A few years earlier Liam Kavanagh had been standing on a windswept solar farm in Swindon pitching an investment opportunity to councils desperate for a new source of income. Now he owns a solar empire bought and paid for in large part by the taxpayer and was living the sort of life most of us can only imagine. As well as flying the world in a corporate private jet, he had a 200-acre country estate and a fleet of supercars. Writes Gareth Davies
As he was chauffeured to the airport where his private jet waited, Liam Kavanagh reflected in typically colorful language on how much his life had changed. “Look at what we’re doing now,” he told his personal assistant, “you’re driving a fucking van to the fucking airport with Kavanagh after nearly 10 years of meeting in fucking car parks, smoking a fucking fag. All the shit we’ve gone through – it’s insane.”
He’s not wrong. Kavanagh’s story is insane. A few years earlier he had been standing on a windswept solar farm in Swindon pitching an investment opportunity to councils desperate for a new source of income. Now he owns a solar empire bought and paid for in large part by the taxpayer and was living the sort of life most of us can only imagine. As well as flying the world in a corporate private jet, he had a 200-acre country estate and a fleet of supercars.
This journey, as Kavanagh calls it, was only possible thanks to a series of secretive deals involving more than half a billion pounds of public money and a council in Essex. It poses serious questions for every level of government.
Not least of which is where on earth a seemingly missing £138m of taxpayers’ money has gone.
Over the course of four years Kavanagh’s companies received a staggering £655m from Thurrock council, a commuter belt borough east of London. Using that cash the companies bought dozens of solar farms and the council generated millions in extra income from the interest on the loans. The Conservative-run council then spent years insisting the investments, which were funded through a bizarre process of borrowing from more than a hundred other local authorities, were safe and secure – all while rebuffing attempts to check whether that was correct.
Now a three-year investigation by the Bureau, hampered at virtually every stage by the council, can reveal apparent gaping holes in the investments that threaten to cost the public hundreds of millions of pounds, holes which lead directly to Kavanagh’s companies. The council now admits it has kept councillors and the public in the dark about these serious issues and our findings have led to calls for an urgent government investigation.
That day on the way to the airport, Kavanagh knew the Bureau’s investigation was well underway – the first story had just been published – but he had no idea the conversation was being recorded by a dashcam. As a result he was caught plotting to “get rid” of some of his publicly funded businesses, seemingly to try to avoid further scrutiny. “You can write about it if you want,” he said, “but there’s nothing to write about – it’s done”.
Turns out he was wrong after all.
Meetings in Mayfair
Thurrock’s involvement with Kavanagh began in June 2016 when, alongside Warrington and Newham councils, it financed the purchase of a solar farm in Swindon through bonds marketed by his company Rockfire Capital. Over the next two years Thurrock helped buy 53 sites across the UK, all of which are now owned by Kavanagh.
The investments were issued through a complex series of bonds, all due to mature in the next five to six years. In return, Thurrock would get interest payments worth millions of pounds. Eventually, Thurrock became the sole local authority investor in Kavanagh’s businesses.
All of the deals, and the loans from other councils that ended up funding them, were arranged by Sean Clark, Thurrock’s finance director. When our investigation first began Clark told the Bureau he had “never gone out looking” for money-making opportunities. “I wouldn’t do that,” he said. “I wait for opportunities to come to me.”
However, Clark repeatedly went to London to discuss deals with Kavanagh; these trips were so frequent that, when asked about them, members of the finance team allegedly joked that their boss was “off to see the City boys to play with our money”.
The pair had met at the five-star May Fair hotel several times. There is no public record of the meetings. But it was after them, between late 2018 and early 2019, that Thurrock injected a further £138m into Kavanagh’s companies.
Nearly four years later the council has little idea where all of this additional investment ended up.
The extra cash related to a portfolio of 32 solar farms the council had helped pay for in December 2017, with more than half of the £515m price provided by the council. The only basis for the £138m top-ups was a short report produced on behalf of Rockfire Capital – Kavanagh’s company that marketed the bonds – in November 2018 that claimed the sites had substantially increased in value since they were purchased a year or so earlier. If this were correct then putting more money in would increase interest returns for the council with little additional risk.
But was this actually the case? The council has repeatedly said it undertook due diligence and sought external advice on all its investments. On this occasion, however, there appears to have been no adequate attempt to determine whether the figures provided on behalf of Rockfire Capital stood up to detailed scrutiny.
Toucan Energy Services is the company responsible for the day-to-day management of Kavanagh’s solar farms. The director, Dan Kirk, confirmed that so far as he knew neither the council, nor any organisation representing it, had visited the sites or requested contract or performance data in relation to the top-up investment – all of which would have been required to accurately value the sites.
Kavanagh is understood to acknowledge the existence of the report but to maintain that Rockfire Capital was not an investment advisor and was not responsible for how the council invested its money.
Just as when the solar farms were originally purchased, there was no public announcement by the council of the extra millions being spent. Although perfectly legal, this lack of transparency and accountability was typical across all of the investments, though the council insisted that it kept relevant people informed about what it was doing.
Eventually, however, the questions around value had to be addressed. Earlier this year Toucan was contacted by investment experts at Camdor Global Advisors, hired by the council to value the entire solar farm portfolio. It is understood that Camdor asked what, if any, improvements had been made to the 32 sites connected to the extra investment – only to be told there had been none. Kirk confirmed to the Bureau that Toucan Energy Services never received any of the £138m.
(Kirk was not involved in purchasing the solar farms or issuing the bonds to the council, had not met or communicated with Clark at the time these investments were made and has no role in the security arrangements relating to them.)
The value of the entire portfolio is vital to determining if public funds are likely to be recovered in full when the bonds mature in 2027 and 2028; the sites would have to be sold in order for the debt to be repaid. To complicate matters there is substantial bank debt attached to some of the farms that would legally have to be paid back first.
“They’re asking sensible questions – you just don’t normally get them four years after the investment has been made,” said a source.
The Bureau’s investigation has learned that, according to Camdor, the 53 sites are presently worth nowhere near enough for the council to recoup all of the money it gambled on Kavanagh’s schemes. The shortfall could be as much as £200m, of which the extra investment seemingly arranged at The May Fair hotel would represent well over half. Camdor declined to comment.
When contacted by the Bureau, the council did not contest the shortfall or that it could be £200m. It’s a sum that’s roughly equivalent to what the council spends on services each year.
‘Now it’s dead, so just fucking let it die’
If the £138m did not go into the solar farms, where did it go? The logical place to look would be at a company Kavanagh owned when the investments were made, Rockfire Investment Finance (RIF), which had issued most of the bonds in which the council invested.
But RIF was put into liquidation in early 2021 without filing its last two sets of accounts. On that drive to the airport in June 2020, days after the Bureau’s first story on his businesses, Kavanagh explained why. A dashcam captured every word.
He said he needed to “protect everybody’s interests and the money” and “get rid” of RIF and Rockfire Capital. A “bomb got dropped” with the “fucking article shit” but that it had “made my mind up: wind up Rockfire and start selling assets, restructure”. He went on: “I’m not bothered now, I’m never going to raise a pound from a local authority again.”
After appearing to receive confirmation that the process of liquidating one of his companies was under way, Kavanagh continued: “Get that gone. Get shit transferred over, get rid of fucking RIF, get rid of all this fucking other bullshit.” He detailed his strategy: “You take risks, you get in and get out.” And he concluded on Rockfire succinctly: “Now it’s dead, so just fucking let it die.”
Within days a new company, Anyard Holdings Ltd, was registered in the Isle of Man, an offshore tax haven. The process of liquidating Rockfire Capital began in September 2020. In February 2021 the farms were transferred into a new structure with Anyard, for which Kavanagh is the sole shareholder, at the top.
A month later the process to get rid of RIF and another key company, Toucan Bond Co 19, had started. As for the £655m these two companies owed to Thurrock, the plan seems to have been for the debt to move across to a new company, Toucan Energy Holdings 1 (TEH1), which would then become the bond issuer.
Kavanagh has indicated that the £138m had been “properly recorded” on the balance sheet of TEH1 – a company whose first set of accounts have been overdue since April – and that it would be wrong to suggest the money had to be invested in the solar farms, and that there were “no specific terms” as to how the funds could be used.
The Bureau understands that Kavanagh maintains he has always been an entrepreneur and that his high standard of living predates the solar farm deals. However, the Bureau has found Kavanagh, 45, made millions through dividends and has enjoyed the benefit of huge sums of money spent by him and his companies during the period where his businesses had received the additional £138m investment from Thurrock council. The private jet he regularly used cost around £10m.
He has lived in a country estate purchased for £20m in December 2020 without a mortgage by a trust company which had been set up the day before one of the solar farm deals.
Then there is the fleet of luxury cars worth millions of pounds and properties in a number of countries around the world.
There is no evidence to suggest any of the purchases and spending were illegal.
Getting rid of Rockfire Capital and RIF had consequences. The council, as RIF’s largest investor, had not given its permission for the restructure. As a result companies within the group, headed by Anyard, breached their obligations, thereby going into default, and failed to file their latest sets of accounts. The companies, including those attached to many of the solar farms, subsequently could not move money in order to pay Thurrock the interest it is owed.
When, in February 2022, the council was due its latest interest payment of £12.5m, not a penny was paid. But when councillors came to vote on this year’s budget later that month, there was no mention of the missing payment. It remains unpaid, though it is understood Kavanagh believes all interest due has been paid.
In May one of Kavanagh’s companies, Perpetual Power Holdings, finally published its 2020 accounts that had been due since September 2021, revealing previously undisclosed details about his businesses’ deals with Thurrock council: the defaults, the missing interest payment, and the total debt of £655m. The accounts also show that if the council does ask for that sum to be repaid early then the group will likely be unable to meet its liabilities – the sites would have to be sold for the council to get most of its money back.
While Kavanagh remains, through Anyard Holdings, the ultimate beneficial owner of the group and the solar farms, he has resigned all his directorships other than Rockfire Capital, which is in the process of being liquidated, and is no longer directly involved in the day-to-day business.
The only director in the new structure, including the companies attached to each of the 53 solar farms, was Ian Walsh, the former finance manager of Rockfire Capital. As sole director of Toucan Energy Holdings 1, he was the company officer in charge of ensuring the council is repaid when the bonds mature.
On July 1, three days after the Bureau sent him detailed questions about TEH1’s finances – including whether the company is solvent – Walsh resigned as a director of TEH1. He has yet to respond to our questions.
In a statement, a spokesperson for TEH1 said the company had “strengthened its management team and hired external advisors to assess rapidly the group’s affairs and identify the best path forward in the interests of all its stakeholders”.
‘The beautiful thing is it’s someone else’s money’
The Bureau’s investigation began in 2019 when we spotted in a government spreadsheet that Thurrock had borrowed more than £1bn from other local authorities, £450m more than the next council in the list. A bit more digging revealed an investment policy that included long-term interests totalling £815m in the renewable energy sector. We now know 80% of that total was connected to Kavanagh’s companies.
In an interview at the time, Clark described a bizarre arrangement, involving dozens if not hundreds of short-term loans, many as short as a month in length, with the effect that the council was in a perpetual state of borrowing from one local authority to repay another. Piecing together data in obscure spreadsheets revealed Thurrock had borrowed from at least 150 other councils. When contacted, some of the biggest lenders said they had not even asked what the loans were for because the arrangement meant they got their money back, with interest, after a short period of time. It was effectively a source of apparently limitless public cash to which Kavanagh’s companies were indirectly given access.
After the Bureau’s first story, some Thurrock councillors encouraged Clark to borrow and spend even more, with one declaring during a public meeting: “The beautiful thing about this plan is that it’s someone else’s money.” Another said elected members were not supposed to question decisions taken by council officers.
Time and time again the council has defended its investment policy, which it says has raised more than £115m towards services since 2016, avoiding some of the cuts made by other local authorities.
Publicly it has dismissed any concern about its business dealings with Kavanagh, even after he was accused, during a high court trial involving one of his companies, of misleading the council into paying a £5m “arrangement fee” to the company. A judge later concluded he had failed to include the payment in a document outlining one of the solar farm investments, which “cast serious doubt” as to whether it was a genuine fee for arranging the deal or a “covert extraction of funds by Mr Kavanagh for his own benefit”.
Kavanagh denied any wrongdoing. He argued that, although he had not told Thurrock about the fee, the council was aware his company always charged a commission.
Other councils, however, were concerned. Some refused to lend Thurrock any more money because, in Clark’s words, they did not want to “risk being the next ones in this story”.
As a result Thurrock has so far borrowed £350m from a Treasury-run lending body, which is supposed to pay for large-scale infrastructure projects, to prop up the business model Clark created. This has come with increased borrowing costs that have sky-rocketed since the loans were issued, and are likely to be even higher when the council needs to refinance from this October.
While there is no suggestion that any rules were breached, concerns have also been raised over the secrecy surrounding Thurrock’s deals with Kavanagh, and the lack of adequate oversight and scrutiny over local authorities’ commercial investments more broadly.
As recently as January the council was trumpeting the success of its investment policy. But Clark has now known for months about the serious concerns the Bureau has uncovered. He knows the council will probably not get its money back in full when the bonds mature, and that the shortfall could run into hundreds of millions of pounds. He knows Camdor has been unable to trace the missing £138m. He knows there is a formal objection to Thurrock’s latest accounts that questions the legitimacy of the entire investment policy. And he knows the council has been owed £12.5m since February.
Why has Thurrock not taken more steps to recover its investment? Maybe it can’t. The council has repeatedly said the investments are secured against the solar farms, but it seems this has effectively not been the case for some of the deals since at least 2020.
The problem is understood to be complex but, according to a source, there are two major potential issues with the protective arrangements designed to prevent huge sums of public money from being lost. First, there are concerns that adequate steps were not taken to ensure the arrangements were enforceable, known within the financial sector as “perfecting” security.
Second, the Kavanagh-owned company that acted as the security trustee for some of the deals, Rockfire Security Trustee Ltd, has been liquidated.
On 22 May 2020, the day our first story was published, Clark emailed Kavanagh to say he had read the piece. “I’m going to need something about security of investment,” he wrote. (Ahead of that story, the council had told the Bureau that the investments were “secured against the assets adding a significant level of protection”.)
He may not have been aware that, a week earlier, Kavanagh had started the process of dissolving Rockfire Security Trustee Ltd. The company was dissolved in October 2020 and there is no ready evidence of a replacement security trustee being appointed. The Bureau understands this is because there likely isn’t one. This would be an extraordinary circumstance given the amount of money involved. Thurrock declined to respond to questions about the security arrangements.
Any absence of security, and a trustee that can act on the lender’s behalf to enforce it, greatly increases the risks associated with a loan because it means the lender may have no adequate legal basis with which to take action to protect its interests.
The Bureau sent detailed questions to the council and Clark, as well as an interview request to the council leader, Rob Gledhill. Instead the council issued a short “corporate response” on everyone’s behalf.
The spokesperson said: “Thurrock council continues to deliver its successful investment policy, which has supported vital services that residents value.
“Through proper, thorough and robust governance and risk management, we are working with external advisors to ensure the council’s position remains secure. The issues raised have been known for some time and are being actively managed, mitigated and resolved through that oversight with significant external advisors.”
The council told the Bureau that the new senior management team at TEH1 had shared evidence that “existing assets remain strong,” and added that it was “not able to provide further details at this time to prevent any prejudice of the multifaceted processes currently being worked through”.
A spokesperson for TEH1 said the top-up investment of approximately £130m was secured against assets. They said Toucan group has resources sufficient to meet interest payments on its bonds.
John Kent, leader of Thurrock council’s Labour group, has written to the Department for Levelling up, Housing and Communities to request an urgent government-led investigation.
“Thanks to the Bureau of Investigative Journalism’s dogged determination to get to the truth, we now know the financial situation of Thurrock council is very grave and far worse than we could ever have imagined,” he said.
“This is a scandal of huge proportions, and we need to know what has gone so disastrously wrong.”
The Department of Levelling Up, Housing and Communities told the Bureau: “We are monitoring the situation in Thurrock closely and will not hesitate to take action if required.”
Liam Kavanagh, through his solicitors, declined to provide a response for publication to the matters raised.
Gareth Davies is an award-winning journalist specializing in local government.