A COURT has heard that Thurrrock Council paid a flamboyant financial entrepreneur £5 million in commission for setting up its deals to buy bonds in solar energy farms.
Liam Kavanagh, 43, who owns a fleet of supercars and travels by private jet, sold the ‘green bonds’ to the council – who failed to pick up on the fact that a report on them showed they were ‘blighted by defects’ and were ‘flawed assets’.
The council has defended its position and says the investments have proved profitable and have raised £65 million which it has invested in local services.
However, experts have warned that the key moment will come when the bonds are redeemed as the problems with the solar farms may reduce their value. The council has borrowed £420 million to buy into the solar power market – part of an overall debt approaching one billion it has accrued in its policy of financial investment to raise cash.
There are questions over the prudence of Thurrock’s strategy. Its exposures to the bond market are not only substantial but are understood to run until 2027 and 2028. Yet much of the borrowing that supports the investments is short term.
A peer review of the council’s finances by the Local Government Association in late 2018 warned of “concerns regarding the scale and leverage of investments”. It asked the council to “carefully consider whether the risks associated with your investment strategy are fully recognised and are as well managed as they could be”.