A concerned carved bollard at Geelong, Australia searches for news on the antics of local company Scale Facilitation (parent company of ‘Recharge’), the struggling owner of Britishvolt and the gigafactory site at Cambois. (Or it may be entrepreneur David Collard, the owner of Scale Facilitation and Britishvolt, scouring the paper for new investors.)
Geelong in Victoria state, Australia, is famous for its wooden bollard sculptures, carved from the piles of an old dismantled pier. Around 100 bollards are spread out along the waterfront. They have become a tourist attraction and an icon of Geelong (as well as a backdrop to North East Bylines series of articles on the otherwise tragic tale of purchase of Britishvolt by Recharge Industries). Geelong is also the home of Recharge Industries’ other, and similarly challenged, proposed battery gigafactory.
Geelong and the Britishvolt connection
In June we reported that the Geelong Australian offices of Scale Facilitation, the ultimate new owners of Britishvolt, the failed company behind the battery gigafactory project planned for Cambois on the Northumberland coast, had been raided by the police. The raid was undertaken by the serious financial crime taskforce which looks at the “most serious and complex forms of financial crime”. At the time Scale Facilitation stated: “We deny any wrongdoing and will continue working with our legal and other advisers to defend any matters arising from these discussions.”
Scale Facilitation, through its subsidiary Recharge Industries (Recharge Production UK Ltd, in the UK) is planning the construction of two multi-billion pound battery gigafactories, one in home town Geelong in Australia and the other on the Northumberland coast at the old power station plant site at Cambois. The company also recently took offices on the 82nd and 88th floors of One World Trade Center, New York City, USA.
In July, Australian internet platform Open Politics (a forum to increase public scrutiny of the private interests of their federal politicians) wondered “how could a small company established in 2019 with little track record, apart from flogging facemasks during the pandemic (how hard would that be?), afford to lease the entire floor of One World Trade Center, built on the site of the Twin Towers”.
Open Politics concluded that it couldn’t. Not long after the Britishvolt deal, Scale Facilitation staff in the US didn’t receive their fortnightly pay. Since then, payments have been sporadic and coming from unusual sources, often without necessary payroll documentation. In June several senior managers and almost the entire legal team left the company.
Collard (Scale Facilitation’s owner) has been named in lawsuits in New York City from staff demanding backpay, as well as an eviction notice from a luxury apartment, and an American Express bill for $746,000.
The situation was apparently much the same in Australia where local papers reported that staff had gone unpaid, and the site lease for the proposed battery gigafactory had lapsed without any work having been done. The Fair Work Ombudsman is reported to have urged employees with complaints about the company to come forward with their claims.
The problems pile up
In August Open Politics undertook an extensive review of Scale Facilitation’s financial stutaion (as far as it was able).
It noted that Scale Facilitation has reportedly paid millions to PwC (PricewaterhouseCoopers International Limited) to provide tax advice on its Australian and UK businesses. PwC had apparently “validated” Scale Facilitation’s claim that subsidiary Recharge Production UK Limited, which acquired Britishvolt, was owed £5.5mn in Value Added Tax (VAT) receivables or refunds for VAT paid on invoices.
This was to be used to finance wages in UK, USA and Australia. Financing to be generated, as Collard noted, “by establishing a UK subsidiary called Scale Facilitation Operations Limited and billing Recharge Production UK monthly for the ‘the costs of our global work’ in the UK”. UK transfer pricing laws prohibit recharging costs to Recharge Production UK as a way of extracting cash out of the UK and into the US operations to fix its cashflow problems. Costs can only be allocated to Recharge Production UK if they relate to its operations.
Collard also said he had executed a facility with a UK firm which finances VAT receivables, providing Recharge with advance payments for VAT refunds owed to it by HM Revenue & Customs.
This sounds like the scheme operated by Greensill Capital and championed by David Cameron (who was reported by the BBC to have been paid the sum of approximately £7mn before the company collapsed). Greensill lent money in advance on wages and invoices, but as it transpired, also on desperate companies’ unicorn hopes of future business, written up and submitted as actual invoices.
Scale Facilitation’s woes
The Scale Facilitation practice of reclaiming VAT immediately, is a legal practice. However, the Financial Times reporting on the same issues notes that “two former employees said some claims were filed even though the invoices had not been paid”. Presumably Lord Cameron of Chipping Norton is now is fully occupied with his foreign affairs and has not got the time to be again involved with an Australian finance company.
Scale Facilitation Ltd was under notice of compulsory strike-off action at Companies House, but on 18 November had the notice discontinued, so still continues to trade.
Despite the claimed VAT windfall, UK operations are not immune from financial woes. Recharge Production UK (owned by Scale Facilitation) has not yet paid the final instalment for the purchase of Britishvolt or paid for the Britishvolt land. UK employees remaining with Britishvolt also complain of the shortage of wage payments, with the Times reporting that “this week, one former Britishvolt employee filed a ‘statutory demand’ against Recharge for back pay that could lead to the business being wound up within weeks if it does not clear the debt”.
Collard has blamed, amongst other issues, intentional sabotage by employees.
The auditors for the Britishvolt bankruptcy are EY Parthenon. In August the Guardian reported that EY claimed the final payment was “unpaid and overdue”, making Recharge Industries in “default of the business sale agreement”, a statement still disputed by Recharge. EY itself has come under some censure, as it not only was the auditor, but had advised Britishvolt extensively in the past and was therefore also a creditor in the bankruptcy proceedings. A position which may appear to favour an initial cash injection rather than the sustainability of the offers. EY has justified accepting the Recharge Industries offer as the partial payment received to date from Recharge is greater than any of the other offers. So that’s alright then.
The Times notes that “a separate due diligence report by UK accountants Grant Thornton into Collard and his businesses, for Northumberland County Council in the weeks following EY’s rapid selection, raised multiple ‘red flags’ over Collard, his businesses and his ability to raise financing, according to five people with knowledge of the report”.
Collard’s latest plan for Cambois site (if he can ever raise the money to buy it) is apparently to build batteries for the Australian military. A strange proposition, which would involve shipping the raw materials half way round the world to Blyth and the finished batteries half way back round the world to Australia. Perhaps made even more unlikely by the Australian government’s policy announcement earlier this year that “one of its top priorities is to add value to Australia’s critical minerals by fostering more onshore processing and manufacturing of modern applications such as batteries”.
The antics continue, the Cambois site sits quietly, and the North East waits for its gigafactory.
On the decision to buy Britishvolt from administration one former employee is reported to have said “It was a madman’s call, we obviously didn’t have the money”. Yet Collard remains optimistic stating, “The recent impact on our efforts is disheartening, but the resolve to reconstruct this vision remains steadfast”.
Like the newspaper-reading bollard, we remain nervously waiting for news from Geelong, while hoping the news is not that the clown car has finally crashed.
UPDATE: The news from Geelong is not good
While we were going to press, the news came from Geelong that Collard’s clown car has finally crashed. An Australian court has ordered the liquidation of his company Sanitex Global.
Sanitex is actually the original, and main company in the Collard portfolio. He moved from his position as a director of PwC in 2019 when he took over the struggling medical supplies company, just in time to fortuitously profit massively from the Covid induced worldwide need for medical supplies. Sanitex has apparently failed owing a total of about AU$100,000 to a supplier, and a former employee in unpaid wages.
Collard will no doubt claim that Sanitex is not directly linked to Recharge production UK Ltd, the owner of Britishvolt and aspiring owner of the Cambois gigafactory site, but they are both closely linked as portfolio companies of Scale Facilitation and of owner Collard. The news from Geelong is not good for Britishvolt.