Struggling enterprise agency paid public cash to directors' firms
Archant © 2014
The directors of the region’s enterprise agency spent public cash on their own firms, while the agency raked up millions of pounds in debt.
A joint investigation by this newspaper and the BBC reveals a web of conflicting interests at the heart of Norfolk and Waveney Enterprise Service (Nwes) while it was led by chief executive Kevin Horne and strategic director John Balch.
The agency gets millions of pounds in taxpayers’ cash each year to boost small businesses in east England. It also manages seven business centres in Suffolk.
But from 2011 onwards large sums of Nwes money went to organisations which Mr Balch and Mr Horne had personal and financial interests in. In response, the men said all payments were approved by the Nwes board.
The two directors retired from the agency in April 2018 and the new leadership is now investigating some of the allegations raised in this article.
Our investigation has found:
-Nwes paid a firm owned by Mr Balch almost £900,000 over four years
-EU grant money handed out by Nwes to support the offshore energy industry was awarded to a firm Mr Balch was chairman of and had shares in
-Other EU cash promised to offshore energy businesses by Nwes has never been paid
-Nwes paid a firm owned by Mr Horne and Mr Balch money to rent a French holiday villa belonging to the two ex-directors - despite a board member’s concerns
Nwes’ debts more than doubled from 2014 to 2017 to £12.5m and the not-for-profit agency was unable to pay back a £2.75m loan from King’s Lynn and West Norfolk Council last year.
Ex-staff have also told of financial problems at the agency meaning they could not pay suppliers on time.
Its new chief executive, Jo Clarke, said she was working hard to put Nwes back on a sound financial footing.
Mrs Clarke said the board had already carried out an investigation into some issues raised which had led to Nwes repaying one funder £3,000.
And she said further allegations would be investigated.
She added Mr Horne and Mr Balch left after “significant differences of opinion over the management and strategic direction of Nwes”.
But in response the ex-directors hit out at “malicious” and “false rumours”.
“We are very disappointed that there seem to be unfounded allegations made by anonymous disgruntled former/current staff members of Nwes,” they said. “John Balch and Kevin Horne took the decision to retire from Nwes after a long and distinguished service which saw the company win many awards and accolades.”
Nwes shelled out almost £900,000 from 2011 to 2015 on services with energy consultancy firm, Nautilus Associates, belonging to Mr Balch.
He is the majority shareholder in Nautilus, based at the Orbis Energy Centre in Lowestoft, and its managing director.
Mr Balch and Nautilus did not answer our questions about what work it did for Nwes, but projects on Nautilus’ website include support for Nwes’ offices in Norwich.
In 2016 and 2017 Nwes spent another £600,000 on companies and groups which its directors had an interest in, according to its accounts.
But the accounts do not state what those organisations were. We have asked Nwes to provide that information.
A statement from Nautilus, Mr Balch and Mr Horne said: “Nwes has enjoyed a long relationship with Nautilus who have provided services over 15 years to support the growth of Nwes.
“Contracts were tendered where appropriate and often bids were made in partnership.
“All related party transactions were shown in the accounts. This arrangement was endorsed annually by successive boards of Nwes.”
Nautilus is not the only firm which Mr Balch has an interest in to benefit from money administered by Nwes.
He is also the chairman and a shareholder in a company called Scour Prevention Systems Ltd which prevents scour build up around marine structures by using old car tyres.
The firm has been given two grants of EU cash called a Score grant which were administered by Nwes and Nautilus.
In 2014 Scour was given £10,000 from the fund and in 2017 it received another £7,200.
In response, Mr Balch said: “All Score grant applications and awards adhered to the terms of the contract with the European Regional Development Fund.
“None of Kevin Horne, John Balch or any other individual from Nautilus were involved in the decision making for the legitimate award to Scour Prevention Systems.
“This went through the normal process application, excluded all interested parties and included the appropriate checks and measures at a senior management level of Nwes. This programme has been audited by the European Commission with no adverse findings.”
Funding not paid
Firms which successfully applied for EU cash through Nwes have never been paid the money.
Manor Renewable Energy based in Dorset was awarded a £50,000 Score grant just before Christmas 2017 to set up an office at the Orbis Energy Centre in Lowestoft.
Managing director, Eric Briar, said: “We made the application for payment in the way we had been advised, being transparent with our costs but to date have never received any funds (from Score and have just about given up with it.
“Last month we decided to pull the plug on the office in the Orbis building and not re-employ anyone locally except for our offshore guys.”
Another firm called CHPV also said it had not had its Score grant.
Owner Alan O’Neill said they were asked to apply in 2016 for the money and in 2017 were told around £2,500 had been awarded to them to buy drones. They bought the equipment but the grant money has still not been paid.
“It leaves a nasty taste in the mouth,” he said. “We’ve chased it up constantly.”
Trips to directors’ villa were ‘staff rewards’
Holidays to a French villa belonging to the ex-directors of Nwes were part of “staff rewards”, the former bosses said today.
As reported in December Nwes staff were given free trips to a villa in the south of France belonging to Mr Balch and Mr Horne - which the ex-directors then billed Nwes for through their company, Beacon Property Investments.
Nick Daubney, who is mayor of King’s Lynn and was a Nwes director until 2016, said he raised concerns with the board about the lease of the villa but he said he was “assured that all was in order”.
But new chief executive Jo Clarke said the arrangement was “not appropriate”
Mr Horne and Mr Balch said: “The villa offer was part of a staff reward structure agreed by the board of Nwes in 2016 as an incentive which resulted in exceptional improvement in productivity.
“Appropriate benefit in kind payments were made to the Inland Revenue.”
What are enterprise agencies?
Enterprise agencies, like Nwes, are largely funded by the public purse with money coming from the EU, central government and some local councils.
The Norfolk and Waveney Enterprise Agency (Nwes) was set up in 1982 as the Lowestoft Enterprise Trust. It changed its name to Nwes in 2002.
Nwes had an income of £8m in 2017, which are its most recent accounts.
Its turnover increased after it took over two other enterprise agencies, called the London Small Business Centre and NBV, to form one of the biggest enterprise agency in the country.
It has worked closely with business groups in east England to support different sectors of the economy, but its focus is on helping start-up firms.
Mr Horne said Nwes had helped 15,000 firms set up in the last 20 years.
It also manages 18 business centres across east England and London, including