Thurrock Council has accused businessman Liam Kavanagh of misusing £150m of funds it intended to invest in solar farm assets, spending the finance “largely for his personal benefit”, court documents have revealed.
In December 2022, the authority issued a section 114 notice as a result of an estimated deficit for 2023/24 of £452m. Its financial problems mainly stem from its dealings with businesses owned by Kavanagh, including Rockfire Energy and later Toucan Energy, who used the council’s funds to buy UK solar farms.
High Court papers, made public this week, have revealed that the authority has issued a claim against Kavanagh and his company Rockfire Capital, which went into voluntary liquidation in 2020. This claim is in relation to around £400m the council invested in bonds issued by Kavanagh’s company to secure a portfolio of solar farms between 2017 and 2020.
‘Fraudulent misrepresentations’
In the three years, Thurrock invested in bonds which saw Kavanagh’s companies buy a portfolio of 32 solar farms, known as the Miramar portfolio. The council invested in bonds relating to this portfolio on four occasions.
Thurrock Council claims that following its initial investments in 2017 totalling £268m, its further investments in 2018, 2019 and 2020, totalling £130m were “induced by fraudulent misrepresentations”, upon which the valuations of the solar farms were based.
In the court documents, Thurrock Council claimed that Kavanagh provided a third-party valuer, Association for Public Service Excellence, with electricity pricing assumptions of £61.45 per MW, which he “knew that the Miramar Portfolio would not realistically achieve”.
An email sent by Kavanagh included in the court documents wrote: “You can call me when you want but we will issue a model is an assumption of power price at £62.
“We are not responsible for the investment decision of others neither do we undertake DD on others behalf.. power prices go up and down valuation goes up and down..
“Please remember that this is a very, very long term play with the council; they never want the portfolio sold and are in for the long term.. if in any particular year due to prices or breakdowns [or] the sun doesn’t shine it won’t be a problem for them to accommodate drops in income”.
Kavanagh went on to write that “these funds along with the existing” will be used to create a “new family investment office” and used to “create wealth for years to come, this has always been my plan”.
‘Largely personal benefit’
The council claims that the further three tranches of funds invested in 2018, 2019 and 2020 were used “largely for his [Kavanagh’s] personal benefit”, including the purchase of a £9.1m Bombardier private jet, a £13.7m yacht and a £3m property in Mallorca.
In a statement to the Financial Times, Kavanagh denied the allegations and added that he had asked the High Court to throw out the claim on the basis that the court did not have jurisdiction.
It was first revealed in March that Thurrock Council made a High Court fraud claim against Kavanagh and his firm.
Thurrock Council sold its portfolio of solar farms in January to Schroders Greencoat to try and reduce its debt of over £1bn.
This followed the Financial Reporting Council opening an investigation into the conduct of one of its members at Thurrock Council concerning the financial management of the authority’s failed investment strategies.
The financial regulator is investigating the accountant’s conduct in complying with governance, reporting, regulations and professional standards relating to Thurrock Council’s operations and investment activities for the financial years ended 31 March 2018 to 31 March 2022.
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