy English in my comment - got a bit carried away.
I just want to say that this had nothing to do with me and good governance and transparency will be the hallmark of my tenure at Alder Hey.
I wouldn't take too much notice of Ronnie's comments, Katie. He'll make any apology of Labours record both locally and nationally.
And your last posting was probably a wee bit too lengthy and taxing for his mind.
Still not in his real name either, which is a shame but wholly expected of someone with his beliefs and blind loyalty who is happy to sit at home on the keyboard and not declare who he is.
Hmm, interestingly I took note. "We don't mandate journalists to do it for us either". Of course not, who would think that? Madness.
Gerald, Ronnie's comment was not an apology for Labour's record - he doesn't need to do this, as the problem was not created by them. He was advocating blind faith in the current Labour council, which I think is bizarre. It sounds like a variant on the divine right of kings, and we got rid of that a long time ago.
We will be able to judge Anderson and his colleagues when we see what they get in the end.
But it's frustrating the way there is no acknowledgement of the enormity of the mistakes made in the past and I cannot understand how anyone can believe that a company that behaved in such bad faith will actually change