May 29, 2017

Peverel should pay back £700,000 over price-fixing not £100,000, says Carlex whistleblower

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KenKilmisterFULL LIST OF PEVEREL / CIRRUS SCAM SITE

One of the Carlex whistleblowers who reported the Peverel / Cirrus price-fixing scam says Peverel should be paying at least £700,000 to the sites affected.

Peverel’s offer to make a “goodwill payment” of 10 per cent of the cost of sham tenders to affected sites was just a “sop”, says former banker Ken Kilmister (left), a co-founder of Carlex.

“In the reasonable assumption that most upgrades could have been done (even where necessary) for 50 per cent of what Cirrus charged, Peverel owes leaseholders around £700,000 based on the OFT’s assessment of the value of contracts affected (£1.4 million),” Kilmister writes in a letter to Peverel CEO Janet Entwistle.

“Add to this the fines you have avoided (10 per cent of turnover as a benchmark?) and £100,000 is shown up for exactly what it is, a typical Peverel sop to leaseholders.”

Kilmister argues that the sham tenders breached section 20 of the 1985 Landlord and Tenant Act – which requires that procedural standards be followed when leaseholders are consulted on expenditure above £250 per flat.

“I cannot imagine that any Tribunal would find any consultation knowingly and deliberately based on quotations that were rigged in favour of your own subsidiary, met those required consultation standards. Failure in this regard means that the managing agent is not entitled to collect any more than the £250 limit per flat.

“Perhaps you might like to reconsider your offer before leaseholders mobilise?”

The full letter is below:

Dear Ms. Entwistle,

I can proudly claim to be one of those who blew the whistle on Peverel’s/Cirrus’s anti-competitive activities four years ago, having sent a file of evidence to the SFO in November 2009 showing numerous bogus comparative quotations of Cirrus and its stooge, Glyn Jackson.  It was only due to bureaucratic delay that the SFO forwarded it to the OFT after Peverel turned itself in, allowing you to claim immunity from penalties.

Let no-one be under any illusions, however, that this was done due to some spontaneous upwelling on Peverel’s part of feelings of guilt, or compassion for the thousands of leaseholders Peverel swindled.  It was done because we briefed The Times of our findings and the subsequent article in December 2009 made it clear to Peverel that their nasty little game was up.  “Damage limitation” then became the priority and a confession would at least gain Peverel immunity from fines.  How cynical can you get?

It is therefore doubly nauseating now to hear Peverel’s sanctimonious and hypocritical words of support for –

“industry-wide moves to improve standards in residential property management, including the market study announced by the Office of Fair Trading (OFT) this week”

and that

“Peverel Group looks forward to contributing to the OFT’s study to ensure that the market is working well for leaseholders”

Your 30 years of experience that you claim gives you so much to offer amounts to very little that anyone would wish to share since for much of that time Peverel was using every ploy it could to exploit elderly leaseholders, including my late mother.  Only within the last few months you have forced me to drag Peverel to the steps of a Tribunal to try to prise two monopolistic contracts from the jaws of your subsidiaries that they had held, unchallenged, for many years and to get Kingsborough to regurgitate its obscene commissions.

The resulting tenders have reduced the emergency call monitoring charges at Royston Court by 70% and the alarms maintenance charges by 50%.  All this in the context of your procurement manager telling leaseholders that Peverel believes in placing “the firm hand of competition on the shoulders of suppliers” (except it seemed, until I came along, on the shoulders of group companies).  Have you now put all such contracts at other developments out to tender for the benefit of leaseholders or have you let sleeping dogs lie for the benefit of Peverel?  What credible contribution can Peverel make to the debate on how to ensure that the market is working well for leaseholders when you are still clinging to your bad old ways?

Your assertion that Peverel has now turned over a new leaf under new management is encouraging but the practice remains to be seen.  No-one is reassured by your cynical offering of £100,000 “goodwill” payments to leaseholders affected by the Cirrus scam.  In many cases the need for expensive replacements of warden call systems was never proved or supported and I am aware of cases where existing systems could have been upgraded at a fraction of the cost.  In the reasonable assumption that most upgrades could have been done (even where necessary) for 50% of what Cirrus charged, Peverel owes leaseholders around £700,000 based on the OFT’s assessment of the value of contracts affected (£1.4 million).  Add to this the fines you have avoided (10% of turnover as a benchmark?) and £100,000 is shown up for exactly what it is, a typical Peverel sop to leaseholders.

I am sure you will be aware that section 20 of the 1985 Landlord and Tenant Act requires leaseholders to be consulted on any large expenditure, above £250 per flat, and that such consultation must comply with certain procedural standards.  I cannot imagine that any Tribunal would find any consultation knowingly and deliberately based on quotations that were rigged in favour of your own subsidiary, met those required consultation standards. Failure in this regard means that the managing agent is not entitled to collect any more than the £250 limit per flat.  In this context, £100,000 is even more derisory.  Perhaps you might like to reconsider your offer before leaseholders mobilise.

 

Comments

  1. Ken,
    Well done my friend for the above, it shows that we should take action against the OFT, Office of Fictional Tendering as it is now known. The fact that the SFO sent it on to the OFT should be accepted that it was in the hands of Authorities that are a Government Body (Quango) and as such were provided before the 04/12/09? Surly the documents would have been stamped/dated, including numbered. The documentation could be retrieved from the SFO and the stamped/date including the number could be proved?

    From the information provided by OFT/SFO (surprised no costing’s have been shown) it can be seen that the first Price Fixing/Tender Rigging commenced in November 2005 and was between Cirrus Communication Services Ltd and Peter O`Rourke Electrical and they provided a Warden Call/Door Entry System for Beech Court, Plains Road, Mapperley, Nottingham, NG3 5PZ.

    I have broke down the information received from the OFT, and it shows that the Initial Price Fix/Tender Rig started at the end of 2005 (we have to assume that for the moment this is the correct date) it then moved from Nottinghamshire to Lancashire December 2005. (Who were the Area and Regional Managers at the time
    The development was Homefylde House, 199-207 Whitegate Drive, Blackpool and was for the same Warden Call/Door Entry System. This was also between Cirrus Communications and Peter O`Rourke Electrics. TBC

    This is the only 2005 developments seen in the OFT report regarding Price Fix/Tender Rigging?

  2. Excellent letter Ken. I would not expect a reply though.

    As someone who has a “little knowledge” of warden call systems, I know how easy it is to over specify and then convince elderly resident this is what they must have. And let us not forget that these system were then tied into an annual service maintenance contract with Cirrus at an overinflated price. So double whammy!

    My view is that as Peverel/Cirrus cannot produce any factual evidence the systems needed replacing, they should pay back the whole amount. At no time was anyone independent involved in the survey or tender process.

    • Insider,
      Do you have any specifications for the Cirrus Warden Call Systems that we can have checked. My brother is an Electrical Engineer/Computer Specialist, who will check the specifications.

      • Sorry I don’t.

        Another point regarding this whole sorry matter, as touched on by Chas, is that Cirrus was promoting its own telephone based warden call system (basically using a commercial switchboard) and this was seen as very experimental at the time. I know it had a lot of reliability problems when first installed. Of course they offered the “lure” of free telephone calls to neighbours, but how many people would find this an incentive? There was also the option of making free phone calls to Peverel HQ, but for some reason Cirrus never installed it. I wonder why?

        And being a Cirrus based system it meant that…..only Cirrus could repair and maintain it. Neat!

  3. Ken, Continued
    2005 saw 01 Price Fix
    2006 saw 12 Price Fix.
    2007 saw 07 Price Fix
    2008 saw 01 Price Fix
    2009 saw 44 Price Fix

    It seemed that they had tested the water in 2005 finding it shallow, this then saw 12 developments in 2006 and 1 in 2008.

    Has Peverel provided all the developments that were Price Fixed?
    Why would it drop of in 2008 and then leap to 44 in 2009?
    Have the OFT been given all the developments that had been Price Fixed????

    The Price Fixers were:
    Peter O`Rouke Electrical from York
    Owens Installations from Dorchester
    Glyn Jackson from Leeds

    Off the first 21 developments Price Fixed, 19 were with O`Rourke and 2 with Owens?

    The next 44 were in 2009 this will be in the next blog?

  4. Ken, Continued
    We had our Warden Call System updated in 2008, and it cost us over £21,000.00 paid from the contingency fund. We have seen from you and others that the cost of the replacement/Updating had been over priced and over specified.

    We were informed by our Area manager that as the new system had been installed the phone could be used to contact each of the 29 residents at ABC and it was free. What he should have said was that we are already paying for it, as we paid the Line Rental charges for the Warden Call System at £51.00 a month £612.00 a year before the first call will be paid.

    We have not had a House Manager since 24/10/12 yet we have paid £867.00 as of today. This will be over £1,000.00 in April 2014.

    The system which was supplied by CirrusUK is very expensive as we also had paid out £1126.00 for private calls for the Sacked House Manager and we have found another £157.00 that she spent of our money. The Regional Manager Peter Whalley refuses to refund the last £157.00 as his boss Carol Crowe has decided that we are not entitled to have our own money refunded,

  5. Ken, Continued

    So we had the:
    Original cost: £21,000.00, to CirrusUK in 2008
    Line Rental £612.00 a year, to BT
    Monitoring cost to £994.82
    Door Entry/Emergency Call £ 627.76
    Private Calls cost £157.00

    So the total cost since the Updated System so far for this year is, £23,390.00?

    Each year the Monitoring and Door Entry/Emergency Call and Line Rental is £2,233.00?

    We do not have any communal doors, so no Door Entry System?

    This is the legacy Peverel Group has left us with, our original Warden Call System was not OBSOLETE? Peverel stated it was?

    The Insurance Company showed us that it was working when the so called lightening struck as Michael Epstein stated, TWICE IN June 2007 and July 2007. I know this is correct, as I have the letters to prove it?

    The Insurance Company paid out 95% of the cost for an updated System????

    So Ken you can see that we at ABC and other developments that I will be helping in the future see Peverel as a Predator who since 2005 had been cheating the pensioners at every chance they could.

    The new Peverel state they are sorry and will pay back 10% of the cost that the Peverel Group had cheated the 65 developments.

    As the costs were not competitive, as agreed by Peverel Retirement, Peverel Management Services Ltd and Peverel Services then the costs may have been hiked up to 50% above the actual cost, who would have known???

    This means that for those that are mentioned a figure of £700,000.00 would be near what they should repay?

    Those that were not mentioned as part of the Price Fixing, such as us at ABC, and others that were undertaken in 2007/08, that show only 8 in that 2 year period?

    Yet 44 developments in 2009 seems that somewhere, some thing, is not correct???

    I will be checking the rest of the Price Fixing information in the coming months and as we have the address we can write to them.

    Ken sorry you were not given the support you required, I will help if I can SOK can provide my info.

  6. Can I just correct the £250 per flat issue- it is if any one flat pays more than £250. This is a subtle but important distinction as consultation can be triggered by one or more flats paying a substantially higher %. A three bed flat will trigger consultation for all even though the majority, say one bed flats, would contribute less than £250.

  7. Michael Epstein says:

    On the assumption that Miss Entwistle as CEO of the Peverel Group, would not wish to be party to any financial gains previous Peverel management made from the price fixing scandal, would it be her position that the goodwill payment offer made to residents affected by the price fixing, represents the total financial gain made by Peverel in this matter.
    Are residents expected to believe that this whole price fixing scam(with all its inherent risks of discovery) was set up and operated by Peverel to earn an extra £100,000? All they had to do was add 48 pence to residents management service charges to achieve the same result!
    I and other residents are more inclined to the view that £700,000 is nearer the correct figure that should be refunded, rather than the £100,000 thus far offered. Doubtless in the near future we will see a statement on the lines of “We have captured what you are saying and we are going to increase our offer of compensation”
    I have a question for Miss Entwistle and Peverel. If the amount of £700,000 is correct,and you have to refund that amount, do you have sufficient funds immediately available to pay that amount to residents, or will you have to increase borrowing to fund any such repayments?