Private Eye is published every two weeks, and in recent times each fortnightly issue has brought a new revelation of unusual activity – mostly of the financial kind – at Teesworks Ltd and the former SSI 2,600 acre steelworks site at Redcar, now called Teesworks.
The current issue is no exception. Richard Brooks who writes the In The Back section, reported on the sale of publicly – owned Teesworks property by South Tees Developments Ltd, a subsidiary of South Tees Development Corporation (STDC) – to Teesworks Ltd. STDC in turn is a body controlled by Tees Valley Combined Authority. Teesworks and other sites form part of PM Rishi Sunak’s freeport – the brainchild of Tees Valley mayor Ben Houchen.
Sell-off for a ridiculous price
The political magazine reported that land amounting to some 105 acres – which cost £100mn of public money to regenerate – has been sold by South Tees Developments Ltd at £1 per acre, a total of £110.35 (plus VAT). The two transactions took place in November and December last year. The main beneficiaries are the business leaders who now own 90% of Teesworks Ltd.
The firm was set up by STDC, a public body under Tees Valley Combined Authority, to remediate and redevelop the derelict land. The corporation created Teesworks Ltd as a joint venture, gifting half its shares to four local developers led by Chris Musgrave and Martin Corney. Then in November 2021 a further 40% of the company was transferred to interests controlled by Musgrave and Corney again without charge, leaving STDC with just 10% of the firm they had created.
The freehold sales to Teesworks Ltd are under an option to buy the land of South Bank Quay currently being developed and the land to the south of it also undergoing publicly funded regeneration. The sites will be rented by Korean wind turbine monopile manufacturers SeAH.
An original condition of the shares transfer was that the private shareholders would foot the bill for ongoing demolition and remediation work, but that condition has now been waived and the public purse via STDC will shoulder those future costs.
Demolition and remediation at Teesworks has so far cost STDC £450mn.
But up to now Musgrave and his pals have paid very little for their interest. The official version for their involvement is that they had purchased a strip of land deemed crucial to the Teesworks site, for £500,000.
The developers have already made their return. Private Eye estimated that £40mn from the sale of metal scrap on the land has so far been released to the four developers. The Private Eye report of the fire-sale of land remediated from the public purse is a serious accusation, warranting an official response.
And the mayor’s response?
Yet there has been no formal rebuttal from the mayor’s office. Our enquiries to his press office were not answered. The only response we can see is Houchen’s posts on Facebook. In response to a comment on his Facebook page – “No one on here read Private Eye then?” – Houchen wrote:
“Only people who enjoy comics and want to an escape from reality..
“It’s all public already. Accounts fully audited and published on Companies House. We have audit reports and scrutiny reports that are investigated on a monthly basis by councillors from across the region from all parties….
“I talk all the time about how much money we secured from government, the fact the [Teesworks] site had hundreds of millions in liabilities and the jobs we’re creating…
“There are so many [false reports] I’d just spend my whole time refuting nonsense. I have actually provided evidence and truth to them directly but they ignore that and print rubbish instead almost like Private Eye is a socialist comic..
“But as an example, STDC will make more than £40m from SeAH and that doesn’t include the millions a year in business rates. It’s wrong to say STDC got just over £100 😂 utter nonsense.”
Houchen’s comments were relayed to Richard Brooks on Twitter, who tweeted:
Why the secrecy?
So apart from the Facebook reactions it’s a no comment from Houchen. It begs the question – why the secrecy?
One of Houchen’s comments bends the truth. He posted:
“Accounts fully audited and published on Companies House”
But Teeswork’s accounts are not audited, they’re simply “unaudited financial statements” meaning that an auditor has not gone through the financial records with a fine toothcomb. But then Teesworks is no longer publicly owned.
Houchen and others have argued that the developers are carrying the site’s ‘liabilities’, but the developers will not be liable for any debts of the limited company and they have not invested any of their own money.
Then there’s the unusual origins of Teesworks Ltd which did not see the light of day as a joint venture between the developers and the STDC. In fact the company was first incorporated in December 2019 as South Tees Enterprise Ltd, equally co-owned by Northern Land Management Ltd (Martin Corney’s firm) and Musgrave’s J C Musgrave Capital Ltd. The registered office was at Corney’s mansion – Southlands in Eaglescliffe, near Stockton.
The company’s SIC code which denotes their business activity was 52101: “Operation of warehousing and storage facilities for water transport activities”. Only later was the remediation role added.
The two business owners ceased to be the controlling parties in July 2020 after two more shares were created and transferred to STDC. At the same time the company name was changed to Teesworks. So the joint venture was born from a Musgrave-Corney partnership.
In November 2021 an official notice in the government’s Gazette announced the company’s compulsory strike-off from the public register, only to be withdrawn later. That month the developers’ share of Teesworks’ ownership rose from 50% to 90%.
All the corporate documents confirm that Teesworks has never employed anyone.
Why Teesworks Ltd was created by the developers seems baffling, when STDC has access to accountants, and online company formation agents could provide an ‘off the shelf’ ready-made firm in seconds for a few pounds. It seems that the Teesworks vehicle was an unused company that was given a new name and role.
That’s not unusual. But it does beg a few questions. If the joint venture was created from the business owners’ own folder of redundant companies, were other potential business partners already ruled out? Was there any formal process to find and recruit joint venture partners? Who was short-listed? How were they screened? Where is the due diligence?
You might ask what discussions were held about the joint venture at STDC board meetings. Given the cryptic minutes and withheld documents you can ask away.
You won’t get an answer.