The long awaited Office of Fair Trading investigation into the Peverel / Cirrus price-fixing scandal concludes on Friday at 11am. Click above or here for OFT website.
But there will be a delay in publishing the Infringement Decision – if there is one.
“If the final outcome in this investigation is an Infringement Decision, we will not be able to make that available on our website on the day of the announcement,” says the OFT.
“This is because we are obliged to ensure that the public version of any Decision does not contain any confidential information before it is published on the website. This would mean a delay before any Decision is actually published.”
It is perhaps unremarkable given the protracted nature of this inquiry that there is to be yet further delay.
The scandal concerns Peverel’s subsidiary Cirrus winning contracts at retirement leasehold sites across the country following a bogus tendering process. Three stooge companies always placed higher bids for the work making Cirrus seem a bargain.
The scam operated between 2006 and 2009, and the OFT accepted the fiction that Peverel turned itself in in December 2009 and therefore should be treated leniently following the investigation.
In fact, Campaign against retirement leasehold exploitation activists had alerted the OFT and the Serious Fraud Office before this date; held a meeting at the House of Commons and had the issues aired in the Times.
All this occurred before Peverel supposedly decided to report itself to the OFT.
It was also galling for the pensioners that the OFT inquiry only began in April 2011, and this leisurely pace has characterized its activities ever since.
Both Sir Peter Bottomley, MP, and Ed Davey, the Energy Secretary who hosted the Campaign against retirement leasehold exploitation meeting in the Commons in November 2009, have dismissed the notion that the OFT only became aware of this scandal after Peverel confessed.
Campaign against retirement leasehold exploitation estimates that each retirement site affected by the price-fixing scam would have been conned out of at least £20,000.
The OFT has confirmed that if an Infringement Decision is issued the affected retirement sites will be named.
Assuming the verdict is “Guilty”, then comes the problem of paying back and compensating those residents who have been affected.
It should be fairly simple to decide how much each affected Retirement Complex has been “overcharged” as the OFT should have been provided with a list of those affected and by how much.
But many of the residents from 2006/9 may have passed away or sold their apartments.
The original cost may have been taken from the Contingency Fund which has been replenished by paying extra Service/Management Fees over the following years. During that period there could have been several different residents in the same apartment.
If the resident is deceased do their descendants get compensated
If every resident who has been affected is to be compensated then someone have got a lot of work to do.
Yes, even if Peverel is found guilty over price fixing the question of compensating those affected seems very remote.
This particular investigation involved only three years 2006/9. But this scandal has been going on for decades. Just this year Peverel supposedly obtained three quotes for a new entry system here at this building and surprise, surprise Cirrus was the cheapest quote and was awarded the job..!
As Sir Peter Bottomley, my MP, has said it is time all those involved in these criminal activities are prosecuted. In the age of the internet, with its fast communication, financial abuses are exposed in seconds to thousands of its users making the eventual demise of leasehold inevitable. It is no longer feasible in this day and age.
And all of us will be so much better off especially when Peverel is gone too..!
It is certainly a right old mess!
In the case of the Virgin Atlantic/British Airways fuel surcharge price fixing, affected customers had to write in to claim refunds.
It is to be hoped that the OFT will insist that Peverel voluntarily repay service charge accounts.
How they could repay everyone on an individual basis would be an administrative nightmare.
As has been pointed out those that have sold or those that have died present massive problems.
I understand Peverel have made provision of £8m to settle resident disputes.
Of course there would be no point in receiving a refund if Peverel simply increase other charges to get the refunds back. So everyone should watch their bills very closely.
If Peverel do not act promptly to refund the money owed to residents, this should be referred back to the OFT.
Perhaps the public statement is being delayed until Friday 13th?
Whatever the actual outcome of the verdict (since Peverel “owned up” it’s hard to see anything but an infringement notice being issued) the questions will continue to be asked both of the OFT and Peverel.
The publication of the verdict WILL NOT be a time for the OFT and Peverel to draw a line in the sand and “move on”
There remains the question as to who knew what and when? Did Peverel really report themselves to the OFT, before the OFT was made aware of the price fixing? That is open to serious doubt.
Why did the investigation only begin in 2011, when Peverel contacted the OFT in 2009?
Could there have been some outside influence by those that were becoming aware of the financial stress being experienced by Peverel,and the banks exposure the collapse of Peverel would have brought about (at a time they were being bailed out)?
It must be a distinct possibility, that had the OFT acknowledged the information supplied by Campaign against retirement leasehold exploitation members and the parliamentary meeting plus the Times article and had investigated the price fixing in 2010, the combination of fines and repayments would have led to Peverel entering administration much earlier than it did and would have made it less likely to survive.
Clearly the publication of the verdict is going to give a rise to a wave of unwanted publicity for Cirrus/ Peverel.
Peverel should be aware that I, Michael Epstein will do my very best to ensure that every time Cirrus bids for a contract, those considering appointing Cirrus will be made aware of the price fixing scandal.
Should Peverel argue “It was a long time ago and it is now under different management” I, Michael Epstein will supply details of those involved with Cirrus, who even after Peverel owned up to the OFT over price fixing, were subsequently promoted.
Finally, should it not be the case that as soon as the OFT verdict is published, if an infringement notice is issued Peverel should immediately be expelled from ARMA?
From Michael Hollands, who has had difficulty placing a comment. [No idea why this is happening occasionally.]
The method of compensating those residents affected will be complicated, but I suggest the following to simplify it.
This does of course depend on a Guilty verdict on Friday.
The OFT should have a list of all the retirement complexes affected and the amount of “overcharge” to each one.
I suggest each complex sets up an account into which this sum is paid plus an adequate agreed amount for compensation and loss of interest.
By dividing the total sum by the number of properties in a complex it will give the amount due for one apartment.
A solicitor /accountant would then have to be appointed for each complex to investigate how many different residents there have been since the offence to each property. This could be just one or many. The amount due for one property would be split between them.
I assume if any had since died their descendants would get their share.
This is the simple way but it does not take into account how long each resident occupied the property.
If the “overcharge” was paid for by an increase in the service/management fees over several years then those who resided longer would be entitled to more that those with short stays.
Regards
Mike
If the guilty verdict is published and the fraud total sum exceeds 1 Mil, the next step is for Campaign against retirement leasehold exploitation and all Campaign against retirement leasehold exploitation supporters and victim leaseholders to write to
(1) SFO for investigation to find out how the proceeds were passed onto BVI ?
(2) Companies House to disqualify those Directors of Peverel ( In 2009) and its parent company which held shares in Peverel and
( 3) FCA to punish those banks which financed Peverel.
My posting on Dec 6 above refers – Item (3) should be PRA which regulates the banks – apologies for quoting FPA which is the Is wrong regulating authority .
http://www.bankofengland.co.uk/PRA/Pages/default.aspx