Pressure mounts on council leader over controversial £300K grant to law firm

THE leader of Bolton Council Cliff Morris and the ruling Labour group are under mounting pressure over the controversial £300,000 grant to personal injury law firm Asons.

Ten detailed questions have been submitted to the authority’s external auditors KPMG over the award of council taxpayers’ money to the loss-making company.

The cash gift to Asons following its £1m move to the former offices of The Bolton News at Newspaper House – initially agreed under emergency powers behind closed doors by ruling Labour leader Cllr Cliff Morris – has caused a public outcry, including from other law firms in Bolton.

Asons’ move to Newspaper House in the summer followed the abandonment of building work on what was to be the £7m showpiece headquarters for the company at the gateway to Bolton on Top Way a year ago.

Car dealer RRG is now teeing plans to launch a Skoda showroom on the site.

Although the Labour Group closed ranks at last week’s Bolton Council meeting by voting down a Tory motion of criticism over the Asons grant, TheBusinessDesk understands there is increasing unease over the handling of the issue within Cllr Morris’ own party.

One insider said: “The worry is that Cliff is becoming a toxic brand within the town.” And in a Shakespearian reference (Hamlet) they went on: “People are saying ‘something is rotten in the state of Denmark’. This is not a good situation we find ourselves in.”

Bolton Council has been in predominantly Labour Party control for the last 36 years.

Labour ruled from 1980 to 2003 but between 2003 and 2011 there was no one party in overall control. Labour returned to power in 2011.

Under Labour group rules, Cllr Morris faces re-election every April, and it is understood he may face challenge. Cllr Morris has so far been unavailable for comment when approached by TheBusinessDesk today.

Meanwhile, Conservative group leader Cllr David Greenhalgh, who chairs the council’s audit committee, has submitted the following official questions to KPMG, who are now understood to be carrying out their investigation:

• Why was the grant signed off and agreed in September when the works had been completed in August, if the purpose of the grant was, as we were told, to keep Asons in the town centre?

• What due diligence was done before the grant was awarded, assessing criteria, looking into the financial competence and sustainability of the company; assessing the business plan for economic growth and job creation; and who from the Council undertook this work?

• If due diligence was done, was the fact that Asons in their published accounts lost over £1 million; are in dispute with the inland revenue for £300,000 and claim in the notes to the accounts that their business model was under threat, taken into account?

• Why did Asons receive this grant when previous attempts to help Asons have ended in failure?

• When was the promise of money made to Asons, and when did the money actually change hands; and which specific Asons company account was the grant paid into?

• What checks have been done by Asons that the money has been spent on the refurbishment costs. Did Asons have to produce invoices and have we seen these invoices and did we put a charge on the building in the event of Asons going into administration?

• What personal connections are there between Asons directors and Executive members or councillors? Were any personal connections declared by Labour councillors? Did the ruling Group declare any interest between Asons and the Labour Party?

• Does the council think it is appropriate when money is tight to be handing over £300,000 to company whose director is claiming to have bought six Lamborghinis in four years?

• Why was the whole grant passed under emergency powers when it clearly was not an emergency? Whose decision was it ultimately to use emergency powers, and why when the original letter was dated September, did the item not come to the October meeting of the Leader’s portfolio, as it should have done, but came six weeks later to the November meeting?

• A further question has arisen since council: Why did Cllr Morris tell the Corporate Scrutiny committee those discussions with Asons started in September and then tell Manchester Radio on December 1 that discussions started in January.

Cllr David Greenhalgh said after the questions were submitted: “I do believe the wrong decision was made.

“I believe that when the correct criteria is met, when a business plan is put forward by a company that can show evidence of sound financial stability; of local economic growth and job creation; of a landmark regeneration project; or of help to a headline business in the town undergoing short term financial problems; then I do believe the council can and should provide what proportionate help they see fit, but I see no evidence that justified the award of £300,000 to Asons.”