WHO’S BACKING BEN HOUCHEN, TEES VALLEY MAYOR?

EPISODE TWO

The majority of donations from Ben Houchen’s supporters are in cash, some from individuals, some from companies.

In addition to this, however, over the past three years, there have also been some non-cash donations.

Precisely what these consist of the Electoral Commission register doesn’t state. 

Of these we believe that one source, in particular, demands clarification from Mr Houchen.

There have been two non-cash donations, totalling £8,750 from York Potash Ltd.  If the name is unfamiliar, it is because in 2011 it was acquired by, and is a subsidiary of, the much better-known Sirius Minerals.

And Sirius Minerals is controversial. 

In its attempts to set up a mine to exploit polyhalite reserves on land near Whitby, it attracted thousands of small, local, investors.

It also planned to process the material at a plant at Wilton, and to ship it out through the Redcar Bulk terminal, thus creating a large number of jobs on Teesside.

York Potash Ltd (founded by Chris Fraser in 2010) made its first donation (of £5,500) to Ben Houchen, in 2018.

Sirius was receiving favourable reviews in the business press and investment analysts were predicting great things ahead for the company.

And while acknowledging that the company had work to do to secure further funding for the project, it was often publicised (alongside a rising share price) that there was already market interest internationally for the polyhalite.   

On Sept 17th 2019, shortly before the company’s second donation (£3,250) to Houchen, it was reported its project was in difficulty. 

In order to raise the necessary funds it had attempted to issue bonds. It needed a guarantor.

UK government refused.

As a Downing Street spokesperson said "When examining any request for financing, we have to assess the potential of a project against the need to protect taxpayers' money."

 On the same day The Gazette reported Sirius’s shares as in “freefall” and the impending job losses at the business.

 Interestingly, also on Sept 17th 2019, Houchen remained publicly positive about the project:

“I believe the team at Sirius will be able to secure the funding they need... I’m in daily contact with Chris Fraser [by now the chief executive of Sirius]”

Ben Houchen’s optimism was misplaced.

As we know share values in Sirius did plummet, and the company was on the brink of going into liquidation when another mining company, Anglo American, came to the rescue and proposed a takeover. 

The downside was that Anglo American PLC were offering 5.5p for shares that had been bought for 25p.

Given that they had no other options, angry shareholders reluctantly agreed to the purchase at an AGM this March.

The failure of the government to support the project can be interpreted in various ways. 

 It could be evidence of the Westminster government’s continuing reluctance to invest in the northern economy.

In which case the ‘levelling up’ agenda that was one the main planks of Boris Johnson’s subsequent election campaign was actually entirely cynical. 

This would put Houchen in a difficult position as his plans for the regeneration of the region’s economy rely on the government’s willingness to invest heavily to enable redevelopment. 

If neither May’s nor Johnson’s government were prepared to support the Sirius project, what hope would there be for other necessary investment?

An alternative interpretation is to take the government at face value, and conclude that Sirius had overstated the viability of the project.

Maybe the venture was never the surefire investment opportunity its shareholders had been led to believe. 

On this interpretation, the donations Houchen accepted put him at risk of being accused of complicity with a project thousands of small investors were persuaded that Sirius had the ability to see through to fruition, when in fact it did not.

There is also a third possibility.

As first reported in the Guardian in June this year, Treasury minister Robert Jenrick, met with billionaire Idan Ofer on 21st March 2018: 

“Departmental registers reveal a meeting between Jenrick and Ofer, the ultimate owner of the UK mining company Cleveland Potash.

“At the time, Jenrick was assessing whether to offer state support for a new potash mine being built by a rival company, Sirius Minerals, which was set to provide intense competition to Ofer’s loss-making business.

“Mr Ofer can’t recall if it [the mining company] was discussed, but if it did it would have been touched on only briefly”

A full investigation of the case has yet to be made.

So, at this stage, we have a hypothetical situation in which a government minister may have favoured a rival company and the fault is neither the government’s indifference to economic recovery in the north, nor alleged disingenuousness by the directors of Sirius. 

Were this the case, then, in the resulting tug-of-war between Jenrick and Houchen; Houchen (and Sirius, and its investors) came second. 

Houchen, it must be pointed out, has recently stated that he had no knowledge of Jenrick’s meeting with Ofer.

But it has to be said that Houchen’s response to the sale of Sirius to Anglo American was, in certain respects, surprising. 

As reported in Business Live in January:

“Ben Houchen, Tees Valley Mayor, said the announcement was a massive vote of confidence in the  project.”

Houchen continued: “Anglo American are one of the biggest mining companies in the world and their involvement is a sign they have huge confidence in the quality of the product and will be a big boost for what is a world-class project.”

As the evidence of the Electoral Commission shows that Houchen received gifts from York Potash Ltd, we have to ask what, precisely, the directors thought they could achieve by courting Ben Houchen?

Could it be his well-honed PR machine?

 A couple of weeks after Houchen made the statement above, shareholders were still trying to persuade the Sirius board to consider alternative sources of funding, and their anger was palpable. 

When the Sirius board recommended the takeover to shareholders Houchen spoke of the quality of the project, and of elsewhere, “I have always taken the view that the people of Teesside, Darlington and Hartlepool want to see investment and jobs”

 In other words, the prospect of jobs in the region was Houchen’s take on the story, to the apparent exclusion of the issue of shareholders’ losses.

Compounding shareholders’ keen sense of grievance was the announcement in July of a £1.3 million bonus for Chris Fraser, founder of York Potash Ltd, former CEO of Sirius, and now a CEO at Anglo American.

The Electoral Commission’s records help to protect people in public life from spurious allegations of impropriety.  But they should not be seen as a ‘Get out of jail free’ card. 

 The fact that Houchen benefited from Sirius while thousands of private investors in and around Teesside lost out significantly demands an explanation. 

Ben Houchen will be doing the people of this region a disservice if he fails to provide one.

Ben Houchen has been contacted for comment.

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