The decision of the ruling Tory administration of Croydon Council to treat J Laing Integrated Services as its preferred bidder for the award of the Library contract has raised a number of concerns about its relationship with the Laing company group.
A member of the pubic Alan Crawley submitted a question to the 1 July Council meeting ‘Was the Council Leader or any other person who signed the contracts with John Laing Ltd, aware of the tax arrangements of its parent company Henderson Group; and can any contract that Croydon Council has with John Laing Ltd be sold by John Laing Ltd to John Laing Infrastructure Fund Ltd?’ After the Council meeting I submitted two Freedom of Information requests.
So what do we learn from the answers?
Council Leader Mike Fisher explained that ‘The Council does not contract with any entity called John Laing Ltd’ and that ‘CCURV arrangements are with John Laing Projects & Developments (Croydon) Limited & John Laing PLC (as guarantor). The proposed libraries contract is with John Laing Integrated Services Ltd.’
Do note that Fisher ignores the reference to the fact that the Laing group is owned by the Henderson Group, an Anglo-Australian equity fund, which Sky News reported back in April was considering selling the Laing group.
Fisher explained the relationship with Laing in more detail.
· ‘The Council has a partnership contractual relationship with John Laing Projects & Developments (Croydon) Limited (‘JLPDC’) through CCURV Llp where the Council and John Laing are 50/50 equity partners. John Laing PLC acts as guarantor to JLPDC’s obligations in the CCURV partnership.
· Under the CCURV arrangements, JLPDC may transfer its interest to a group company with the consent of the Council, such consent not to be unreasonably withheld where the transferee has similar resources, experience and a consistent approach to partnership as John Laing Projects & Developments Croydon Limited). A group company in this context comprises any of the subsidiaries of John Laing PLC.’
The Proposed Library Contract
· ‘The Council has another potential contractual arrangement with John Laing Integrated Services Ltd (‘JLIS’) through the proposed contract for the provision of library services the procurement of which is in the final stages. The Council as part of this procurement process took closely into account the financial viability, legal standing and status of JLIS. Such checks are undertaken as part of the ‘pre qualification’ stage of a procurement process and companies that do not fulfil the necessary criteria are unable to take part in the substantive procurement. The process is rigorous. However the tax arrangements of companies operating within the UK are the concern of Her Majesty’s Revenue and Customs.
· It is not appropriate for the Council to comment on the details of a contract being negotiated with a third party which is still the subject of a procurement process. However, contracts that the Council has with external companies (particularly for larger scale projects) typically contain ‘change of control’ provisions dealing with the ability of the contractor to assign its shareholding to affiliated parts of its company group. These are standard contractual provisions and the proposed contract with JLIS will be no different in that regard. Similarly it would be possible for a contractor to ‘assign’ the benefit and obligations of a contract to a third party subject to the Council consenting to this and being satisfied that any such assignments is in accordance with procurement regulations. In either of these scenarios, the contracts are drafted in such a way that the quality of the service and their obligations of the private sector to work to the contract are unaffected.’
Potential Sale of J Laing plc
My Freedom of Information request stated:
'Given the media reportage that its parent company may sell J Laing plc:
1. Has the Council discussed with the former the inclusion of a condition of sale requiring the new owner of J. Laing plc to honour the guarantor from J Laing plc to JLIS under a library contract?
2. What is the result of the discussions?
3. If the matter has not been raised why not and it is intended to raise it?
The answer is as follows:
‘John Laing Public Limited Company is not a guarantor to John Laing Integrated Services Limited under the arrangements put in place between John Laing Integrated Services Limited and the Council under the Council's library management contract.’
If JLIS is not being underpinned by its parent company what happens if it finds it cannot operate the library contract within the contract sum, or it gets into financial difficulties in respect of its other contracts?
Potential Conflict of Interest
My second Freedom of Information request was as follows:
‘Given the fact that Councillor Pollard suggested at the Scrutiny Committee meeting on 11 June that the following question raised in public contribution to debate was worth investigating: ‘As the Mayor and Burgesses of Croydon are joint partners with John Laing plc in the CCRUV, does a conflict of interest exist for Councillors in respect of considering the library tender bid from John Laing plc’s subsidiary John Laing Integrated Services?’ What is the legal advice obtained on this matter?’
The answer is as follows:
‘The Council can confirm no specific legal advice was sought or given in relation to this matter.
However, in accordance with the Council’s duty under s.16 of the Freedom of Information Act 2000 to provide advice and assistance I am able to advise as follows:
· John Laing Integrated Services (JLIS) is a separate legal entity to John Laing;
· All bidders invited to tender for the contract were required to sign an anti-collusion certificate in the form attached;
· As part of the tender documents the Council “reserve the right at their sole discretion to disqualify or reject an Applicant where: there is a conflict of interest arising between either Authority and the Applicant and/or any Relevant Organisation”.
· As part of the Council’s Constitution the Members’ Code of Conduct requires the declaration of “any private interests, both pecuniary and non-pecuniary, which relate to your public duties and must take steps to resolve any conflicts arising in a way that protects the public interest” http://www.croydon.gov.uk/contents/departments/democracy/pdf/599085/November_2012/part05i.pdf ;
· Consideration of the tender from JLIS was undertaken by an evaluation team of officers, who made a recommendation for the appointment of JLIS as the preferred bidder and award of the contract, to the Cabinet Member for Children, Families and Learning who had been given a delegated authority from the Leader of the Council to take the decision;
· No pecuniary or non-pecuniary interests regarding the appointment of JLIS have been declared by the Cabinet Member authorised to take the decision http://www.croydon.gov.uk/democracy/dande/ethics-committee/members-interests/;
· No Members of the Council are on the Board of John Laing or CCURV.
It is considered that the above matters provide the necessary assurances that no conflict of interests arose and that, for those reasons, specific legal advice was not required.’
Note 1: The answers to the Freedom of Information requests will not be posted on the Council website until September, Joe Stock, Data Protection/FOI Support Officer in the Interim Chief Executive’s Department (Business Support Service; Complaint Resolution & Information Management Team) emailed me on 25 July to explain: ‘We aim to upload redacted versions of FOI responses to our website 2 months in arrears, so I anticipate that your responses will be on in September.’ Clearly if it wins the local elections in May Labour should promise to end this delay on posting up future FoI replies.
Note 2: The Council does not make understanding easy. The CCURV website talks about John Laing and gives a weblink to John Laing Plc’s website: http://www.laing.com. So is it any wonder that members of the public will assume that the partner is John Laing Plc not one of its subsidaries?