Ship of fools.

Even though it's common knowledge that the Newham Council/WHUFC bid to take control of the Olympic Stadium is now no longer on the cards, it may be the time to make a brief examination as to how, through a lack of scrutiny and a refusal to ask very simple questions, the ineptitude of Newham’s councillors failed to nip the fiasco in the bud.

I’ve posted elsewhere on how the partnership between Newham Council and WHUFC appeared to be biased in the club’s favour. What is worth taking into consideration is the form of the business partnership both parties agreed to enter into. When it was announced that the Council and the club entered into a limited liability partnership, I wondered why they had opted for a partnership rather than form a limited company.

A quick trawl of Internet sites offering to assist in the formation of limited liability partnerships answers my question. Here are some of the advantages of a LLP as listed on one site:

“An LLP would be wise to have a partnership agreement to set out the agreement between the members, but it is not necessary. The LLP does not file any form of constitution. The members can agree profit sharing or other arrangements amongst themselves verbally and change those arrangements as often as they agree.” and, “The LLP must file financial statements at Companies House. These can be so abbreviated that they tell an outsider very little about the business”.

And here’s the wording from another:

“There is nothing in the provisions to prevent a limited company being a partner. This opens up interesting possibilities for joint ventures and profit sharing. For example, in the claw back of tax losses, the partnership agreement could specify that the corporate partner should take the first £000 of profit, and a second partner the remainder.” And, “The benefits of a limited liability partnership against a limited company may be:
Less public scrutiny because the partnership agreement remains confidential;
Easier manipulation of shares between partners;
Easier changes of membership;
No administration relating to the issue and allotment of shares”.

Little wonder that, in the early 1990’s, the Channel Islands authorities were lobbied by international firms of accountants and bankers to pass limited liability partnership legislation. The Blair New Labour government succumbed to the same lobbying in 2000.

On learning of this lack of transparency, I wrote to the Information Commissioner (e-mail enquiry sent 29th September) requesting conformation on what type of Freedom of Information requests could be put to such a partnership, considering the fact that one of the partners already falls within the remit of the FOI Act.

I was also going to write to Newham Council to ask why it chose to enter into a limited liability partnership rather than forming a limited company. I was also going to ask about the capitalisation agreement and profit sharing arrangements made with its partner, WHUFC.

But, the truth is, I shouldn’t have to do this. All this information should have been garnered by the councillors that sit in the Council Chamber and they should have ensured that it was made public knowledge. Those same councillors have a duty to protect the interests of the people of Newham and I think that, by failing to get a grip on this comedy of errors, they have failed in that duty.

Still, never mind. It’s all over now… or is it? There seems to be some confusion as to whether or not Newham Council will still stump up £40 million to bail out, sorry I mean support, Boris’ new Special Purpose Vehicle that will now run the stadium (let’s hope it’s not another limited liability partnership). The Minister for Sport & the Olympics, Hugh Robertson, claimed on the BBC London News that Newham Council will come in on the deal as it will be a "public-to-public" loan(?).

I cannot see how that will work. What it would mean is that one of the most impoverished local authorities in the country will borrow money to lend back to the government to assist in the up-keep of a venue that is supposedly protecting the Olympic legacy for the nation. Rob from the poorest and give to… everyone else. Nonsense!

Should it start to look like this odd transaction may take place, it’s Newham councillors’ job to make sure this kind of bullshit doesn’t happen. So my suggestion to all those Newham councillors who are not in receipt of a mayoral allowance is to take a deep breath, find your backbone and for the love of all things decent start asking those questions, checking that documentation and wake up to the fact that the mayor didn’t elect you. If you cannot do that, stand down, And stand down now.