NWES: Enterprise agency awarded contracts to director's firms
A publicly-funded enterprise agency gave contracts and channelled European Union (EU) funds to firms connected to one of its bosses, as it piled on debt.
Norfolk and Waveney Enterprise Services (NWES) paid almost £900,000 to Nautilus Associates, owned by John Balch, who was then NWES strategic director.
NWES awarded work to Nautilus from 2011 onwards, it has emerged.
Mr Balch and former NWES chief executive Kevin Horne said "contracts were tendered where appropriate".
The contracts, revealed in a joint investigation by the BBC and the Eastern Daily Press, included one to project-manage the construction of the King's Lynn Innovation Centre (Klic) and secure its financing.
This work was part-financed by a £2.75m loan from King's Lynn and West Norfolk Council to NWES.
But the council is set to take over Klic after NWES defaulted on the loan in November.
Last year NWES made 14 staff redundant. It hit financial problems after taking over two other enterprise agencies in 2016/17.
Mr Horne and Mr Balch resigned from NWES in April last year.
In a joint statement, they said: "NWES has enjoyed a long relationship with Nautilus who have provided services over 15 years to support the growth of NWES.
"Contracts were tendered where appropriate and often bids were made in partnership. All related party transactions were shown in the accounts.
"This arrangement was endorsed annually by successive boards of NWES."
NWES also delivers a £6m grant fund called Score, part-financed by the EU, aimed at supporting new technology in the offshore sector, and Nautilus is described as a "delivery partner".
But another company in which Mr Balch has an interest, Scour Prevention Systems, received payments totalling £17,000 from Score, despite his senior positions at NWES and Nautilus.
Mr Horne and Mr Balch said they were not involved in the decision to award payments to this firm.
"This went through the normal process application, excluded all interested parties and included the appropriate checks and measures. This programme has been audited by the European Commission with no adverse findings," they said.
Other successful applicants for Score funding - media services firm CHPV and engineering company Manor Renewable Energy - invested in projects, expecting to claw back a large portion of their money under the scheme, but complained they had yet to be reimbursed.
However, there is no suggestion Mr Balch's firm received preferential treatment.
Manor Renewable Energy said it had not been paid about £50,000 it was expecting, leading it to decide last month to close its Lowestoft office.
Managing director Eric Briar said: "We made the application for payment in the way we had been advised, being transparent with our costs, but to date have never received any funds (or contact) from Score and have just about given up with it, to be truthful."
Both companies confirmed their applications were approved and they provided supporting documents to confirm their expenditure.
Alan O'Neill, owner of CHPV, said: "We're honest people; we work hard. This is a small industry and your name gets about.
"We're just a bit annoyed at the fact that these people haven't come up with what they have promised."
Last month the BBC reported that Mr Horne and Mr Balch sent NWES staff on free holidays at their French villa and then billed the agency.
NWES's new management stopped the payments after the discovery in April, describing the arrangements as "not appropriate".
Mr Horne has subsequently said that this had been approved by the previous board.
'A private transaction'
In 2015, NWES Property Services purchased a company called RA Jones & Sons, acquiring its Rouen House office building in Norwich.
According to its accounts, NWES Property Services purchased all shareholding and assets, and RA Jones & Sons became dormant.
However, Companies House records show the firm continued under a new name, Beacon Property Investments - the company that invoiced NWES for staff holidays at the French villa.
Its sole shareholders were Kevin Horne and John Balch.
Land Registry documents show a plot of land used as a car park in Stepping Lane, behind Rouen House, was retained by Beacon Property Investments.
This was only transferred to NWES Property Services after Mr Horne and Mr Balch left in 2018.
Mr Horne and Mr Balch did not respond to specific questions over why the car park was not registered to NWES until 2018, or why information in the 2015 accounts did not reflect this.
Mr Horne said "neither NWES or Beacon Property Investments has any dispute relating to this matter".
He said it was "a private transaction between private companies with no public money utilised whatsoever" and that NWES had received all the rental income from the car park.
Norwich North's Conservative MP Chloe Smith was notified about concerns relating to NWES last April, and informed the Cabinet Office.
She said: "When allegations were first raised with me, I alerted the department in central government that looks at fraud, who passed it to Norfolk Police to ensure any aspect of criminality is fully investigated."
Norfolk Police has so far been unable to confirm that it was notified.
Mr Horne and Mr Balch strongly deny any suggestion of wrongdoing.
Current NWES chief executive Jo Clarke said she was working to "remedy the position" and thanked creditors and grant recipients for their patience.
She said: "I'm most concerned that allegations relating to historic issues in NWES continue to surface.
"These matters could impede the excellent work that the current, entirely professional NWES team are successfully delivering in the community and we take such allegations very seriously."
She said the board had already investigated some of these allegations, leading to one funder being repaid £3,000 over an unspecified "financial occurrence" in 2017.
"This matter has now been comprehensively investigated utilising external legal guidance and the partner affected has been fully informed," she said.