A BUSINESSMAN at the centre of Thurrock Council’s controversial investment strategy has been accused in court of a “fraud” by misleading Thurrock Council over a £5million commission fee.

The question was put during a dispute at the High Court which centres around the multi-million pound purchase of 19 solar farms.

The Bureau of Investigative Journalism reported that businessman Liam Kavanagh, who was involved in many of the council’s investments, was asked whether he had misled the council in documents advertising the deal.

But Kavanagh denied any wrongdoing and the court heard he was not being accused of committing an offence.

Thurrock Council put £40million towards the original purchase of the solar farms in May 2017 and £145 million for refinancing in August 2018.

It is part of a controversial investment strategy which has seen the authority borrow tens of millions of pounds from other local authorities to invest in renewable energy schemes.

The council has consistently defended this strategy, despite it putting the authority in more than £1billion of debt.

The Conservative administration has claimed it has helped prevent cuts to services and helped handle the pressures caused by the Covid-19 pandemic.

According to the Bureau, companies owned by Kavanagh raised hundreds of millions of pounds of public money from local authorities, including Thurrock Council, through a complex and potentially risky network of investment bonds and vehicles relating to investments in solar farms.

The high court dispute was focused on a deal for the 19 solar farms between Toucan Energy Holdings, owned by Kavanagh, and Wirsol, an energy business.

The court was told that Kavanagh’s company had received £145million from Thurrock Council to fund the refinancing of the solar farms.

However, a prospectus for the deal failed to mention the sites were at the centre of an ongoing legal dispute over alleged defects, and that a separate Kavanagh-owned company, Rockfire Capital, would take a £5million commission fee.

The court was told that both omissions had breached rules on financial marketing and lawyers submitted this amounted to a “fraud”.

The Bureau also revealed that Rockfire Capital is being voluntarily liquidated, with less than £200,000 in assets.

In a heated exchange, counsel for Wirsol said: “I am absolutely accusing you of fraud, Mr Kavanagh, in light of the answers you have given.”

Later, the barrister confirmed to the court that he had been giving Kavanagh an opportunity to answer the allegations about misleading statements in the prospectus and he was not accusing him of committing an offence.

During the hearing, Kavanagh said he had done nothing wrong. He told the court he saw no reason to include the fee in the document and did not disclose it to Thurrock at the time because the council knew Rockfire Capital “always charges a commission”.

He also said the council was aware of the dispute with Wirsol, the energy firm that sold the solar farms, which his company claims 15 of the sites were “blighted by defects” and worth nearly £20million less than the sale price.

It is this allegation and Wirsol’s claim of money still owed for the deal that are at the centre of the civil trial at the High Court.

The Bureau also reported another witness saying Kavanagh had treated his businesses as a personal “cashpoint”.

The remark was made by Dan Kirk, managing director of Toucan Energy - one of Kavanagh's companies – to Mark Hogan of Wirsol, who sold the 19 sites, in a WhatsApp message which was shown to the court.

Mr Kirk later told the judge that Kavanagh had taken out large sums of money at short notice and with little explanation, and suggested some of it may have been used to buy cars.

But Mr Kirk also said he had sent the message in frustration and it was not based on actual knowledge of the facts.

In total it is believed that Thurrock Council has around £420million invested in bonds connected to Kavanagh’s company Rockfire Capital.

All of that money was borrowed from more than 150 other local authorities, including police and fire services.

After fresh details emerged at the high court, John Kent, leader of the Labour group, has called for urgent answers.

He said: “The council must now provide a full and detailed explanation about the level of financial risk to Thurrock residents and account for the £5million payment to Rockfire.”

In a statement from Thurrock Council, the authority said it never "knowingly" paid any kind of commission when making the investments.

A spokesman said: "The council has never knowingly made a payment of ‘commission’ but it does understand and accept that fees such as legal, due diligence and legitimate costs of bond preparation are accrued in advance of the bond issue and that these are then recovered if the bond issue is successful.

"The defects in the Wirsol Energy Ltd plants have not been seen as an issue regarding the viability of the investment as we have been aware of the strategy to remedy these and it has had no impact on the performance of the bond Thurrock Council has invested in which has continued to pay out in the expected manner. As this is part of an ongoing court case the council cannot comment further at this stage.

"On all the projects in which the council has invested it has undertaken its own due diligence and sought appropriate independent advice. All of the council’s investments continue to perform as anticipated and have secured the returns required."