Return on investment

3 Sep

“If you look around the table and can’t tell who the sucker is – it’s you.”

The mayor has been on week-long trip to China with council chief executive Kim Bromley-Derry, paid for by Chinese developer ABP, and now he’s looking at investing in its Royal Albert Dock project.

The Newham Recorder asked him about the plans:

“We’re always looking at opportunities to invest in projects,” he said.

“…we will always look at opportunities to make money out of projects.

“Each project is judged on its merits of course, but if we can make money and there was an opportunity we’ll do it.”

Sadly this is not the first time the mayor has decided to use public money to play ‘Investment Bankers’ after being sold a dodgy business plan by a man in a shiny suit.

Back in 2012 the London Pleasure Gardens was, according to one of its directors

“going to be one of the coolest places to watch live sports, chill out and catch some amazing events.

“This isn’t just a commercial proposition – we want to be a whole new cultural hub for London and beyond.”

It turned out to be a fiasco that cost Newham council taxpayers close to £5 million for the five weeks it was open.

The company was bankrolled by a £3.3 million loan from the council, plus a further £800,000 because of interest and costs. The council also ended up paying £444,000 to Deloitte for administrators’ fees (graciously discounted from the £1 million they actually racked up) after the business went bust.

Unable to accept the reality of the situation a Newham council spokeswoman insisted:

“The council is continuing to discuss the future use of the site with relevant parties and remains confident that we will see a return on our investment.”

That, of course, never happened.

And awkward questions about what happened to the money, why what was delivered by LPG was so far from what was promised and the evidently hopeless quality of the due diligence carried out by council officers were never even asked by our feeble and supine councillors, much less addressed.

With £40 million of our money on the line with the Olympic stadium ‘loan’ and another £5 million already earmarked for ‘retail opportunities’ in the Queen Elizabeth Park councillors should be wary of indulging the mayor’s next investment fantasy.

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One Response to “Return on investment”

  1. Another flop! September 18, 2015 at 16:09 #

    Newham Council has advertising all over town and on buses, telling residents that it needs to save £50million. It had no money for repair a heater at a community centre, and so shut it down. It must have known about this for 20 years and should have kept fund in reserve. Yet it has millions to invest in projects and advertising.

    The Royal Docks Business park was a £500million flop. They were mean to build a number of offices blocks and residential buildings. They only built Building 1000 (renamed to Newham Dockside). However, it never managed to find a suitable tenant. Why would a company want to bring it employees, where they are interrupted by air craft noise and subjected to the smell of aviation fuel?

    Depiste London City Airport, claiming it is good forthe area, but it has cost Newham residents £100million, because Newham Council ended up building this white elephant.

    Office space is in great demand in Canary Wharf, those businesses do not want offices in the Royals Docks opposite the airport.

    It took a massive tax bribe by turning the Royal Docs into an Enterprise Zone to secure Chinese investment. This is the second time, the area has been turned into an enterprise zone.

    Whilst the small corner shop pays thousands in Business Rate, the Chinese businesses in the Royal Docks will pay nothing due ot the Enterprise Zone status!

    Perhaps the Chinese have realised they have been sold a lemon and are trying to spread the risk by investing Newham to take a stake. Sir Robin Wales, must know it will be a flop, but Newham Council has been backing the airport., everything they want to expand.

    I doubt the Chinese Business park will do much to create local jobs, unless you happen to speak Chinese. Most import trading firms need bilingual people. Most of the staff are likely to be relocated from China, creating pressure on housing and infrastructure.

    The best solution for Newham is to shut down the airport and pull out of the Chinese development. Once the airport is gone, the site may be attractive to different businesses. I would love if Google moved instead.

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