March 26, 2017

Carlex whistleblowers were THREATENED with prosecution if they went public over OFT’s feeble £500k investigation into Peverel-Cirrus

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OFTuselessThe three Carlex whistleblowers of the Peverel-Cirrus scam were threatened with prosecution by the Office of Fair Trading  if they revealed the investigation.

The threat was minuted by the OFT on September 27 2012 even though it had already decided to give Peverel leniency and not take any action.

In a blatant example of shooting the messenger, the OFT  threated to prosecute three whistleblowers in case they …  er, compromised a prosecution that the OFT already knew would not happen.

The threat of criminal proceedings against the Carlex whistleblowers was revealed yesterday by the OFT, which also admitted that it had recovered a pathetic £1,777 in fines from a stooge company in on Peverel’s fiddle. Other outfits involved in Peverel’s scam have ceased trading.

Throughout its pointless £500,000 investigation, the OFT urged the whistleblowers not to go to the press, but they were kept in the dark about the OFT’s leniency deal with Peverel.

They only learned that the OFT was going to do nothing at all in July 2013 when the OFT’s “statement of objections” outlining the inquiry were published.

The fact that the whistleblowers were threatened with prosecution was revealed yesterday in an email from OFT director Andrew Groves to Susan Wood, one of the three.

The letter is reproduced below.

The OFT is to be wound up at the end of this month.

Carlex urges anyone reporting serious issues to officials at the OFT or its successors only to do so through Carlex, Sir Peter Bottomley or Ed Davey, the Energy Secretary, and LibDem MP for Kingston and Surbiton.

It is vital that substantive issues concerning the current investigation into leasehold management are copied to these MPs and recorded.

The tiresome “cleverness” displayed by the OFT over the Cirrus inquiry erodes trust in our protective institutions.

The OFT treated the Carlex whistleblowers badly.

They were strung along for years to co-operate with an investigation where it was already decided to offer leniency, and they were not informed.

Then they were threatened with criminal prosecution if they tried to interest any outsiders in the injustice of the Peverel-Cirrus price-fixing.

From Andrew Groves to Susan Wood, March 3 2014

Dear Ms Wood,

Thank you for your email of earlier today. I address each of the issues you raise in turn:

  • I understand why you find the grant of immunity in this investigation extremely frustrating particularly given, in your view, Peverel’s conduct was already in the public domain. However, as I set out in my email of 12 November 2013, The Times article does not go as far as alluding to the anti-competitive conduct (collusive tendering) which has been found in the Decision and its content is unlikely, on its own, to have been sufficient for the OFT to launch a formal investigation under the Competition Act 1998. 
  • I note the information you have provided in respect of why Peverel applied for leniency however, as set out in my email (as well as in Mr Elithorn’s letter of 19 September 2013 and Ms Naylor’s letter of 11 December 2013), a company’s motivation for applying for leniency is not relevant when determining whether or not leniency is available. 
  • You have also asked why the OFT did not disclose the dates Peverel ‘turned themselves in’ when it was originally requested. It is not the OFT’s policy to disclose this sort of information about a leniency application during the course of an investigation. In certain circumstances, the situation can be different after the close of the investigation. 
  • On the issue of leniency, you will understand from Mr Elithorn’s letter of 19 September 2013, that the exact timing of Peverel’s leniency application in relation to The Times article was not relevant in determining whether or not leniency was available to Peverel. The question is whether certain other criteria were satisfied, including whether the OFT had commenced an investigation into the conduct. These criteria were satisfied and the grant of immunity was automatic – in line with the OFT’s published guidance. 

Please follow the link, under ‘Related Documents’, to ‘Public version of the OFT’s Infringement Decision’ 

  • The fines imposed are summarised in the table below. They are also set out in the Decision and on the website at the above address. 
  • To date, the OFT has recovered £1,777 in terms of the fines it imposed. You will see from the OFT’s Decision that two of the three companies upon whom the OFT imposed fines are in administration. I can confirm that, as a matter of general practice, the OFT takes appropriate steps to recover outstanding fines, including from companies in administration. 
  • The OFT requested that you and the other interested individuals we engaged with kept the OFT’s investigation confidential up to the issue of the Statement of Objections. It is OFT standard practice not to publicise certain details about its investigations before the issue of a Statement of Objections. The request we made in this investigation was in line with that practice. You have asked what would have happened if you had ‘flouted’ that request. This is hypothetical. However, it is highly unlikely the OFT would have provided you with any further information or briefings in relation to the investigation. Additionally, there may have been a risk, depending on the information disclosed, that the person who disclosed the information would have committed a criminal offence contrary to Part 9 of the Enterprise Act 2002. In this respect, I note our records show that this risk was brought to your attention – for instance, at the meeting of 27 September 2012. 

I very much hope the information provided above is useful and I do genuinely understand why the issues arising from this investigation are both frustrating and unsatisfactory to you. 

Kind regards, 

Andrew Groves

OFT Director

Comments

  1. Peverel Management Services, tendered for Warden Call Systems and Fire Systems on behalf of Cirrus Communications from 2005 to 2009.

    In that 4 year period they made £1.4 million, by allowing 3 contractors to tender for these works when they knew what the others were pricing, ensuring that Peverel Management Services would always be the cheapest.

    The Times Newspaper reported what was happening on the 05/12/2009 and as Chris Owens Head of Peverel Customer Relations stated that this outing meant that Peverel Group Ltd were forced to phone the OFT and admit Price Fixing had been going on.

    This letter from Andrew Groves has shown why when it comes to companies breaking the law they are allowed immunity and received no punishment?

    The innocent parties who were cheated are threated with being charged with a criminal offence if they mention the Price Fixing to others?

    SO THE INNOCENT CAN BE GUILTY AND THE GUILTY FOUND INNOCENT?

    WHAT A REAL FARCE?

    I wonder what Sir Peter Bottomley and Ed Davey will say, SEBASTIAN??

  2. Mark Time says:

    Anywhere else in the world we would be accusing the OFT and the politicians behind these decisions of corruption, it is as though someone has been paid to obstruct justice and deliver an unjust decision. So why not here?

    I hope someone has a file of the other formal complaints which have been made about Peverel and Tchenguiz, such as pretending to test the market for reasonable insurance premiums when they were only motivated to inflate their own commissions and did so to clearly unreasonable levels.

    Peverel and Tchenguiz were capable of setting out to defraud at least 65 retirement developments over their Cirrus systems in order to profit. That is surely not the extent of their crimes, the companies involved employed “business development” managers who were paid to find similar schemes to increase profits and exploit capitive leaseholders. The head of Peverel Retirement at the time was and is a senior presence at the industry self-regulator, and he has always been a chiseller.

    Quite why the OFT / government thinks the right response is to launch another enquiry into the exploitation of leaseholders – the London Assembly study has already told us what to expect – it is just going to give false hope and delay action. All the OFT needed to do was find Peverel utterly guilty of this blatant crime, and punish them properly.

    Instead I suspect we will still be here in years to come moaning at the corruption.

    Carlex’s policy of continuing to pay unreasonable service charge demands … I’m all for peaceful and lawful protest, but it seems we are the only ones playing by the rules here. We have the power to change everything overnight, it is in our chequebooks and bill payment instructions. Why are we so fightened to do what is right?

    Leaseholders can lawfully withold payment for many reasons I believe?

    • Mark Time

      “Anywhere else in the world we would be accusing the OFT and the politicians behind these decisions of corruption, it is as though someone has been paid to obstruct justice and deliver an unjust decision. So why not here?”

      I agree entirely with your point of view. It’s a scandal and an unacceptable state of affairs that leaseholders are financially exploited and those responsible escape punishment/prison. The root of the problem lies with Trading Standards and the police. I know as I dealt with them over property mis-selling and misrepresentation when TS failed to report and investigate suspected serious fraud.

      When older retired people are ripped-off/defrauded by dishonest builders and salesmen of mobility equipment etc TS instantly treat it as a crime and involve the police. But when developers/landlords/managing agents defraud the vulnerable for leasehold criminality they are treated with kid gloves and treated differently, as a civil matter, that allows TS/OFT/police to wash their hands of the crimes.

      Fraud is fraud and a crime, whoever commits it, and the police must become involved. Until Trading Standards are given effective new powers to involve the police in this leasehold racket and the law amended accordingly – NOTHING WILL CHANGE – “we will still be here in years to come moaning at the corruption”…

      Remember Peter Rachman? Wikipedia: “A special police unit was set up to investigate Rachman in 1959 and uncovered a network of 33 companies controlling his property empire. They also discovered Rachman was involved in prostitution and he was prosecuted twice for brothel-keeping.” Says it all really…

  3. Michael Epstein says:

    Mark Time,
    In part the OFT enquiry into leasehold is to “kick the ball into the long grass”
    Imagine the financial consequences not just to freeholding companies, but also to the banks, who lent the most unbelievable amounts secrutised against notional assets.
    You can be sure that the banks would have to declare billions of losses. I am not sure the government would welcome this.
    Whilst it has been demonstrated that withhoding service charges can work, it is a very high risk strategy.
    What you are doing is giving cause for Peverel to add charges and take court action.
    You should remember, is that Peverel have an unusually high dependence on “added charges” as a source of income. It must be better to be able to challenge Peverel on every level from a secure position, whilst at the same time denying them every opportunity to raise extra income.

  4. Mark Time says:

    Michael Epstein,
    You are right in what you say, isolated individuals who ignore or refuse to pay service charges without good and lawful reason are inviting greater problems on themselves. The law is against the leaseholder in that they must first pay what might be unreasonable charges and then fight to get them back, with all those risks.
    However, there are many reasons why service charges can and should be withheld. I am fortunate that I no longer have to pay service charges to Peverel, but I still have to pay ground rent to Tchenguiz via E&M and I have to pay service charges to ARMA-chums of Peverel.
    Despite warning the ARMA-chums three times they continue to demand service charges unlawfully; I have until now paid under written protest; but not any longer. They simply have to correct their mistakes, but until then I am not obliged to, and it seems they will not listen until I force the issues:

    – they are unable or unwilling to identify the actual landlord/freeholder on invoices, something which is required for the demand to be lawful
    – they cannot demonstrate they have the authority of the landlord/freeholder to collect service charges, and since they cannot even identify who the landlord is there is reasonable cause to believe they are not lawfully demanding the service charge; in one case I know (because I set up the arrangement) that the ARMA-chum does not have authority from Tchenguiz, it is operating as an agent of Peverel without a lawful agreement between parties.

    There are many reasons, including the examples given, why groups of leaseholders might lawfully withold service charges, even if it is only temporary.

    But you miss my point.

    We have been doing the right thing as you/Carlex advocate for too long and it is not working; it is time to consider a mass protest, the kind which asserted the freedom of ramblers to walk over the Peak District, or the kind of objection which the citizens of Paris registered over wheel-clamps [they were all super-glued overnight rendering the clamping businesses incapable at a stroke].

    How many of the millions of leaseholders would it take to withold service charges for 3-6 months? All the better if there are reasonable grounds to do so.

    • Mark,

      Carlex cannot advocate the sort of action that you describe. Only a minority of retirement leasehold residents read Carlex.

      Unless you really know what you are doing, you must pay up and fight in the tribunal second.

      Freeholders will let a debt hang on a property and then raise the issue whenever it comes up for sale, plus interests and legal costs. That is far better than taking legal action against an elderly leaseholder, which risks adverse publicity.

      • The only real alternative is to ask questions about a bill and if you dont like or dont get a reply, then apply to the Tribunal straight away. That pretty much stomps on any legal or recovery action that they can take. Exercise your rights now rather than react to a DCA letter!

  5. Susan, Note

    From Andrew Groves to Susan Wood 03/03/2014 OFT Director.

    In mentioning the Times Article in his email, we all believed that it was the report on the 04/12/2009 that is mentioned as the catalyst?

    I have been trawling the back press and note that the mention of ANTI-COMPETATIVE PRACTICES was not highlighted in the 04/12/2009 as stated by Mr Groves.

    It WAS HIGHLIGHTED IN THE TIMES NINE WEEKS EARLIER ON THE 26/09/2009?

    Technically Mr Groves is correct but as the ANTI-COMPETATIVE PRACTISE was mentioned 9 weeks earlier then we have been misled by Mr Chris Owens who gives the report in The Times as the CATALYST.

    We are now aware that Peverel Group Ltd or Peverel Management Services Ltd would have had 9 weeks to conjure up, what had happened for the Immunity, not the 3 days they claim?

  6. Mark,

    Who do you believe were the Directors involved?

    Initials only will do.

    I like your style?

  7. Mark Time says:

    I hear everything that is said about why we should not take the ultimate direct action of witholding payments, it would take a martyr or 1,000 to succeed. Maybe we are more frightened of the lawyers than we need to be, as a few brave souls have demonstrated so superbly Or perhaps we have too much to lose, but I cannot imagine circumstances where the legal system would take the property of a retirement leasholder or punish them out-of-proportion to the dispute.

    What is clear is that peaceful legal and political protest is too slow and does not work. The Cirrus fraud is a great example. We cannot look to friends in government like Ed Davey to make a difference, he was a minister in the BIS department responsible for the OFT while all this was happening (or not happening).

    Chas – the short answer is all of them! The Chairman of the board Nigel Bannister was publicising Cirrus as a fair and necessary part of what Peverel do, and defending them against what he said was unfair criticism, at a time when this scandal was being made public – he surely knew, he MUST have known what was going on. At the time he was probably the most senior, experienced and expert person working in the whole industry, having been one of Peverel’s founding team 20+ years ago. It would simply not be believable for him to deny all knowledge or to have not even asked the questions of those responsible. And that goes for all the executives right down to the technical staff actually carrying out the practical aspects of the crimes – they all knew what was being done and how wrong it was.

  8. Mark, instead, you take the direct action of asking the FTT to determine that they cant have the money until they comply.

  9. “What is clear is that peaceful legal and political protest is too slow and does not work.” Absolutely right.

    MPs meeting with Keith Edgar/ex Peverel and the like will change nothing.

    All those engaged in white collar criminal activity is the job of the police to investigate and prosecute.