Council officers missed a chance to save millions of taxpayers' pounds when they bought a Wood Green office block, according to a previously secret report.
Haringey Council bought Alexandra House last year in a deal which cost £23m.
However, as revealed by this newspaper last month it turned down the opportunity to buy it for far less just ten months earlier, allowing a property developer to swoop in. The council then had to pay a "ransom" to get the building.
Council leader Joseph Ejiofor said he was “very unhappy” about failures detailed in the report, by auditor Mazars.
He said it showed officers met the owner of Alexandra House to discuss buying it without senior councillors knowing.
The council has repeatedly refused to publish the Mazars audit, but Lib Dem councillors forced its release.
First Approach
In a statement last month, Cllr Ejiofor said he could find no councillor or officer who recalled knowing Alexandra House was for sale “prior to summer 2019.”
But Mazars uncovered repeated discussions about buying the block, starting in late 2018.
In November 2018, the council was approached by Workspace, which owned the site.
It said it had received an offer on the building but as Haringey Council was the current tenant, it wondered whether it might want to buy it instead.
At that point, said Mazars, “work started” for the council to acquire the site.
Later that month, Noah Tucker – then cabinet member for insourcing – had a “one to one briefing” with an officer.
Notes from the briefing stated: “Major property purchase – Alex House.”
The proposal was then mentioned in reports to the Strategic Property Board in December 2018.
But, said councillors, that was the last they heard of it.
Missed Opportunity
According to Mazars, Workspace indicated at a meeting on January 15, 2019, that “they would sell Alexandra House to the council for £14.5m.”
In February, an email between officers referenced “the need to resolve matters with Workspace, to enable acquisition of Alexandra House”.
But another officer email said it was “very difficult to justify a cost of £14.5m”.
The building had been valued in 2015 at around £10m.
In March 2019, Mazars found “further discussion with Workspace to consider options to buy Alexandra House.”
By May 2019, the purchase was still being referred to as a “live option”.
But later that month, Workspace was told Haringey did not want it.
Decision
Mazars said the “audit trail” around how the decision was taken was “weak”.
“The trail of records of meetings and referrals is lacking in key areas,” it wrote.
“We understand there was a verbal instruction issued to an officer within the Strategic Property Unit by the Assistant Director Property and Economic Development, to inform Workspace the council would not be putting in an offer.”
After that, Ability Group owner Andreas Panayiotou set up a shell company, used it to secure the option on Alexandra House, then submitted a planning application to turn it into flats.
When councillors objected to the proposal, they decided to buy the block to scupper it.
But Mr Panayiotou charged £6m for the shell company, which had no assets, so the council could exercise its option on Alexandra House.
An auditor ruled this year that the block was worth £10m and said Haringey had paid "a bit of a ransom".
Blame
Councillors said the decision to turn down Alexandra House was taken without their input.
Cllr Tucker said he instructed officers to “pursue every avenue to increase the council’s ownership of buildings, including Alexandra House.”
But, he said: "Evidently, some senior officers were so not on board that the new leadership wasn’t correctly consulted and decisions were not brought to us.”
He said the meeting where Workspace offered Alexandra House for £14.5m was not attended by any councillors, “only staff”.
“This was not brought to my attention and I’m certain that it was not brought to the attention of any other cabinet member,” he said.
Cllr Ejiofor added: “For the avoidance of any doubt, I was never told that Alexandra House was available to purchase for £14.5m or any other price prior to it being sold to the Ability Group.
“Clearly some individual officers were having informal conversations with Workspace, including at a meeting in January 2019 that I knew nothing about. I am very unhappy about this fact.”
He said “shortcomings” identified by Mazars were being “comprehensively addressed”.
For more, read:
Revealed: How council paid £23m for office block valued at £10m
The questions council must answer after spending £23m on £10m office
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here