Jet-set tycoon and green gamble that left council facing a loss of £200m
Taxpayers face losing up to £200 million after a council ‘gambled’ more than half a billion pounds on a green energy scheme run by a fast-living financier, the Daily Mail can reveal.
Cash-strapped Thurrock Council in essex borrowed £655million of public money – the equivalent of triple what it spends on services each year – to invest in 53 solar farms across the UK.
It agreed a series of deals with globetrotting businessman Liam Kavanagh, whose integrity was later questioned by a High Court judge over £5million his company banked in ‘commission’.
Thurrock hoped the huge investment would generate millions in extra income but independent consultants hired by the council have privately warned that the solar farms are worth far less than required to recoup their cash.
They also raised concerns about the use of a £138million top-up investment made by Thurrock – approved after a series of meetings at London’s five - star May Fair hotel between Mr Kavanagh and the council’s finance chief – which does not appear to have gone into the farms. and the latest £12.5million interest payment owed to the council is months overdue, an investigation by the Bureau of Investigative Journalism has found.
although there are serious concerns about the effect of these deals on the council’s finances, they certainly proved lucrative for Mr Kavanagh. During the years of Thurrock’s investment, Mr Kavanagh, 45, legitimately took millions in dividend payments and his jetset lifestyle included the use of a private jet, a fleet of supercars and a Hampshire farmhouse with a swimming pool, wine cellar, home cinema and steam and hot tub room.
Because Thurrock borrowed all the money it invested from more than 100 other councils and a Treasury-backed loan scheme, taxpayers across the country will pay the price if there is a default on the loan. Last night there were calls for an urgent government inquiry into the ‘grave’ situation.
Thurrock councillor and opposition leader John Kent said: ‘This is a scandal of huge proportions, and we need to know what has gone so disastrously wrong. I’m really not sure Thurrock Council can survive a catastrophic loss of £200 million – it may well be on the brink of bankruptcy.’
He said council leaders had overseen a ‘massive gamble with taxpayers’ money’.
Thurrock’s involvement with Mr Kavanagh began in June 2016 when, alongside Warrington and Newham councils, it financed the purchase of a solar farm in swindon through bonds marketed by his company rockfire Capital.
Over the next two years, Thurrock helped buy 53 sites across the UK, all of which are now owned by Mr Kavanagh.
The investments were issued through a complex series of bonds, all due to mature in the next five to six years.
In return, Thurrock would get interest payments worth millions of pounds.
eventually, Thurrock became the sole local authority investor in Mr Kavanagh’s businesses. During the period, Mr Kavanagh took more than £7.3million in dividend payments from rockfire Capital. The company also banked £5million in commission for one part of the arrangement, which was later criticised by a judge.
Mr Justice Henshaw ruled in april last year that Mr Kavanagh was ‘very likely’ to have been the source of ‘ clear untruths’ in a prospectus issued to Thurrock about some of the bonds.
It also ‘concealed’ the £5 million fee, which the judge said cast ‘ serious doubt’ over whether it was a genuine fee for arranging the deal or a ‘covert extraction of funds by Mr Kavanagh for his own benefit’. Mr Kavanagh denied any wrongdoing.
Days after concerns emerged about Thurrock’s solar deals in 2020, a new company, anyard Holdings, was registered in the Isle of Man.
Mr Kavanagh subsequently liquidated key companies that owed the council hundreds of millions and transferred the solar farms into the new offshore structure.
Daniel Kirk, managing director of Toucan energy services
(Tes), the company mainly responsible for the day-to-day management of Mr Kavanagh’s solar farms but which is separate from his business dealings and investments, said council consultant Camdor told him in april it had discovered the solar farms were not worth enough for Thurrock to recoup all of the money it invested. The shortfall could be as much as £200 million.
Camdor also asked him about the £138million top-up – which it understood was meant to go to some of the solar farms he manages for Mr Kavanagh – but Mr Kirk said Tes never received any of the money.
a source close to Mr Kavanagh’s company said the investments had been properly recorded on the relevant balance sheets, and claimed there were no specific terms governing how the funds could be used. Mr Kavanagh declined to comment to the Mail.
Thurrock Council said: ‘The council and its external financial and legal experts have established a comprehensive resolution plan to safeguard the council’s financial position. Thurrock Council is confident that the action taken on this matter will minimise risk and support the continued security of public funds.’
a Department of Levelling Up spokesman said: ‘ We are monitoring the situation in Thurrock closely and will not hesitate to take action if required.’
‘On the brink of bankruptcy’
‘Scandal of huge proportions’