Developers Tighten

 Their Grip on

South Tees

Development

 Corporation

Grade II Listed Dorman Long Tower, demolished at Teesworks, September 2021

Scott Hunter

1 October 2024

A letter arrived on Deputy Prime Minister Angela Rayner’s desk last Friday (27 September). A letter from Tees Valley mayor, Ben Houchen, explaining how reforms of governance at the TVCA and STDC were being implemented. It was accompanied by 845 pages of appendices. So, the Deputy Prime Minister will have had a busy morning.

The 845 pages explained in detail the changes that were being made in light of the 28 recommendations of the Tees Valley Review published in January. We recently reported   (tvca--approaching-new-dawn-or-high-noon) on how the TVCA Overview and Scrutiny Committee were politely told that they were not entitled to information about decisions made by the STDC board. So, presumably they had no comment to make on the selection of its new Chief Operating Officer, one John Graham Barnes.

The appointment is in response to Recommendations 1 and 25 of the Review:

(Where TWL is Teesworks Limited, the company owned by property developers, Corney and Musgrave, which owns 90% of the shares of STDC.)



Angela Rayner may find page 22 of the appendices of particular interest:

In particular the section entitled ‘Management of cashflow and expenditure’, where procurement activity will be signed off by the new COO, and the management of operational and financial risks will also be managed by him. Having sign-off rights for procurement gives the COO considerable influence, and makes him a person of special interest for companies and individuals seeking contracts with STDC.



One of the many criticisms made in the Review was that the STDC was taking most, if not all, of the risk for the redevelopment of the site, while its joint venture partners, Martin Corney and Chris Musgrave, had none. It also criticized the inclusion of a JV representative as an STDC associate board member, regarding this as constituting a conflict of interest. So, the COO needs be working exclusively in the interest of the STDC. Someone who might prefer the interests of the JV partners would not be suitable in this position.

So, the appointment of John Graham Barnes is surprising. Barnes has long experience in the construction industry, and was, until shortly before he took up his new post at STDC, a director of Duchy Homes Ltd. This sounds as if he may be a person with some relevant experience. But the issue here is not one of expertise, it’s about loyalty, or at least perceived loyalty.

The trouble with Duchy Homes is that it is owned by Duchy Homes (Holdings) Ltd, two of whose directors are property developers, David Shann and Jarrod Best. As is typical of property developers, they hold directorships in a large number of companies. Here they both are in the list of directors of another:

That’s Martin Corney of Teesworks Limited, and, in fact, Shann and Best are co-directors with him in a number of companies. Now this link between Barnes and Corney, in the present circumstances, is unfortunate. The circumstances being that the Review found that Corney and Musgrave were making large profits at Teesworks while making little or no investment of their own, and also that they were in receipt of some very lucrative contracts there.

We have no evidence of any wrongdoing by John Barnes. But his appointment is not a good look for the mayor. Because, given John Barnes’ background, it looks as if he’s there at Corney’s behest. There is the appearance of a conflict of interest, which must be embarrassing for the Houchen as he tries to shake off the accusations of bad management, lack of transparency and of working primarily in the interests of Corney and Musgrave, to the public detriment.



The FT reported on Friday (27 Sept) that Corney and Musgrave had refused to renegotiate contracts with STDC, which kicks Review Recommendation 22 out of the park:

TVCA CEO, Julie Gilhespie in recent months, asked the developers to consider this renegotiation. Combine their refusal with Barnes’ appointment and the question arises as to who is really in control of the project. The developers must realise that a less than robust response by the mayor to the recommendations of the Review puts his future in office in jeopardy. He is already under threat of investigation (although the new government has been more than a little vague in recent months about what its intentions are).



The question now is, has Houchen outlived his usefulness to the developers? At one time, his continuing tenure in office was their meal ticket.  Now that his reputation has become tarnished through attracting too much attention, has he become dispensable to the point that the developers are happy to throw him under the bus?