ARHM’s pathetic response to the Peverel / Cirrus scandal

… while “under review”, Cirrus sponsors the ARHM summer conference and is doled out generous contracts

In the club: Richard Wheeldon, ARHM vice chair, part of the Cirrus review team and an executive of Housing and Care 21 housing association. It handed out a bumper contract to Cirrus in February, two months after the OFT found it had carried out collusive tendering and without waiting for a decision on the company by the ARHM review team.

Just as well, then, that the ARHM did not subject Cirrus to disciplinary measures … (as if that were ever likely)

It is now 13 months since the defunct Office of Fair Trading published its preliminary findings showing competition infringements by Peverel Group companies including Cirrus. Now the Association of Retirement Housing Managers, whose largest funder is Peverel, has provided a three-page document on the price fixing. ARHM accepts such a practice is in breach of its code, but then concludes no action should be taken.

Why?

ARHM does not have a reputation of being a strong trade body, but it has put itself into an even more delicate position when deciding how to look into the dealings of Cirrus. Richard Wheeldon is a vice chair of the ARHM and was part of the ARHM review team. He is also leasehold manager of Housing and Care 21 housing association. In February Housing and Care 21 placed a massive contract with Cirrus and Careline scheduled to last for 10 years. There is no reason to believe Mr Wheeldon was part of that selection process. On the other hand, it would appear that Housing and Care 21 felt there was no need to wait for an ARHM report before deciding to appoint Cirrus. It would be surprising if the residents of Housing and Care 21 were entirely happy with the appointment of Cirrus two months after the OFT ruled it was responsible for running a bogus tendering process against stooge companies to win lucrative contracts. The ARHM itself also felt that Cirrus was sufficiently sanitised to sponsor its annual conference on June 10. Under the circumstances, it is just as well the ARHM’s review team did not rule that Cirrus was subject to disciplinary measures. That would have resulted in red faces all round.

The ARHM’s absolution of Peverel / Cirrus comes in two parts

First, it concludes that things have changed at Peverel: it has new policies, new management and new procedures etc . But the same could be said at various points in Peverel’s bumpy history as it has swapped ownership several times. McCarthy and Stone dumped it in the early 1990s after scandals about management charges – these resulted in John McCarthy’s failed £1 million libel case against the Daily Telegraph. After a period with a management buyout – when Peverel was highly esteemed – it was sold on to the Tchenguiz: both owners were new brooms once. ARHM should have noticed the last major clean up happened in early 2010. Following controversies at non-retirement sites, Peverel’s systems were required to be independently audited by ARMA (Association of Residential Managing Agents). Of course, Peverel came out with flying colours and “new systems” were trumpeted, even though we now know the Cirrus door entry bid rigging scam had been “self-reported” and was under investigation by the OFT. Peverel boasted that its improvements had resulted in the Investors in People accreditation in 2009 – which we now know was when the Cirrus collusive tendering was in full swing. The second strand of the ARHM’s exoneration rests on its questioning Peverel’s efforts to put the matter right. Peverel has offered a 10 per cent “goodwill” payment to the 65 swindled retirement sites – based on the value of the Cirrus contracts. If residents are not happy, Peverel will deal with any complaint fairly provided evidence is provided. There is only the “possibility” of the sites making an overpayment in any case. The only criticism ARHM makes of Peverel is that it should – perhaps – have written more clearly to those impacted. This namby-pamby wording is very similar to the ARHM’s report to Alex Ellison’s concerns over Peverel misleading residents over the sale of a house manager’s flat in Cheshire. More here The ARHM clutches at straws by repeating that Peverel Retirement is not actually the company at fault, but does accept that it worked “hand in hand” Cirrus. The net result is that ARHM find no action needs to be taken and the issue is closed.

Campaign against retirement leasehold exploitation would suggest that what needs closing is … the ARHM

The trade body’s report failed to consider many of the key statements in the OFT report. One of ARHM’s key claims is that “Peverel Retirement relied upon an associated company (Cirrus) to undertake the procurement of access and alarm systems”. This suggests AHRM has not understood that Cirrus was not tasked with “procuring” these systems. Peverel Retirement, as managing agent, was meant to select independently the best solution for the residents from a range of bids, including those from its sister company, Cirrus. It is not clear why ARHM does not accept that Peverel failed properly to supervise procurements from 2004-2009. Why did ARHM not ask Peverel why it also failed to procure effectively on other bids during this time – which are the subject of court rulings? In concluding that Peverel has acted fairly by offering a 10 per cent goodwill payment to those sites listed in the OFT findings, ARHM fails to take into account a key point in the OFT Q&A:

“The OFT retains reasonable grounds to suspect a breach of competition law in respect of a number of contracts … falling outside the findings in this decision”

Surely if Peverel has turned over a new leaf it should have told the ARHM it also intended to compensate sites not included in the findings? Only Peverel knows which ones they are. If some have been settled with Peverel’s habitual confidentiality agreement, it surely should inform the ARHM? Peverel assures the ARHM that “most schemes have not raised any significant objections to the sums involved in the good will payment”.

But why hasn’t it provided those sites with detailed copies of all the bids so the residents could check for themselves what may have happened, “significant” or otherwise? As the bid rigging scam goes back to at least December 2004, according to the OFT, the ARHM could also have paid some respect to the fact that many of those who were cheated will no longer be in any position to object to anything, let alone a small “goodwill” payment.

Janet Entwistle told Campaign against retirement leasehold exploitation and Sir Peter Bottomley in February that no staff involved in the bid rigging remain with the company. We assume the same information was provided to the ARHM investigation. We hope ARHM noticed that the OFT refers to the scam not being limited to a few individuals in Cirrus. It interviewed staff and directors from a number of companies in the group and concluded:

CML [Carline] is “presumed to have exercised decisive influence of CCSL [Cirrus] commercial policy” (2.20) “Accordingly, PBTL [Peverel Building Technology Ltd] can be presumed to have exercised decisive influence over CSL’s (Careline) commercial policy for the duration of the Infringements 2 and 3” (2.22)

It was also accepted that “Peverel Group Ltd informed the OFT that it was of the view that PMSL [Peverel Management Services Ltd the company which trades as Peverel Retirement] was involved in the Infringements and provided evidence to support that proposition” (Page 52 5.6) The following is also current information on the Peverel web site about a director in the group. Andy Davey “joined Peverel in October 2002 as Operations Director for Cirrus and was appointed Head of Cirrus in 2007 and then went on to become Managing Director of the Peverel Building Technologies Division in November 2009. He was appointed Director of Business Excellence in September 2012.” ARHM had been unwilling to act against Peverel despite complaints being raised with it on a number of occasions in the past. After the OFT found against Peverel, ARHM concludes the issue is now historic so no action is needed. Within the report ARHM does not acknowledge the huge role that many pensioners took to bring this scam a stop … while the ARHM themselves did nothing. An observer might well conclude the ARHM code of conduct has been worthless. Those it is supposedly designed to protect have been exploited, and those who profited from the exploitation have faced no penalty. Indeed, they are welcomed to the ARHM club and rewarded with contracts. We should mention that Campaign against retirement leasehold exploitation and the original whistleblowers have not been consulted at any point by ARHM as part of their review and the “possibility” of overcharging by Cirrus. It is unlikely that the ARHM would have even bothered with this report had Campaign against retirement leasehold exploitation not pressed the issue. Pointedly, we were not provided with a copy of the report by ARHM. To illustrate the culture prevailing in this award-winning firm, we quote from the OFT report an email a Peverel staff member wrote while operating the scam:

“Hello, I have updated the process but think its best if we keep this one ‘in house’ as the bits in red are what we do behind the scenes and not an official part of the process (tee hee).”

Related posts:

Nine months in the making: ARHM rules on Peverel / Cirrus scandal OFT will report on the Peverel / Cirrus price-fixing scandal on Friday Peverel Cirrus price-fixing stooge says sorry … Cirrus isn’t an ARMA member so we have nothing to say about the price-fixing scandal, says Michelle Banks Fury as OFT may give Peverel immunity over Cirrus price-fixing scandal