Burgess Lands cash may be lost and council facing grants debt

Welshpool Town Council may have to repay money drawn down from the Burgess Lands Trust and £400,000 of investments made by the Trust might have been lost.

This information has been revealed to MyWelshpool as part of the authority’s responses to Audit Wales following questions over the 2019/20 council accounts.

The Town Council acts as the Trustee of the Burgess Lands Trust and the report reveals that, following the sale of a large chunk of the Burgess Lands, money was invested in two companies.

One of the two companies has gone into administration and the other is under investigation by the Financial Services Authority.

The response also reveals that the former Town Clerk was also acting as Clerk to the Burgess Lands Trust at the time the investments were made.

In response to a question from Audit Wales about corporate governance the council replied:

“The Town Council is the corporate trustee as a body and all councillors are trustees. The Burgess Lands Trust had met in the financial year in question however we can not be certain that the trust and trustees have met their responsibilities due to the way information was presented to them by the previous town clerk, who was the appointed clerk of the trust and therefor we feel there was a conflict of interest.

“One major area of concern is a report that went to the trust which encouraged investment in renewable energy sources and similar operations which unfortunately has led to lack of income and dividends due to poor investment. One of the companies has gone into administration and one is failing to meet criteria for a European Licence following the FSA stopping investments in the company.”

The response also states that the Trust owned several houses as part of its portfolio, the majority being in poor repair.

The properties had been registered in the name of the previous Town Clerk with Rent Smart Wales rather than in the trust’s name. Solicitors had been engaged to resolve the issue.

The response also says that Counsel from a London Chambers had been engaged and the Charities Commission contacted following the sale of The Armoury Sports Centre after it was discovered that the lease for the building was invalid.

The documents also reveal that investigations are ongoing to determine whether large sums of money drawn down from the Burgess Lands Trust by the Town Council would need to be repaid. The council is questioning whether all the grants of over £100,000 met the legal terms of the trust agreement.

The report shows that in the 2019 budget £28,603 was drawn down for Town Hall costs; £9,934 for The Market Hall; £9,900 for the Armoury Sports Centre; £20,900 for toilets; £3,850 for the Tourist Information Centre; £14,300 for the Day Centre; £6,050 for administration and management and £16,500 for general council costs.

MyWelshpool has seen the annual report of the Burgess Lands Trust provided for March 2021 which confirms that £400,000 worth of investments may be lost.

The report includes: “Concern remains about the investment in asset-backed bonds. It is now fully expected that the funds invested in Westway Holdings and Future Fuel will be lost.

“The former was shown as a loss in the accounts for the year ending March 31 2020 whilst Future Fuel has been impaired in these accounts.

“Renewal Energy Waste Solutions remains in business but has again deferred payment of interest until December 2022 although it maintains that it will be rolled-up with the capital.

“From the total investment of £400,000 in these bonds the Trust has only received some £29,938 in interest since 2018/2019.

“A Serious Incident Report was made to the Charity Commission where the Trust stated that to deal with this situation it has agreed inter alia to repay £20,000-£25,000 a year from income to replace that lost and also to move to being a Charitable Incorporated Organisation.

“The Charity Commission responded noting that "based on the information you have provided, which we assume is a full and frank disclosure of the relevant facts, it appears that the trustee is now dealing with the matter appropriately and responsibly."