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factual
FACE THE FACTS
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Face the Facts
Transcript : Face the Facts - 01 August 2008
THIS TRANSCRIPT WAS TYPED FROM A RECORDING AND NOT COPIED FROM AN ORIGINAL SCRIPT. BECAUSE OF THE RISK OF MISHEARING AND THE DIFFICULTY IN SOME CASES OF IDENTIFYING INDIVIDUAL SPEAKERS THE BBC CANNOT VOUCH FOR ITS COMPLETE ACCURACY.

FACE THE FACTS: The Promised Land

Presenter: John Waite

TRANSMISSION: FRIDAY 1ST AUGUST 2008 1230-1300 BBC RADIO 4
-------------------------------------------------------
Waite
I'm standing on a field in Iver in Buckinghamshire. It's a field co-owned by 95 people who each paid up to £37,000 for less than a quarter of an acre of it. Now at the moment it is classified as green belt. They would like to have houses built on it. Then they have been told they will get back more than four times their original investment.

Clips
We come from an agricultural family, back in India, we love land, we love to own it so perhaps we have got a reason we bought this plot.

The idea was to build something - a dream home - that we've always wanted - the central staircase etc. Everybody's got dreams, we can dream and we thought brilliant, it would be very good for us and that's the way forward.

Waite
On this week's Face the Facts, we investigate the company which sold those small parcels of land as an investment opportunity to thousands of people looking for a good return on their savings. Inviting those who took part essentially to gamble that the restrictions on Green Belt land would be lifted to allow developers to build new homes. And promising to persuade planning authorities to redesignate their green fields as suitable for housing. Yet experts have told us that at most of the sites there is little to no prospect of housing ever being built. We've discovered too that the company from which they bought the plots, went into administration in April, despite being able to make £9 million worth of loans to sister companies and subsidiaries over the last two years. And that the man behind UKLI Limited, Bali Chohan, has a CV that's a work of fiction. The reality for his investors, however, is that all they've been left with is a strip of virtually worthless land and, of course, their regrets.

Clips
I bought it for my children, I don't know how I'm going to recover. I have to cut back on my expense and I don't know.

If it's too good to be true then it is and I thought it was too good to be true and I was foolish and I put my hand up say I made a dreadful mistake.

I only invested £8,000 of my own savings but the rest of the money came from the money paid to my children as child benefit. I owe this money to my children now you know, so I have to repay them first.

Waite
At the time those people were deciding to invest in land, there was a good deal of talk about putting right the chronic housing shortage in Britain. Leading to speculation that areas of the countryside - even the Green Belt - would have to be built on to make way for these new estates.

It was against this background that so-called land banking suddenly became big business. The economics of which were simple. Agricultural land sells at almost £5,000 an acre. But land which has been earmarked for development is worth a lot more - the average for England and Wales is £1.2 million an acre. In London this can rise to more than 4 million an acre. So Green Belt land used for farming which suddenly becomes available to be built on, may increase hugely in value overnight.

Atkinson
Well I came home from work one day about four years ago to find that a lot of people had turned up and were busy hammering stakes into the ground and marking out what turned out to be individual plots, the idea being that the company that was doing it was going to sell them to people as investments.

Waite
That's Chris Atkinson who noticed those strange goings on back in 2004, in the field opposite his home in Majors Green near Bromsgrove in Worcestershire. Puzzled, he decided to investigate the company offering the plots for sale.

Atkinson
We looked at the prices and the prices that were being asked for some of these plots were round about 22,000.

Waite
Twenty two thousand pounds?

Atkinson
Yes.

Waite
For how - for how big a plot?

Atkinson
I think they were around about a sixth of an acre.

Waite
Afraid that investors were being misled, Mr Atkinson set up a website called Property Scam - scam standing for "sale of countryside awareness movement". Where he receives regular e-mails from people regretting their investment.

Atkinson
Okay so we'll have a look in the mailbox first and see if we can find some of the queries we've had recently about UKLI. Okay and there's the most recent one - this is just a chap who wants our advice on whether to hang on to his plot.

Waite
So I mean that's literally in the last couple of days isn't it that that's coming in, so this is an ongoing concern obviously.

Atkinson
Yes it is absolutely.

Waite
UKLI Ltd - the L I stands for Land Investments - was based in London's Mayfair and we should make clear at this point that it should not be confused with several other UK companies which have a similar name. It employed between 60 and 80 sales staff - on attractive commissions - who successfully sold plots to 5,000 people at 17 sites across the country.

The company specifically attracted British Asians with adverts on commercial stations like Sunrise and Panjab Radio.

Punjab Radio clip

Waite
We've seen the script for one of the ads - which ran in Hindi and Punjabi.

UKLI Ad
Wake Up! UK Land investment is selling plot after plot.
Countless people have invested in land and you are still sleeping?

But will you call this a good investment?

What are you talking about? UK Land Investment is one of the experts in land investment. Plots start from £10,000 - small investment and if planning permission is granted you could gain big time! I'll dial the number for you. Here talk to them.

Waite
Atika Moghul who invested with UKLI says it was a clever strategy to attract the Asian community.

Moghul
The Asian sort of state of mind, we do this over years, we've been owners of land, we invest in land, we like to build houses on plots of land and I think that's why we were targeted. And keeping in mind that the UKLI company was owned by an Asian person, he knew that very well and I think that's what he sort of counted on, psychologically.

Waite
Mrs Moghul and her father and her brother all bought plots in Billericay in Essex in 2004. For which, they each handed over £16,500.

Moghul
This was a time when the housing market was just taking off and to us we thought wow sixteen and a half thousand pounds is very, very reasonable, we can't get a house for that much and why not put it in a plot of land and just leave it for investment later on and we'll build a house and make money of it, maybe later on. That's how we were sort of like tuned in.

Waite
What sort of pitch did they make?

Moghul
The pitch was that three to five years definitely we were going to get planning permission.

Waite
Definitely?

Moghul
Definitely. And it'll be for a four to five bedroom house, there were houses that they showed us - like floor plans and things - what you could do with the plot of land etc., all very exciting, all very doable. And what we were told was that this is where we all went wrong was that the value of the land is actually £32,000 but you only have to pay half now and half on planning permission. And we thought well if they're going to trust us with sixteen and a half thousand or £16,000 well we should trust them.

Waite
Visit Lodge Farm, in Billericay, today though, where, together, the Moghuls paid nearly £50,000 for their 300 square metre plots, and you won't see any houses. That's because there's no planning permission for development on its 23 acres. And, if a report we've seen by independent planning consultants is anything to go by, there never will be.

They describe Lodge Farm as an "isolated site with no real value" that is part of the Green Belt. The local authority, they add, has "no shortage of land". And they rate prospects for getting planning permission as "minimal".

Moghul
We were sold a plot of land which has no potential of planning permission, we were sold to it as having potential for planning permission and basically they were Green Belts and they will not have planning permission since - I don't know 20, 30 years easily, if that, not in our lifetime.

Waite
So what impact has all this had on you?

Moghul
Well apart from the fact that I had to remortgage my house to get the money out and I'm still paying for that plot of land, that's a major impact, I mean especially with how things are going in the housing market - I could have bought another house.

Waite
Not quite the outcome painted in a promotional DVD, sent out by UKLI Limited to all its investors. In which one of the company's planning experts talked about plots which had been sold in Borehamwood, Hertfordshire.

UKLI Ltd Promotional DVD
There's a growing amount of money left to be shared between the developers' profit and the land value. All of that value is going to land, numbers aren't being built because land's not being made available, again more and more pressure therefore on the value of the land which does have planning permission. Benefits of getting a site allocated for residential development is just getting more and more exciting all of the time.

Waite
Another person caught up in the exciting sounding investment opportunity was retired GP Govind Lall.

Lall
[Indistinct words] buy and if you manage to introduce somebody else then they might give you some better discount or something like that. In my case six of our friends bought this and I think partially I'm - blame to me because I didn't realise that they would also get into this mess.

Waite
A mess indeed. Dr Lall and the six doctor colleagues he suggested the scheme to - invested over £100,000, part of it in the same Billericay site that Atika Moghul and her family found so attractive. Dr Lall bought with the rather empty guarantee of a refund if planning permission wasn't granted.

Lall
It's a lot of money. I have to cut back on my expense and I don't know, I thought I bought it for my children but I don't know how I'm going to recover.

Waite
Why didn't you get your own solicitor to look into things?

Lall
The person who was selling and he said that you do cover our solicitor fee.

Waite
According to that detailed planning report we've consulted, of UKLI's 17 sites, just two are rated as having a "good prospect for development", with one other described as having "good potential with time". Another three are said to have merely "limited" planning prospects - while eight are graded as "minimal".

Planning report
Lagham Farm, Lingfield, Surrey 114 acres

Waite
Of which the report says "There is no access, Green Belt site and rates the planning prospect as "minimal" while adding:

Planning report
Tandridge District Council confirmed they would resist any non-agricultural development in this location.

Pednor Road Chesham, Buckinghamshire 33.4 acres…

Waite
This, the report says, is in an area of outstanding natural beauty, with very poor access, and with planning prospects rated "minimal" And again:

Planning report
The planning vision is to promote agriculture, forestry, stabling or paddocks with no realistic prospect of securing an allocation for any form of development whatsoever, apart from those above.

Waite
Minimal prospects then on nearly half of the sites offered for sale by UK Land Investments Limited, as it operated from its impressive suite of offices in Berkeley Square in London.

And soon the company's own prospects were what you'd have to call "minimal".

Creditors meeting for UKLI Ltd.
Ladies and gentlemen, I think I'm - there's a bit of movement at the back but I will - I think I need to start otherwise we'll never get started ...

Waite
A creditors' meeting for UK Land Investments Limited, held in London in June. It was standing room only in the large venue, and the start of the meeting had to be delayed because there were so many investors wanting to know what would happen to the money they'd ploughed into the company. UKLI Limited had announced it was going into administration two months earlier.

We've been told that the company's collapse followed the calling in of a £3.3 million loan by the Clydesdale Bank. And Lee Manning from Deloitte is the man who's now handling its administration.

Manning
Potentially there could be claims of up to £70 million. The assets we have in the company at the moment, if we realise the properties that we have, could produce as little as two or three pence in the pound, if all the investors were able to claim.

Waite
The prospects for investors now are complicated. The administrators could sell off the land to raise money to pay off all the creditors - with investors too taking their share of any money raised. Or individual buyers could hold on to their plots and hope one day the land does receive planning permission. Whatever is decided, Lee Manning told me, it should be a collective decision as the investors effectively form a collective investment club. And such small individual plots of land will be virtually worthless, he says, if they are sold on a one by one basis.


Manning
The problem is if you had one whole field then you might have something of more value but the problem is once you've carved that up into a 100, 150 smaller plots it's extremely difficult to attract anybody who wants to buy, unless they can get the entirety. Now the company did not have any contract with the investors in its arrangements with them that gave the company the right to buy back the land, albeit at a large percentage of its enhanced value. And if the company itself had no rights to buy that land back from the individuals a developer would have to negotiate with potentially 150 or so individuals and the chances are one or two would hold out - what they would call ransom strips - and it would make it extremely unviable.

Waite
And that may not be the only hurdle investors of UKLI Limited face. We discovered that one of the fields they've bought, in Iver in Buckinghamshire, actually has a tenant farmer working it, Steve Payne. But investors don't see a penny of his rent because he has been paying that to UKLI Limited.

Payne
We understand that UK Land Investments bought it off the previous owner and we took on a tenancy or carried on our tenancy agreement with it, UK Land Investments knew that we were farming it and I assume that the people knew that when they bought the plots that it was agricultural land. We've still got a tenancy, we pay our rent and these poor people obviously have been led down the garden path.

Waite
Well, if the prospects look bad for the owners of that field, then spare a thought for Munir Khan, who paid £7,500 for a plot in Brede in Sussex. After UKLI Limited accepted that planning permission wasn't imminent, they agreed to swap his ownership to another site in Hertfordshire. So he sent off his old deeds, but the new ones failed to arrive before UKLI Limited went into administration.

Khan
I have nothing, I have lost everything.

Waite
But you don't even have a title deed to the land?

Khan
No I don't.

Waite
So no money and no plot?

Khan
No, no, no money and no plot, you see, I don't know where I stand. I'm shocked. And I wonder how come in the United Kingdom the FSA let them work in this situation.

Waite
The Financial Services Authority has been criticised in the past for failing to regulate effectively companies like UKLI Limited. However, the FSA has no responsibility for monitoring land banking companies per se, it only has the powers to intervene when the precise set up of a land banking enterprise makes it in effect a so-called collective investment scheme - when the company selling the land also agrees to represent those who buy it in either seeking planning permission for them or by managing the land. Five days before UKLI Limited went into administration the FSA served a winding up order on the company on the grounds that UKLI Limited was indeed a collective investment scheme, and as such it needed official authorisation to operate by the Financial Services Authority. Having failed to register, the FSA said, UKLI Limited was in effect operating illegally.

Promotional DVD
For any of you who are looking at other investment opportunities we've got five care homes under careful management. The other area that we've grown out into was the data and marketing services. The other area that we've grown out into we have a call centre operation. So if any of you have or require the need of this call centre we'd be happy to discuss that with you.

Waite
Another extract from the marketing DVD we heard earlier, revealing that UKLI Limited wasn't only interested in selling land. But that "diversification" has almost certainly reduced the amount of money available to creditors. Because in between February and September 2006, from its Berkeley Square H.Q., UK Land Investments Limited loaned those sister companies over £5 million. Including £2.3 million to that call centre company based in Glasgow, £1.4 million to an international call centre company, another £1.4m to the care homes operation and £359,000 to a consultancy firm also based in Berkeley Square. Lee Manning again from Deloitte.

Manning
To be fair if the company truly believed it was operating a scheme that was entirely legal it had every right to spend its money as it saw fit. And it wasn't really until the last few years that a series of loans to third parties - and I would argue - connected parties were made some of which were not as arm's length as one would ordinarily expect in a traditional trading company. Where we are concerned is that clearly from March 2006 there were serious discussions and allegations being made by the FSA and at that time I believe they should have been taking steps to preserve as much of their assets as possible, as opposed to making numerous loans and money therefore being spent in that direction.

Waite
Face the Facts has also established that UKLI Limited auditors, Moore Stephens, resigned in January 2007 after expressing concerns about the millions of pounds in loans being made by the company. In the formal letter they are obliged to write explaining such a decision the they say.

Auditor's letter
As at February 2006 a further £3.2 million of the company's funds have been lent to other companies or entities. Audit evidence available to us was deficient in respect of £2.2 million to companies and entities whose ownership we were unable to discover or confirm. According to the company's management accounts by September 2006 this had increased to around £5.5 million. We have not been provided with any evidence that the company has a commercial rationale for making these loans.

Waite
And Moore Stephens was even more direct about a loan made from UKLI Limited to its own founder, sole shareholder and director of the company, Bally Chohan.

Auditor's letter
The company had loaned £553,002 to Bally Chohan. As he was then a director of the company, the loan was unlawful. By September 2006 the loan had risen to £957,732. We are unable to say whether the loan is recoverable.

Waite
Baljinder or Bally Chohan was born in Bradford in 1975 and set up UKLI Limited when he was 28.

Last year he was barred from being a company director following a government investigation into another company he had set up - UK Property Fund Managers Limited.

The idea was to offer investment opportunities to Muslims which complied with Shariah law. Mr Chohan sent his proposal to a bank based in Saudi Arabia, but then the Department of Trade and Industry stepped in alleging he'd made false claims on his CV.

Mr Chohan said he had a degree from Brunel University - in fact he never completed his course and left with a diploma. He claimed he had an MBA from Henley Management College. He didn't. He says he worked as communications director for British Airways at the age of just 21. Another lie, though he did do some consultancy work for the British Airports Authority.

The Court judgement was damning.

Court judgement
His CV contained a number of misrepresentations and some outright lies. Whilst some of the misstatements can perhaps be seen as the product of ambiguity or carelessness this is not so in the case of the academic qualifications. Nor can some of the career claims, notably that regarding British Airways be dismissed on that basis. These are statements which were lies which were consciously put forward as truth

Waite
We were of course keen to speak to Mr Chohan about these claims on his CV; whether buying plots of farm land from him was ever likely to be a realistic investment opportunity, and what had happened to the millions of pounds in loans which disappeared from UKLI Limited.

Sadly, Mr Chohan was too busy, correcting his CV perhaps, to grant us an interview. Instead we received a statement from his lawyers. Mr Chohan is cooperating in the recovery of the loans, and as for the company's auditors resigning over the issue, "they had got it wrong". Last year Mr Chohan had been barred from being a company director but the judge who heard that case was satisfied Mr Chohan was a fit and proper person to remain a director of UKLI and he granted that special dispensation.

The government had investigated the company in 2005 and were satisfied about how it was trading. And it has always kept the Financial Services Authority aware of how it was operating and obtained "top legal advice" that it did not require the FSA's approval. Indeed, the statement went on, the regulator's ruling that it was operating illegally hindered the best interests of investors. Because:

Statement from Mr Chohan's lawyers
Far from permitting UKLI to push ahead with rezoning applications, the FSA actually stopped the process. For the individuals who bought the land it is tragic. Mr Chohan fully appreciates the seriousness of this situation and has proposed personally funding the cost of the planning applications for each site. UKLI employed professional experts who identified sites which could be re-zoned, and were keen to ensure that sales staff sold the plots in a correct and proper manner. They were given extensive training; there was a detailed monitoring system and action was taken where the company became aware of staff not following guidelines. The Department of Trade and Industry spent six-nine months within UKLI's premises in 2005/6. The DTI clearly saw nothing wrong. UKLI firmly believed that it was trading correctly and offered value for money for investors.

Waite
And you might think that would be the last word. Except that, the other day, casually surfing the internet as you do, I came across a website for a company called UK Land Investments International - and guess what? It's run by none other than the reticent Mr. Chohan. UKLI-I is based in Dubai, and if you can believe the company website, has offices in Hong Kong, Saudi Arabia, India and Malaysia. And what the company is offering foreign investors also sounded familiar.

UKLI-I website
Canary City enjoys an excellent strategic location, close to the M25 motorway and only 30 minutes by train to central London. This site has excellent potential for obtaining re-zoning for development, and its value could increase by as much as 350%! The site is within the administrative area of Bromley.

Waite
Well, I couldn't resist a trip to find Canary City…so I headed off for Bromley town centre.

Have you every heard of Canary City? It's apparently part of Bromley, Canary City. No idea? How long have you been taxi drivers?

Taxi drivers
Twelve years.

Eighteen years, nineteen years.

Waite
Nobody ever got in your cab and said take me quickly to Canary City?

Taxi driver
Oh no.

Waite
Know where Canary Wharf is don't we?

Taxi driver
Yes for sure.

Waite
Well Canary City sounds like the sort of Bromley equivalent, you know - financial centre of Bromley.

Taxi drivers laughing

Waite
Well it could be couldn't it?

Well it's taken a while but I have now found it. And this is Canary City. In fact it's a field, a huge field I have to say, a couple of hundred acres maybe but a field. Councillor Gordon Jenkins is with me, he sits on the development control committee of Bromley Council. Welcome to Canary City.

Jenkins
Oh thank you.

Waite
Is it likely it will ever be a city, are you going to give - is it likely that it'll be given planning permission?

Jenkins
Well to be honest I mean it is Green Belt. It's covered by all the Green Belt regulations, inappropriateness and all the rest of it. I think it's highly unlikely. Looking at it now I mean you've got to want to preserve something like this - it's beautiful, open field, countryside and long may it remain so.

Waite
So, Bally Chohan - the man behind a UK collective investment club that the Financial Services Authority has ruled "illegal", is now behind a collective investment club abroad selling exactly the same sorts of plots of land, but this time to foreign buyers. Let's hope their internet is working, and they can listen to Face the Facts.
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