No one likes us. We don't care. The battle for new bermondsey
For several years Lewisham, with their development partner, Renewal, have been trying to start redevelopment of a large part of industrial London in Deptford. Now the scheme is going off the rails after the council and Renewal have faced an increasingly well organised opposition from the fans of Millwall, which occupies land at the heart of the redevelopment area, “New Bermondsey”.
Millwall football club lies on the border between Deptford and Bermondsey. When the club moved to the area they currently occupy 117 years ago this was the centre of London’s global maritime economy. Today, the docks are no more, but the area is still a thriving hub of activity; workshops and small industrial companies in areas like Deptford are the backbone of London’s industrial economy.
However, London’s role in the global economy is increasingly, it seems, to build luxury housing to sell to anonymous international elites, and that economy is simply incompatible with the type of small scale industrial production that exists in areas like Deptford.
The term used by local government when promoting such schemes is ‘regeneration’, a term loaded with the promise that local communities will stand to benefit. In reality these communities often find themselves excluded: priced out and forced out.
Lewisham council has put forward plans for a comprehensive redevelopment of a large piece of land they call New Bermondsey. The promoters of the scheme say that the project will deliver 2,400 new homes and 1,500 new jobs. The scheme will include just 12% affordable housing, much less than what is needed in the area by the local community.
Part of the project includes land owned by Millwall Football Club, including their youth club and carpark. The youth club, the Lions centre is just meters away from the Millwall’s stadium, the Den.
To ensure the redevelopment proceeds, Lewisham is seeking to use their powers of compulsory purchase. That is where the council can force landowners to sell their land to them.
The supporters of redevelopment claim that they want to make the area into a sports hub, and have recruited some high profile sportspeople to a charity they have founded to promote the scheme. However, that claim seems to be based on a fiction, as it was recently revealed that a multi million pound grant that the charity had said they had been pledged by Sports England simply didn’t exist. Millwall say that if the compulsory purchase goes ahead they may be forced to move out of London altogether. Losing a professional football club is unlikely to do much to promote the interests of sport in “New” Bermondsey.
A land war in “New” Bermondsey
Millwall deny opposing the principle of regeneration. In fact, they say that they could take forward part of the scheme that is on their land, in a way which will allow them to stay. But Lewisham insist that the only way this scheme can be delivered is if all the land is in the hands of just a single owner – and they are seeking to use their powers of compulsory purchase to make that happen.
That single owner is not the council. A ‘development partner’ called Renewal has been selected by Lewisham, to whom the council will transfer the land to after compulsory purchase. In order to assist Renewal in delivering this vital service of getting Lewisham council to force landowners to sell their land to them, the Greater London Authority is providing the company with a £20m loan.
Given the power used by the council for the benefit of Renewal, it was inevitable that questions would be asked. What special expertise do they bring? what makes them a worthy partner, or indeed crucial to the success of the project?
The first thing to note is that Renewal are not a property developer. They have no track record in taking on a major redevelopment project such as New Bermondsey and are indeed not even planning on building anything at New Bermondsey themselves.
Instead, as is set out in Lewisham council’s Compulsory Purchase Order documentation, once Renewal gets control of the land, they will be selling parcels of it onto other housebuilders, who will then go on and build. The sales will be in phases as the development progresses.
Renewal may keep a stake in the development. Or they may not; the CPO documents are openly non-committal on this point.
The conclusions to be drawn from the Lewisham CPO documents are clear and disturbing. The only real value which Renewal is contributing to the project is the potential to act as a single land owner.
Lewisham claim that Renewal have been buying up land in the area for 10 years and so are the only organisation that is serious about taking forward comprehensive development. However, Lewisham council’s own documents show that Renewal only own a small portion of land in the area (the area coloured bright green). The vast majority will have to be bought. It is effectively the council which is creating that single land owner through compulsory purchase – and then handing the profit to Renewal.
This would be a questionable transaction, regardless of the parties involved. But the background and financial structure of Renewal raise some very serious questions for Lewisham.
The founding directors of Renewal are individuals with long associations with Lewisham Council. One, Mushtaq Malik is a former Chief Executive of Lewisham Council, the other, David Sullivan, is the former Mayor of Lewisham council. Clearly both are likely to have long standing relationships with people who still work at the council.
The potential conflicts of interest that exist around this deal are so blindingly obvious that any reasonable public authority would have to insist on full transparency over all aspects the deal if there is to be any trust that they are acting in the public interest.
But that is not what is happening here. Instead no one, not even Lewisham council themselves can really know for sure who they are dealing with, and who is benefiting from the deal, because Renewal are owned by a series of offshore entities, including a trust in the British Virgin Islands.
In 2013 Lewisham commissioned auditors PwC to conduct financial due diligence on the Renewal Group. They found that:
“Renewal Group Limited (registered in the Isle of Man) is a 100% subsidiary of Renewal Holdings Limited (also registered in the Isle of Man) which in turn is owned on a 50/50 basis by Incorporated Holdings Ltd (IHL) (registered in the Isle of Man) and Independent Advisors Incorporated (IAI) (registered in the British Virgin Isles).”
Renewal confirmed to PwC that IAI is ultimately controlled by a family trust and that IHL is ultimately controlled by a charitable trust. But all the information was unaudited, which mean it had not been independently verified. Lewisham and PwC simply had to take Renewal’s word for it.
The threat of financial secrecy
People often assume that offshore is just about tax. It isn’t. Offshore holdings provide not only low tax rates, but high levels of financial secrecy. Many offshore companies (including the UK’s own limited liability partnerships) allow their owners to hide their identity, and to hide any payments they are making to third parties. As the Panama Papers laid bare, that secrecy, and the resulting potential for corruption and criminality, can be as powerful a motive as tax for many people setting up offshore holdings.
This is not just about hiding from public scrutiny either. Financial secrecy is a nightmare for professional financial investigators and the police who also find it difficult to find out what is really going on with an anonymous company. Anti-corruption campaigners and the Tax Justice Network have campaigned for years to end anonymous companies, calling for all companies to be subject to rules which compel them to disclose publicly who owns them.
Let’s be blunt. If Lewisham was a developing world government, outside observers would not hesitate to highlight the conflicts of interest and the potential for corruption. The same people would be calling for a thorough investigation of Renewal and Lewisham. They would be right to do so.
We have no reason to suspect that Renewal are engaged in any unlawful behaviour, and nothing in this article should be taken as a suggestion they are. But regardless of the actual motivation and ownership in Renewal’s deal with Lewisham council, that deal is fundamentally flawed, and should be rejected.
Fighting fraud and corruption is not just about catching villains in the act. It is also about ending the opportunities for secrecy that allow financial crime to flourish. This deal seems to be structured in a way that creates the maximum possible risk of financial impropriety.