Exclusive: Confidential emails show insiders had concerns a £1M deal would leave council out of pocket

Dear members — Two weekends ago, we published Matt O’Donoghue’s compelling longread — an investigation into how the city council’s investment in a luxury car firm didn’t just fail to turn a profit, but lost taxpayers £950,000. Today, we’re publishing an exclusive follow-up to this story, also written by Matt: confidential emails from council officers suggest at least some at the council were concerned that this wouldn’t be a lucrative investment. 

So why weren’t these dissenting voices listened to? That’s the question The Post explores in this must-read sequel to our first piece. As always on a Thursday, this is a piece for members only. Our free readers will be able to access the top of this piece, but if you want to read a story about council insiders’ withering verdicts on a deal that cost huge amounts of public money, you’ll need to join as a member if you’re not part of our paying community already.

To publish this story, we had to sift through an entire Google Drive’s worth of documents. Today we’ll reveal the documents that we believe, in a functioning democracy, we should have had access to all along.

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Exclusive: Confidential emails show insiders had concerns a £1M deal would leave council out of pocket

By Matt O’Donoghue

Confidential emails shared exclusively with The Post show council insiders knew a £1 million deal had been a disaster, weeks after they doubled down on their loss-making investment. 

The city’s administrators claimed in March 2020 that their investment into the Briggs Automotive Company (BAC) had more than quadrupled to be worth £4.4 million, a year after some in the council shared their belief that the majority of the money was already lost. Now, Joe Anderson — the former Mayor of Liverpool — tells The Post: “Yes — I admit this was a cock-up and maybe someone should have their wrist slapped”.

As we reported two weeks ago, the investment in BAC was part of the city’s ‘Invest to Earn Strategy’ introduced in 2014. Returns on council investments in the private sector were supposed to bolster its austerity-battered finances. From its factory in Speke, BAC manufactures a single-seater sports car called the Mono that’s beloved by American rappers and British celebrity petrolheads. The council, under the leadership of former Mayor Joe Anderson, ploughed a total of £1 million of public funds into BAC. 

Late on Friday afternoon, as we were putting the finishing touches to our original piece, a call came through from the council that our overdue Freedom of Information request for internal council documents relating to the investment was finally ready to view. It had been nearly two months since we made the request. These documents arrived too late for us to include in our first article but you can see them for yourselves by following this link.

What’s there presents a paper trail that details how taxpayers’ money was lost on a series of questionable deals that cost nearly £1 million. It shows public funds poured into the project while Cunard Building insiders appear to know things didn’t stack up in the council's favour. In emails now released, officers discuss concerns that their investment is in a company with “financials” that are “fundamentally weak”. 

This doesn’t mean Briggs is a bad bet for those willing to risk their money on a company that is still to post a profit. But trying to plug the holes left by government austerity with a punt on BAC’s supercar did not produce the desired payback.

In response to this story, a BAC spokesperson told The Post they had made a major contribution to Liverpool's economy and created over 100 new direct and indirect jobs. The company said in a statement:

In recent years, the global automotive industry has faced unprecedented and challenging external headwinds, such as the Covid-19 pandemic. Like all global automotive companies, BAC has had to adjust its business strategy to adapt to this changing automotive landscape. BAC is currently over-proportionally investing in the development of its next generation vehicles and supporting business development to deliver long-term, sustainable, future growth for BAC as well as Liverpool City Council as well as the North-West region.

Today, The Post can exclusively reveal how some at the council knew that their £1 million had dwindled down to just £50,000, while others continued to claim the loss-making deals delivered millions in profit.

‘Their financials are fundamentally weak’

The information that has been shared with us is illuminating. What we now know, thanks to the documents, is that some in the council were fully aware it had made a bad bet which was unlikely to pay off. Among our paperwork is an email exchange between council officers who had just returned from a visit to BAC’s factory in Speke where the Mayor had also been present. All names have been redacted.

The first email is dated March 4th, 2019 and comes shortly after the council paid nearly £500,000 to double their stake in BAC shares to £1 million. Here’s what one council staffer, whose name is redacted in the documents released to The Post, wrote following their tour of the factory floor:

The 2 x £0.5m payments are worth well below the par value of the equity, e.g. £490k cash for 1% equity potentially worth £40-50k today. Presumably this was done / justified with a view to supporting them as a business in exchange for jobs created … from what I have seen, their financials are fundamentally weak.

This is a taxpayer-funded investment that the author of this email already appreciates may “potentially” be “worth well below” what’s been paid, and he believes this just three weeks after the deal was done. Who else believed this was the case is unclear, due to the redactions in the emails. But whoever it was at the council who entered “£4.4 million” as the valuation of their Briggs investment in the council’s 2020 accounts should have been told. 

Any fair assessment of BAC’s published accounts could have shown the company was in no obvious position to deliver the 8%-15% returns that the council required under their “Invest to Earn” strategy. Yet, through no fault of Briggs, these loss-making deals were still done. How could this have been allowed to happen?