Lord Crony and a £55m hotel
First there was the Tatler Tory scandal. Now police are probing his team for electoral fraud. Today we look at another murky saga involving Dave’s closest confidant
EXCITEMENT was in the air as a group of bigwigs and their entourages gathered together in Skopje, the capital of Macedonia, on a humid August day. The occasion was a ceremony eight years ago to mark the start of construction of a new £55 million luxury hotel project, which, in the eyes of the country’s political leaders, was hugely significant.
From the end of the World War II until the dismantling of the Iron Curtain in the early Nineties, the tiny landlocked Balkan nation had been subsumed into the repressive regime of communist Yugoslavia.
The plush new hotel in the centre of town would be proof that the proud country of Macedonia was finally a player on the modern European stage. Given the prestigious nature of the project, what was so surprising was that the potentially lucrative contract to build it had gone not to an internationally famous corporation, but an obscure outfit called HLH Macedonia.
There to represent HLH was a figure who would soon become all too familiar in Westminster’s corridors of power: Lord Feldman of Elstree, David Cameron’s best friend. It was Feldman who urged Cameron to run for the Tory leadership in 2005. He helped run Cameron’s campaign with ruthless efficiency, calling in favours from his network of contacts in the business world and raising tens of thousands of pounds in the process.
Back then, however, he was plain ‘Mister’ — his ennoblement and rise to Tory party chairman lay in the future. At the gathering, Feldman waxed lyrical about the hotel project, in which he had invested £450,000 through his family business.
‘We plan to build a . . . luxury hotel, on an area of 44,000 square metres with over 200 two-bedrooms, conference and meeting facilities, restaurants and a spa centre,’ he told the assembled throng.
One would hardly have guessed from his self-assured speech that Feldman’s experience in the hotel trade was minimal at best.
A barrister by training, his commercial activities were confined to the family business, a middling sized clothing company based on London’s Tottenham Court Road.
He was, however, a well-known figure among Skopje’s political elite. An elite which included a Macedonian playboy and tycoon by the name of Orce Kamcev — whose firm did business with Feldman’s company.
Another prominent contact was Macedonia’s former Prime Minister Nikola Gruevski, a strongman who stepped down this year after a decade in power amid a miasma of lurid allegations including the cover-up of a police killing.
Feldman’s Macedonian venture attracted little notice at the time. But in the light of recent events, it raises a number of intriguing questions not just about his method of doing business but also about his offshore activities.
This week, Feldman was dragged into controversy after The Electoral Commission election watchdog launched unprecedented legal action against the Tory party over claims of electoral fraud.
The move follows an investigation by the Mail and Channel Four News into whether the party deliberately breached constituency spending limits — which are limited to around £15,000 per candidate — while campaigning during the last election.
As party chairman, Feldman oversaw the Tory election machine and he will be only too aware that a deliberate breach of spending is punishable by a fine or even a jail term. Feldman has recently come under siege on a number of fronts — the Electoral Commission’s interest in the Tory party’s election expenses is but the latest.
In particular, he has faced questions over how the party dealt with allegations against former party campaigner Mark Clarke, the ‘Tatler Tory’ who was accused of bullying a young activist who took his own life.
So what was Feldman doing involving himself with controver- sial politicians and businessmen in the Balkans? Why was he suddenly dabbling in the hotels business? And why had such a valuable contract been awarded to a virtual unknown in hotels — in the face of objections from local opposition politicians and anticorruption groups?
THE vehicle for Feldman’s interest was, of course, HLH Macedonia, the company awarded the project. It had only been dreamt up in July 2007, very shortly before contracts on the hotel deal were signed.
It was a partnership of two — one partner was Feldman’s family firm Jayroma, the clothing business set up by his 76- year- old father Malcolm in the Seventies; the other was Rigo Holdings, a mysterious company based in the tax haven of the Netherlands Antilles.
Tax havens are the cause of some embarrassment to the Tories after the recent leak from Panama of financial papers which highlighted overseas investment activity by the rich and powerful.
The papers revealed details of tax-avoidance by world leaders and showed that David Cameron’s father ran an offshore investment fund from which the PM benefited.
Feldman had made contacts in Macedonia some years before setting up his hotel venture there — and had already introduced David Cameron to his circle of Macedonian power brokers.
Such was Feldman’s influence that, in September 2003, the playboy tycoon Orce Kamcev’s sportswear company Orka Holdings organised and paid for Cameron — then just an MP and shadow minister — and Feldman to attend an England-Macedonia football international in Skopje.
The sportswear company picked up the tab for a three-night sojourn in the five star Aleksandar Palace hotel, where the England team were staying.
Cameron, who described the trip as a ‘junket’, disclosed the visit in the register of members’ interests at the time. Just days after this jolly, Cameron argued vigorously for Macedonia to be allowed into the European Union.
Admission would be worth billions to the impoverished nation — although it has not yet been granted the privilege of joining.
The close bond between Feldman and Cameron was first forged when the pair were at Brasenose College Oxford together in the Eighties, where they enjoyed a
mutual love of racquet sports. Like Cameron, Feldman got a First in his final exams before taking a job with management consultants Bain & Company. He was called to the Bar in 1991 and practised as a commercial barrister at one of the country’s top chambers.
In 1995, aged 29, he went into the family firm, Jayroma. Lord Feldman, 50, now controls the majority of its shares. Feldman’s father Malcolm was listed as a director along with his mother Marcia and wife Gabrielle Gourgey, 46, a hotshot fund manager in the City, according to documents from data intelligence company DueDil. The firm made a profit of just over £500,000 before tax in 2014 and the un-named highest paid director, possibly Lord Feldman, received £657,113, up from £405,000 the previous year.
So far, so unremarkable: which makes it all the more extraordinary that such an establishment figure as Feldman embarked on a far-flung hotel venture. It transpires that it is through the family business that Feldman seems to have acquired his ties with Macedonia.
Perhaps because both companies are in the clothing industry, Jayroma has long- standing business links with sportswear company Orka Holdings, which had been founded by tycoon Orce Kamcev’s father in the wave of privatisations of state companies after the fall of communism.
The company says it undertook a ‘collective production investment with the English firm Jayroma’ between 1995 and 1998.
Twice-divorced Orce, 45, who is regarded as a boulevardier and who was close to Prime Minister Gruevski, is now at Orka’s helm.
Feldman did not answer questions about who was the mystery partner behind Rigo Holdings, the Netherlands Antilles vehicle.
Going into partnership with an entity based in a tax haven is perfectly legal. Nonetheless, it is uncomfortable in today’s climate, given the furore over the Panama Papers.
And although it attracted virtually no attention in Britain, awarding the hotel contract to Feldman and his cohorts was explosive stuff in Macedonia.
Even against the benchmark of other former communist-era cities, Skopje had been famed for its dreariness.
The hotel project took place alongside a costly drive by then Prime Minister Gruevski to spruce up the capital with gleaming new buildings and expensive works of art, including a stupendous 22 metre-high statue of Alexander the Great on horseback in the central square of the town. As the cornerstone for Lord Feldman’s luxury hotel was being laid, around a third of the population were below the poverty line.
Ink on the contract was barely dry before the rows began.
Opposition parties and anti- cor ruption campaigners claimed that Gruevski’s government had rigged the bidding.
Feldman’s joint company HLH Macedonia was accused of not even qualifying to participate in the tender, because it did not have a track record of building hotels.
Prosecutors, however, decided there were no grounds for further investigation.
FELDMAN says he ‘utterly refutes’ any allegations of impropriety on his own part, that of Jayroma or ‘ any other companies involved in this transaction’. He added that the justice department in Macedonia had investigated and found no evidence of impropriety, and that neither of his Macedonian friends — the tycoon Orce Kamcev nor ex-PM Nikola Gruevski — had any involvement in the bidding consortium.
The HLH Macedonia partnership was dissolved last year and neither Jayroma nor Lord Feldman have any remaining interest in the hotel project.
The story, however, does not quite end there. For Feldman was briefly a director of another almost unknown British-based hotel venture — Heritage London and Hanover UK — which had two hotels, one in Peterborough and another in Rotherham.
It has the initials HLH, and was listed in City documents as an initial partner of Jayroma in HLH Macedonia.
Heritage London and Hanover UK hit the rocks in 2011 with a debt of £29.6million owed to the Dunbar Bank, a small private bank.
Administrators were appointed to sort out its finances.
Company records reveal Lord Feldman served as a director of HLH UK Ltd only from July to November 2007, as did a man named John Cotter, then a director of Jayroma.
The administrators noted late last year that just over £9 million of the £29 million owing had been returned to Dunbar Bank but that it would not get the rest of its money back.
Lord Feldman did not respond to inquiries as to why he served as a director of HLH UK so briefly.
Meanwhile it is not clear how much profit, if any, his firm Jayroma made on its £450,000 hotel investment in Macedonia, but it is safe to say Lord Feldman is not desperate for money.
A fully-paid up member of the chi- chi Notting Hill set of wealthy, metropolitan Tories, the 50-year-old peer lives in a smart square in West London.
He shares the family home — a grand four- storey stucco-fronted mansion — with wife Gabrielle and their three children.
The couple bought the property for £2.2 million in 2003 with a mortgage from Barclays bank and refurbished it in some style. The house is now likely to be worth at least £7 million.
In 2006, Feldman was given the key position of party deputy treasurer and also became chairman of the Leaders Group, the body that organises donors of more than £50,000 to get access to Cameron. Then came the fateful summer of 2008, when Feldman flew into controversy in Corfu. He and George Osborne, then the shadow chancellor, were guests — along with Labour’s master of spin Peter Mandelson — on the yacht of billionaire Russian oligarch Oleg Deripaska.
Their presence on the yacht blew up into a gargantuan row about party fundraising.
Both men both denied soliciting cash from Deripaska, which would have broken the law against donations to British political parties from non UK citizens.
Lord Feldman claimed he accepted Mr Deripaska’s invitation to join him on the magnificent Queen K, an £80 million, 238ft floating palace, through ‘human weakness’.
He was, he said, curious to see a boat like that close up.
As well he might have been. The luxurious vessel is so large it needs on-board lifts, and boasts a piano room, a bar, bathrooms fitted out in onyx and a dining room with a vast array of blinking lights so the ceiling resembles the night sky.
Tory figures describe Feldman — whose party-piece is to impersonate Elvis Presley — as friendly, bright and unassuming.
One senior corporate figure said that at a breakfast to butter up businessmen, Feldman made no pretence at being a career politician.
He made no bones, the businessman said, about the fact he owes his exalted rank of party chairman entirely to his friendship with Cameron.
Commendable honesty, perhaps, but it is not surprising that lessfavoured rivals have the knives out for Cameron’s best friend.
Some may also feel his position is out of kilter with the Tory party’s desire to appear modern and meritocratic, as opposed to a chumocracy for the PM’s posh mates.
So loyal is he to Cameron that he has recently come under fire from the Brexit camp, which claims he has been helping to raise funds for the campaign for the UK to stay in the European Union.
The Conservative party says he merely put donors in touch with campaigns on either side.
HIS political woes, however, pale in comparison with those of the other Prime Minister who has figured in his life, Nikola Gruevski. Macedonia has been mired for months in a deep political crisis triggered by claims from his opponents that secretly recorded tapes show Gruevski was behind the secret surveillance of thousands of people.
The recordings also appear to show that ministers were plotting to rig votes and cover up a murder. Gruevski stepped down earlier this year.
Lord Feldman says he has no contact with Gruevski and did not respond to queries as to why he became involved in the Skopje hotel venture, when his main business expertise was in the fashion and textiles sector.
Of course, there is nothing wrong in British firms like Jayroma trying to invest abroad.
But the Skopje affair inescapably raises questions about the judgment of a man who has the ear of the Prime Minister and his hands on the Tory purse strings.