Image by Szili via Flickr
Just down the road from the home of Sherlock Holmes, the creation of a Scottish born Irishman, another (Northern) Irish creation presents a case worthy of the attentions of the aforementioned Holmes.
Worthy of scrutiny, it involves magic (how do you pull money out of an empty hat?), ‘reverse economics’ (how do you buy something and sell it for half the price and still make a profit?), and intrigue. It also lends itself to the types of practices one might associate with certain ‘organisations’ (don’t mention the word ‘Family’) common of 1920’s New York City or Chicago.
2-14 Baker Street (10 Portman Square), Central London. The once glorious 1950’s building is no more. Pulled down. Demolished. Ashes to ashes and all that. The former home of BDO Stoy Hayward and the infamous, and oft fondly remembered, Irish managed restaurant, ‘School Dinners’. A restaurant perhaps better named ‘Sinners Paradise’!
But the intrigue starts in 2005 when British Land sold the building to McAleer and Rushe for £57.2m. McAleer and Rushe were overstretching themselves on the deal but ingratiated themselves with a friendly manager from Bank of Ireland. It was Bank of Ireland who performed the magic – money from nothing. Deal done. But not ‘happily ever after’. At least not for Bank of Ireland and not for the Irish State.
Trumpets boomed, the peacock strutted and the London construction-related media exhibited excitement. McAleer and Rushe were on the lips, in the headlines and full steam ahead. But not all was as it seemed. Public image is one thing, but the bottom line is money. And McAleer and Rushe simply did not have that. Not even nearly enough. Eventually the cards started to fall. With the loan heading towards NAMA, speed became the essence. A race.
The finishing line witnessed the ‘reverse economics’. McAleer and Rushe sped towards the line in 2010 to a waiting British Land standing with £29m. McAleer and Rushe won the race and their prize was a forfeit of nearly £30m. 2-14 Baker Street (10 Portman Square) going back to the 2005 seller for half the price – and despite Central London’s commercial property market largely remaining unaffected by valuation woes elsewhere.
And then the intrigue. The Bank of Ireland loan goes to NAMA becoming an Irish State asset. McAleer and Rushe did more than forfeit the £30m. There was a second prize – but one that took McAleer and Rushe outside the NAMA debt. In a move that many a poker player might admire, McAleer and Rushe were now a ‘partner’ of British Land and would share the profits of the development of 2-14 Baker Street (10 Portman Square). But it did not stop there. There was a third prize. With declared net assets of just £5m, losses of £11m and borrowings of £70m in 2010, McAleer and Rushe were also awarded the contract to develop the site. By all accounts a firm who were technically bankrupt were handed the cream on the cake as well as a large slice of the cake.
Might there be even a fourth or a fifth prize? How many rabbits can be pulled from a single hat? Yes, there was, in fact, a fourth prize. This one went to the directors of McAleer and Rushe. Money. Lots of it, in fact – with one director gaining over £100,000 in his take home package. Despite their winnings and the fact that the 2-14 Baker Street (10 Portman Square) race represents the single best deal in McAleer and Rushe’s history – the company’s annual report, filed in March 2011, fails to acknowledge the ‘race’ and accompanying benefits among their ‘Principal Activities’.
Demonstrating yet more magic, intrigue and ‘reverse economics’, despite declaring losses of over £11m, turnover down 45% over the previous year, £51m of term loans and £10m of overdrafts repayable on demand, the directors lay claim to all being rosy in the garden with the statement “.…the construction activities continue profitably”. Not surprisingly, the directors go on to declare that analysis of key performance indicators are not necessary! Not surprisingly too is that KPMG, the auditors assert “significant doubt on the ability of the group to continue as a going concern.”
And all of this is likely to be relevant to recent events at 2-14 Baker Street (10 Portman Square). Demolition started in January 2011. Despite Westminster’s widely acclaimed ‘Westminster Considerate Builders Scheme’ the demolition of the original building appears to have been done without proper compliance to both the relevant standards and to regulatory requirements including Health and Safety. It is noteworthy that in the annual accounts filed by McAleer and Rushe in March 2011 the directors set out their obligations on Health and Safety as pertaining only to their staff and not the Public.
The 2-14 Baker Street (10 Portman Square) site, during the major part of the demolition, has not been cordoned off or secured. The site has been freely accessible to members of the public including young children. Despite the substantial size of the site, and multiple demolition equipment in use – dust and particulate control has been one man with a garden hose – “because if the site becomes soggy or inundated with water it will become muddy”, according to one person working on the site.
Neighbours have been complaining since work began of excessive noise, dust and vibrations. Concerns on asbestos have not been responded to. Residents have regularly been prevented access to their homes – or have been unable to exit from them. Children living in the vicinity of the site have been put at risk. The excavated site has been unguarded and there is a noticeable lack of staff on site. Local residents have not been included in planning around the works, assurances on undertakings have not been kept to, and the impact on quality of life and ‘quiet enjoyment’ remains substantial for those affected.
Worryingly, McAleer and Rushe appear to believe that their actions should be by their determination only – with scant regard for official bodies and no regard for members of the public.
‘Promises are made to be broken’ seems to be the order of the day. Written and verbal assurances to local residents about things as basic as unimpeded and safe access to homes, site security and dangerous practices have not materialised in practice.
On the 26th of May one resident of Baker’s Mews was prevented access to his home in his car by a substantial sized trailered truck to the front and then additionally blocked by other heavy duty trucks belonging to the site from behind. Unable to move forward to access his home and unable, for a time, to reverse out of the street he was subject to threats and intimidation by the site staff including direct employees of McAleer and Rushe. This included threats against property and threats of Police action. And this to someone being physically prevented from accessing his home. McAleer and Rushe were solely the ones at fault. See video.
The tenant is now considering legal action against both McAleer and Rushe and against British Land as the site owner. The threats and the nature of the incident on the 26th May were such that the family of the resident were not comfortable in attempting to gain access to their home that day – and instead had to spend several hours at a nearby hotel until such time as the site staff including the McAleer and Rushe employees were off site for the day.
Westminster’s assessment of the incident was starkly on the side of the resident and states that it “ultimately agrees” with the resident “that he should be able to access his property via the available public highway in Baker’s Mews at all times.” The Westminster City Council Officer goes on to demand that McAleer and Rushe “ensure that the City Council does not have to take further action to ensure free access to the public highway in Baker’s Mews is maintained.”
Despite this, British Land prefer to side with McAleer and Rushe rather than deal with the seriousness of the incident. In a thumbs up for thuggery and threats, British Land says in an email of Friday 27th May to the affected resident, “we are unable to establish definitively fault on the part of the contractor”. The inference seems to be that British Land prefer to protect an effectively bankrupt company cutting corners at public risk than to act reasonably towards the interests of those affected daily by the site at 2-14 Baker Street (10 Portman Square).
And so the saga continues. Perhaps the optimal solution and best for the safety for the public and residents adjacent to the site will be that the banks call in the loans and McAleer and Rushe be replaced by a party that complies with the law in every respect, the requirements of the Prevention of Harassment Act and with the obligations of Westminster’s Considerate Builders Scheme. Maybe with the ‘right’ partner British Land might start behaving as a responsible company again.
Given that there is, in fact, no real Sherlock Holmes, perhaps British Land might like to appoint their own ‘Holmes’ or even a ‘Watson’ to resolve this in a proper and fitting manner.
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Legal Statement Regarding This Article
This article makes no assertion of illegal behaviour or wrongdoing by British Land or McAleer and Rushe in respect to the sale of 2-14 Baker Street in 2005 and in 2010. The information relied upon in this statement is available in the public domain including articles in the British media, online blogs, the respective websites of British Land and McAleer and Rushe as well as the financial information and remarks contained in the McAleer and Rushe annual report published in March 2011. Information relating to the actions and activities of McAleer and Rushe in respect to the site at 2-14 Baker Street are supported by video and photographic records and recordings and reflect the experience of people and persons directly affected by the actions of that company, its agents and employees.