THURROCK Council appears to be set to sue up to 23 other councils on the premise they misled the borough authority into investing money by not undertaking due diligence.

Thurrock's disastrous borrowing to invest solar energy racked up a debt of more than a billion pounds when its investments in companies run by rogue businessman Liam Kavanagh went sour went sour, but in a bid to claw back some of the lost money Thurrock is effectively saying other councils were at fault for influencing where the council invested the money it lost – therefore they want them to share in the loss.

Thurrock Council borrowed hundreds of millions from other local authorities to invest, and having lost that money has had to borrow more than £800 million from the government to pay back the loans, rather than imposing losses on the other councils.

The story has been broken today (Thursday, 7 November) in a Local Government Chronicle (LGC) exclusive which says Thurrock Council is planning legal action against 23 councils that are members of the Association for Public Service Excellence (Apse) to recover up to £54m lost in solar farm investments. Some of those councils may have been those who made loans to Thurrock.

Thurrock states in its letter of claim, which has been seen by the LGC, that it invested in bonds worth £398m related to a group of solar farms known as the Miramar portfolio between 2017 and 2020, based on valuations prepared by Apse.

Based on these valuations, it paid money to "companies within a group that was ultimately owned largely by Liam Kavanagh (the Rockfire/Toucan group), in exchange for bonds issued by a company within that group", the letter added.

However, the council has accused Apse of making a "number of errors" in preparing these valuations. On that basis, it asserts claims against Apse "for damages for negligent misrepresentation".

It's a decision by Thurrock that the leader of one of the lender councils has described as 'scandalous'.

Apse chief executive Mo Baines has written to affected councils advising them of Thurrock's intentions to issue legal proceedings.

The letter, also seen by LGC, states that because Apse is an unincorporated association, Thurrock's claim is "actually being advanced against [its] member councils".

The organisation disputes the financial value of this claim and Thurrock's argument that it must seek to recover funds from the organisation and its members because of its best value duty.

Mo Baines says Thurrock's action is against other councils who are 'entirely without blame'

Apse's letter to members says that while Thurrock suggests that their claim is between £42 and £54m, Apse's view is that the "issues of quantum" in the matter are about £17.6m.

Addressing the matter overall, the letter adds that Apse has "vigorously" disputed Thurrock's best value duty argument.

Ms Baines says Thurrock's action is against other councils "who are entirely without blame and yet face the cost burden imposed by Thurrock upon them".

Apse's national council members say they are "appalled by Thurrock's approach to engage in mass litigation against other local authorities", saying the risk profile to these councils "will no doubt increase as a result of this avoidable action".

It expresses regret that the matter "has gone beyond all of Apse's strenuous attempts to find a resolution and avoid embroiling its member councils in this decision by Thurrock's political leadership and the appointed commissioners".

The chief of one of the 23 councils affected described Thurrock's approach as a "scandal", saying "It beggars belief that a council that clearly lost control of its affairs is now trying to deflect that onto others. It's a scandal at a time when everybody is already struggling."

They also questioned how Thurrock's commissioners, appointed by the government to oversee the running of the authority, had backed the approach, saying: "It does raise questions about the nature of that intervention."

In August, court papers were published which confirmed Thurrock is suing Mr Kavanagh and Rockfire Capital Ltd for "deliberately misleading" the authority to inflate the value of investments.

Thurrock Council's Labour leader Cllr John Kent leader says his authority will leave "no stone unturned in its attempts to recover public money" that was lost through it "well publicised poor investments".

He said: "Regrettably, the advice that Apse provided on valuation (relied upon by the council) was wrong and gave the council a confidence in its decision to make its investments that did not reflect the reality of the situation. This in turn led to a course of events that cost Thurrock residents millions of pounds."

Cllr Kent said that it was "extremely concerning" that Apse did not have in place "appropriate safeguards" to limit the financial exposure to its member local authorities.

A statement by Thurrock Council to Thurrock Nub News says: "With one week to go until the deadline for legal claims against APSE to be issued, Thurrock Council is urging APSE to urgently agree a way forward with its members following months of negotiations.

Rogue trader Liam Kavangh's got hundreds of millions of pounds of investment from Thurrock, sanctioned by its senior finance officer Sean Clark.

"The claim is in relation to the valuation by APSE of an investment made by Thurrock with an individual called Liam Kavanagh and companies associated with him operating under the name Rockfire Energy. The council has been in discussions with APSE management since last September, but the clock is ticking on a decision as the legal claim must be submitted by 19 November.

"APSE has been aware for many months that a potential limitation period accrues on 19 November 2024. Therefore, unless a standstill agreement can be entered into before that date, Thurrock Council will be compelled issue a claim.

"Whilst Thurrock Council remains committed to seeking a constructive solution to the issues (including entering into a standstill agreement), APSE has only properly engaged with these issues belatedly. Therefore, it may need to take steps to preserve its claim by issuing a claim and applying for a stay.

"The council believes that valuations of the solar assets undertaken by APSE which they allowed the council to rely on were negligent and overvalued those assets.

"As a consequence of relying on those valuations the council did not have adequate security for the value of the investments made with Liam Kavanagh and companies within the Rockfire group between 2017 and 2020.

"It is the council's view that this has led to significant financial losses to Thurrock with negative impact on taxpayers and service users. While the council's primary focus is on recovering money from Mr Kavanagh (and his associated companies) who sought to line his own pockets from the public purse, we also have a duty to pursue those whose actions led to the poor investments.

"Normally where organisations carry out commercial valuations, they ensure that there is sufficient insurance in place to cover potential liability. If this had been in the case here, the council would have been able to seek recovery from APSE`s insurers and not other members of the local government sector.

"As a council in statutory intervention, Thurrock has a fiduciary duty to taxpayers, to pursue all action that could see some of the lost investments brought back to the borough. The council has not taken this decision lightly and it is based on detailed analysis of the evidence and leading counsel's advice.

"Through its legal representatives, Thurrock first wrote to APSE's executive in September 2023 notifying them of the council's claim, and has been in correspondence since and have also met with members of the executive.

"If a standstill agreement cannot be reached, the Council will issue proceedings but would seek a stay so that other means of recovery can be pursued before any steps are taken to progress its claims against APSE members. If sufficient recoveries are made, the council will not need to pursue its claim against APSE's members."