Council pays £500k shop subsidy to ‘mystery’ firm
ACOUNCIL is facing questions over a private company to which it is paying hundreds of thousands of pounds a year.
Newport City Council pays out money each year as part of an agreement to cover rent for empty shops in Friars Walk shopping centre.
The council pays the money each year as part of a subsidy agreement made in 2017 when the £100m Friars Walk was sold to Canadian investment firm Talisker Corporation.
Newport City Council pays up to £500,000 a year until 2032 to guarantee rental income if the centre is not bringing in enough rent.
It comes as the council had recently agreed an 8.5% council tax rise as part of its budget, which has seen it forced to cut services including closing some city libraries, reducing operating hours at the Civic Centre and charging for replacement bins.
It was initially said the Friars Walk subsidy agreement was “only intended to cover any rental shortfall for the first few years of trading”, but Friars Walk has been hit with a number of high-profile closures in recent years and the council has paid out £3m in the past few years to cover vacant units, including the massive Debenhams building, which has been empty since the chain collapsed in 2021.
Last year, a Western Mail investigation found the money paid out by the council was no longer going to
Talisker, but to a company called Old Star Finance.
The council said Talisker was no longer involved in Friars Walk but that Old Star Finance was not the new owner, and it refused on a number of occasions to reveal who had actually taken over the flagship shopping centre.
Earlier this year, further investigations by the Western Mail revealed that Friars Walk had been transferred to a hedge fund called Cyrus Capital, a UK- and US-based fund with a long history of investing in struggling assets and companies, including regional airline Flybe, and the Pizza Express restaurant chain.
The council is now facing questions about the identity of Old Star Finance, to which it paid £500,000 last year to cover lost rent from empty shops in Friars Walk, after it emerged it had “no involvement” in the decision of the previous centre owner, Talisker, to reassign the subsidy agreement to Old Star Finance, about which little is known.
Of the active businesses on Companies House there are similarly named organisations, including one listed as “buying and selling of own real estate”.
A wider Google search provides few international results.
It is unclear whether any of these are anything to do with the Old Star currently receiving the subsidy money from the council, which has always maintained that making the subsidy agreement back in 2017 represented the best value for money, even if it had to pay out the maximum amount for the duration of the 15-year deal.
Asked about the process of reallocating the subsidy payments from Talisker to Old Star in 2022, a council spokesman said Talisker reassigned the subsidy and did not need the council’s consent.
They added that the council “was informed of the reassignment to Old Star Finance after it had taken place and had no involvement in the decision”.
Matthew Evans, leader of the Newport Conservatives, said the lack of available information about the company the council was paying money to raised further questions about what was happening with Friars Walk.
He said: “One would have hoped that when the council signed the agreement that if there was a change of ownership the council would have been able to ensure that it was a wholly legitimate outfit.”
Mr Evans said he wasn’t suggesting anything illegitimate had happened but that “reassurances” needed to be given to taxpayers.
He said: “You don’t just give a cheque to a company for £500,000 unless you have done some basic checks about them.
“I’m sure it is nothing sinister, but the more barriers the council puts up, the more questions it raises than answers.”
A Newport City Council spokesperson said: “Talisker did not need the council’s consent before reassigning the Friars Walk subsidy agreement.
“The council was informed of the reassignment to Old Star Finance after it had taken place and had no involvement in the decision.
“The subsidy agreement was unchanged by the reassignment.
“The financial arrangements made at the time Friars Walk was sold to Talisker represented the best value to the council as it was able to fully pay off its borrowing costs and received an additional £8m.
“It was also agreed that the council would pay a subsidy of up to £500,000 a year towards a shortfall in rental income or would receive a ‘profit share’ of any increased rental income from the scheme. That remains the case.
“In the first few years of the scheme the council did not have to pay the full subsidy, but even if that had been the case, and the full subsidy is paid for the remainder of the 15-year agreement, the balance will still be less than the £8m the council received from the sale.”