EXCLUSIVE

THURROCK Council stands on the brink of another significant financial and reputational failure that is likely to cost the authority hundreds of thousands of pounds - and has possibly cost millions in the past if a trail of incompetence and lack of diligence can ever be unlocked to tell the truth.

Thurrock Nub News can exclusively reveal that the council's showcase relationship with housing finance and homes provision partner Phi Capital Investments has been built on shifting sands of deceit, untruths and bureaucratic incompetence.

The relationship is now effectively in tatters after the HM Revenue & Customs (HMRC) filed a petition to wind up Phi Capital Investments. A hearing is due to take place next Wednesday (22 January), at the Royal Courts of Justice when Nub News understands the truth behind the true state of the Woking-based company will be unveiled.

Thurrock Council was unaware of the winding up order, until told by Thurrock Nub News' editor today. This afternoon it issued the following statement: "We have been made aware by Neil Speight that a petition to wind up PHI Capital has been issued.

"The Council has acted immediately on that information to freeze further payments for the work PHI Capital was undertaking for the Council. The Council will be taking further advice on this matter and taking all necessary action to protect the Council's interests."

Mr Speight offered to meet with the council's senior leadership team today (Friday, 17 January) to share information that he has uncovered and offer the council the chance to explain its situation, but the offer was declined by the council's chief executive officer Dr Dave Smith.

Effectively, despite a public façade of new offices, high-flying staff and a high-profile marketing campaign which has attracted contracts with other councils including Torbay and Hastings. The review of their finances shows a business that has not made a profit for a long time; Nub News believes questions should have been raised how they could afford it all.

Other councils, including Torbay have strick deals with Phi after receiving positive referances from Thurrock Council. Phi MD Omar Al-Hassois was among those at a launch event in Tobay, saying:

Sources within the financial sector of the housing market, who have contacted Thurrock Nub News in the wake of our persistent challenges about the validity of the Phi deal, say there is history litany of financial mismanagement in the company which passes or borders on fraud. Effectively the allegation is that the company has been trading while insolvent or wrongfully trading, both which carry serious consequences.

Phi Capital has an associate company Phi Works, which it used to carry out its home regeneration works in Thurrock and with other councils. Following the insolvency petition by HMRC, it seems Phi intends to carry on providing these services through new companies formed in the last fortnight, PHI PROPERTY ACQUISITION LIMITED (16166674) and PHI TECHNOLOGY SOLUTIONS LIMITED (16191210). It calls into question also the viability of Phi Works, given it is owed 2.2m by Phi Capital Investments.

Nub News has been told that previously the transfer of funds between the two, which would have included money from Thurrock Council paid to Phi for materials and labour on Thurrock projects, was not passed on – meaning delays, or possibly sub-standard work on Thurrock properties. Questions remain whether all the properties contracted to Phi which have been paid for have been delivered to standard and on time.

What Thurrock Nub News has discovered is that Thurrock Council has been treated as the 'cash cow' by Phi, because it has paid all its invoices almost instantaneously and without any challenge, and has not instituted a practical process of due diligence – nor chased up money that it was owed back by Phi.

Nub News believes this figure currently tops £200,000.

Phi has been engaged by the council to source properties that are then bought and refurbished by its own team of housing contractors. When the properties are sourced, Phi supplies Thurrock Council with a purchase cost, fees for handling conveyancing, cost of refurbishment and managing the refurbishment that need to be carried out to bring the property up to the council's standards. Through their project management fees – effectively Thurrock paid them to mark their own homework.

That can include complete refitting of properties and the installation of such things as new boilers or central heating – all detailed in the 'scope' and recorded on their property platform, "IRIS Housing Portal". The council is billed in full for the work. An obligation then lies with the council to carry out diligence on the refit, check what work was actually carried out and then claim back the monies it has paid out for work carried out.

Around 150 such buildings have been purchased, and Nub News understands only in a handful of properties has there ever been any diligence and we have been told that the council has never claimed any money back – even though thousands of pounds of work has not been carried out.

The total cost of this to Thurock Council may never been known but it is estimated it runs to six figure amounts – if not more.

And the scale of Thurrock Council's lack of diligence is even more shocking. We have examples of two major purchases by the council in recent times of blocks of flats.

Jacqueline Court

One of them is the 16 flat Jacqueline Court building in Corringham. In June 2023 Thurrock Nub News highlighted the £3.5 million purchase of the brand new unoccupied building as a matter of public concern. We believed then that the purchase involved Phi Capital, only to be told by then housing portfolio holder Luke Spillman that Jacqueline Court was not part of the Phi Capital deal and it was a direct purchase financed from the authority's Housing Revenue account reserves.

However, Thurrock Nub News has seen evidence that the transaction was managed by Phi, who later overcharged Thurrock for property reports, that it never commissioned, while most of the reporting would have been provided by the developer. These overcharged costs stand at more than £20,000 – all profit for Phi Capital.

Because it was building up a significant theoretical reserve of cash from overpayments by Thurrock Council, Phi needed to theoretically balance its books. In reality, it appears the money was actually being utilised to pay for their expenditures of hires, an Indian software company and a Christmas party at Somerset House.

Thurrock's cash used for party time by company that had already been subject of winding up order

A similar scam is believed to have been carried out of the purchase of another private build, a new block of flats on St Margaret's Avenue in Stanford-le-Hope, bought for £3.5 million in October 2023.

Other councils that deal with Phi have far more stringent methods of checking invoices and payment methods, with one taking up to 72 days to settle invoices – only after the work has been checked and verified. Limiting their exposure to overpayments.

In November, Thurrock Council's cabinet approved a deal with Phi for it to purchase ten homes on behalf of the council. The cost to the council for Phi's services was more than £200,000.

Nub News' editor, Neil Speight, is also an independent councillor, representing Stanford West ward. Knowing of the deep and distrustful nature of Phi Capital – and having produced many stories about the company questioning the council's decision-making over Phi - he attempted to 'call in' the decision and have it reviewed.

He questioned the validity of the deal timeline and said the council could obtain better value by dealing directly in the local housing market.

That call in request was heard by the council's Place overview and scrutiny committee on Tuesday, 3 December but after hearing from council officers that it was imperative the deal was rushed through to secure associated government funding, and that the council had to work through its own procurement rules, it had no option but to select Phi Capital.

Mr Speight's request for a call-in was rejected by members, including his own independent group colleagues Cllrs Gary Byrne and Roy Jones, who said they were influenced by the statement that Thurrock would lose the money if it could not fulfil the deal in time.

Labour's portfolio holder for housing, Cllr Mark Hooper, told the meeting: "I think this is a good news story for Thurrock. One of the main issues for us is the timeline.

"The funding became available in March. We bid for the funding and we were successful in getting £1.8million. The funding wasn't made available until September and then it became a real issue around speed because we have to spend this money by March 2025 so time was of an essence.

"To go through a tender process takes about six to eight months and we don't have that time."

Following today's news imparted to Thurrock Council it remains unknown if the deal for the ten homes will now go through.

However, the statements of senior officers and Cllr Hooper about the need to go through proper process, and that it was obliged to go to tender on deals, has now been brought into contention, as investigations by Nub News appear to show no formal procurement deal according to the council's recognised processes and rules, has ever been made with Phi Capital.

Instead, Nub News understands an informal terms of engagement agreement was struck with Phi by former assistant director housing and development Ewelina Sorbjan. There is significant doubt about the validity of the agreement to pay Phi what amounts to hundreds of thousands of pounds on housing deals, brokered outside a procurement process.

Ms Sorbjan left the council last year to work for Lumensol Ltd which is a multi-disciplinary property and asset management service similar to Phi Capital

An important question remains for Thurrock. Nub News understands Thurrock have 12 months of warranty on the refurbishment works provided by Phi Capital investment and its companies. Now they stand on the brink of winding up. Who covers the cost of any issues? Will the council be left paying for these issues alongside the lost hundreds of thousands.

The petition to wind up Phi was placed with the High Court on 15 November. In November Thurrock Council paid Phi a total of £149,746.15, including £33,992.39 on 20 November. It is not yet known what the council spent, if anything, with Phi in December or this month.

COMMENT by Thurrock Nub News

This latest, shameful, catalogue of Thurrock Council's inefficiency has one significant difference to much of what has gone before.

While the litany of potential dodgy transactions with Phi stretches back to beyond government intervention in 2022, much of what is detailed above happened on the 'new watch'.

It came after the residents were promised that a commissioner-led, government-supported regime of top-class officers, senior and experienced local government professionals and a tight rein on spending with every outgoing transaction monitored and scrutinised, meant that the dark and dodgy days were done.

It transpires that has not been the case – and to make it worse, this news platform through its stories – some of them written by the BBC's Local Democracy Reporting Service – tried to raise some red flags.

We were ignored and we were mocked by some.

Since day one, the Phi Capital Investments deal has reeked or impropriety. And this report has not touched on the council's relationship with financiers, the Topland Group. Who potentially stand to lose millions with the collapse of Phi.

There's an old adage. If something looks too good to be true, it probably is.

That is the case with Phi and now the chickens have come home to roost – embarrassingly so for Thurrock Council, which has been beaten to the punch by HMRC.

Yet again the residents of Thurrock have been shamefully let down by the sloth, incompetence and a dilatory attitude to diligence by council officers and a lack of effective challenge by councillors.