Business improvement company slammed in independent report (From East London and West Essex Guardian Series)
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The E11 Business Improvement District company is slammed in independent report
Directors of a publicly funded company set up to boost business in Leytonstone but which soon fell into financial chaos have been criticised.
An independent report, commissioned by Waltham Forest Council, criticised the E11 Business Improvement District (BID) Company for failing to maintain proper accounts for years and putting the organisation’s future at risk.
The organisation was set up in June 2007 to promote the interests of businesses in Leytonstone.
In return the businesses were charged a levy. Public bodies have also paid more than £150,000 into the scheme.
But the company has fallen into almost £87,000 of debt - forcing police to launch an investigation into possible fraud.
The report read: "The available evidence suggests that the company and its directors failed in their duty to maintain proper accounting records and systems for the first three/four years of the first BID term and it was only towards the end of 2011 and into 2012 that some level of control was imposed and records brought partially up to date."
“The structure is very unusual for a BID as these companies are usually registered as companies limited by guarantee, but the E11 BID is limited by shares, with two shareholders, Mohammed Ahmed and Fawaad Shaikh, each holding one share.”
Cllr Clyde Loakes, the current deputy leader of the council, sat on the board of the company between November 2010 and August 2011.
If the BID fails it is thought it would be the first in the UK to do so.
The council says it has not collected the levy since January because directors refused to agree to costs involved in collecting the levy, and the report stated there “must now be a significant doubt over the recoverability of outstanding income from some of those businesses”.
Estimates predict an investment of around £80,000 is needed to keep the company moving forward, which would mean around 18 months of further levy collection.
The debt figure is more than double what Fawaad Shaikh had previously estimated, and the figure continues to rise from penalties incurred for failing to pay PAYE and national insurance – an issue revealed in audit reports from 2010 and 2011.
The report also found that the first statutory accounts filed on time were those for June 30, 2012 – five years after the firm's first accountancy year.
It was noted, however, that the company had recently improved by appointing auditors, an external accountant and a full-time administrator.
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