08.03.24 Local Power

Thurrock launches fraud claim against businessman behind council’s disastrous deals

The businessman at the heart of the secretive deals that bankrupted Thurrock council is being sued for fraud by the local authority.

According to legal filings, Thurrock has instructed law firm Birketts to bring a commercial fraud claim against Liam Kavanagh and his company, Rockfire Capital, in the civil courts.

The latest development follows a four-year investigation by the Bureau of Investigative Journalism (TBIJ), which last year exposed how Kavanagh appeared to have cheated the Essex council out of as much as £130m. He used the money to buy various luxury assets including a country estate, a private jet, a yacht and a fleet of supercars.

The episode left Thurrock with what was then the biggest budget gap ever reported by a local authority, its residents facing years of tax rises and service cuts.

TBIJ’s investigation revealed that Kavanagh and his companies had vastly exaggerated the value of a group of solar farms it had invested in using money from the council.

Between 2016 and 2020, Thurrock poured £655m, borrowed from other local authorities, into bonds issued by companies owned by Kavanagh so he could buy the farms.

Kavanagh has previously told TBIJ he denied misleading the council and the allegation of fraud.

The deals with Kavanagh and his businesses were at the centre of a disastrous investment policy overseen by Thurrock’s chief financial officer, Sean Clark. TBIJ found that the pair met in secret at a five-star London hotel to discuss the deals.

In January, the Financial Reporting Council (FRC), the UK’s accounting watchdog, announced that it had launched an investigation into an accountant in relation to activities at Thurrock.

The council remains in a precarious financial state following the collapse of its investments. In November 2022, figures showed that its failed investment policy had left a budget gap of nearly £500m.

Since then, it has declared effective bankruptcy and its financial affairs have been taken over by Essex county council. Thurrock was given permission to impose a 10% council tax hike without a local referendum, increasing household bills by hundreds of pounds per year.

At the end of January a buyer was found for the solar farms, at a loss to the taxpayer of around £200m.

TBIJ has contacted Kavanagh’s lawyers for comment.