English council claims Dubai-based businessman misused £150mn
Thurrock Council accuses Liam Kavanagh of diverting funds to buy a yacht, a Bombardier jet and a 232-acre country estate
Thurrock Council has accused Dubai-based businessman Liam Kavanagh of misusing about £150mn of funds it invested into solar farm-backed bonds and spending some of the money to buy luxury property, a jet and a yacht.
The local authority in south-east England, which was made bankrupt in 2022 largely as a result of its dealings with Kavanagh, made the claims in High Court papers made public for the first time this week.
Thurrock has issued a claim against Kavanagh and his company Rockfire Capital in relation to nearly £400mn it invested in bonds backed by British solar farms in deals with the businessman between 2017 and 2020.
The council initially invested almost £270mn and claimed it put in further money on the basis of “fraudulent misrepresentations” by Kavanagh and Rockfire.
The authority, which racked up huge debts to fund the investments, also claimed Kavanagh used some of the money to make purchases largely “for his personal benefit”.
The court documents accused him of diverting funds to spend £13.7mn on a yacht, £9.1mn on a Bombardier jet and £20.75mn on a 232-acre country estate in Hampshire.
The council alleged Kavanagh deliberately caused “completely unrealistic” electricity pricing assumptions to be provided to a third-party valuer, Association for Public Service Excellence, which led to the assets being overvalued.
“We are not responsible for the investment decisions of others neither do we undertake DD on others behalf behalf [sic] . . . power prices go up and down valuation goes up and down,” Kavanagh wrote to a colleague in January 2020 after another employee raised doubts about the pricing assumptions.
Kavanagh’s email, cited in the court filings, added the deal with the council was a “very long term play”, and that it would not be a problem for the council to “accommodate drops in income”, including due to prices or “breakdowns whatever [sic] the sun doesn’t shine”.
He added: “These funds along with the existing will be used to create a new family investment office and create wealth for years to come this has always been my plan.”
In a written statement passed to the Financial Times by lawyers for Kavanagh, he argued Thurrock’s claim had not been validly served and that he “strenuously” denied the allegations.
Kavanagh added he asked the High Court to throw out the claim on the basis that the court did not have jurisdiction, and that he would put forward “a full defence” if the court did allow the claim to proceed.
APSE, which is not accused of any wrongdoing, said it “acted with the utmost integrity” and was “awaiting the outcome of due legal process.”
Rockfire Capital’s liquidators did not respond to a request for comment.
Thurrock Council issued its claim against Kavanagh and Rockfire Capital in March but court papers only became publicly available earlier this month. The council has sought damages.
In July, a High Court judge ordered that Kavanagh should be served papers through a legal firm in the United Arab Emirates.
Thurrock is one of the most heavily indebted councils per capita in the UK and had to declare itself effectively insolvent in December 2022 after accumulating about £1.4bn in debt.
The council was led by the Conservatives throughout its dealings with Kavanagh. In May, Labour won control of the authority.
Thurrock’s budget deficit for the 2022-23 year was forecast at £470mn, more than three times annual spending.
The council is just one of a series of local authorities that have run into trouble after making commercial investments to offset cuts in central funding during the years of austerity that followed the 2008 financial crisis.
The UK’s accounting watchdog has since launched an investigation into an unnamed accountant in relation to Thurrock Council’s investments.
John Kent, Labour leader of Thurrock Council, said: “We have an obligation to Thurrock’s residents to make sure that we leave no stone unturned and vigorously pursue all available legal avenues to recover as much money as possible to help Thurrock Council get back on a firm financial footing.”
Thurrock’s dealings with Kavanagh were laid bare a year ago following an investigation by London-based non-profit Bureau of Investigative Journalism.