The three Campaign against Residential Leasehold Exploitation whistleblowers of the Peverel-Cirrus scam were threatened with prosecution by the Office of Fair Trading if they revealed the investigation.
The threat was minuted by the OFT on September 27 2012 even though it had already decided to give Peverel leniency and not take any action.
In a blatant example of shooting the messenger, the OFT threated to prosecute three whistleblowers in case they … er, compromised a prosecution that the OFT already knew would not happen.
The threat of criminal proceedings against the Campaign against Residential Leasehold Exploitation whistleblowers was revealed yesterday by the OFT, which also admitted that it had recovered a pathetic £1,777 in fines from a stooge company in on Peverel’s fiddle. Other outfits involved in Peverel’s scam have ceased trading.
Throughout its pointless £500,000 investigation, the OFT urged the whistleblowers not to go to the press, but they were kept in the dark about the OFT’s leniency deal with Peverel.
They only learned that the OFT was going to do nothing at all in July 2013 when the OFT’s “statement of objections” outlining the inquiry were published.
The fact that the whistleblowers were threatened with prosecution was revealed yesterday in an email from OFT director Andrew Groves to Susan Wood, one of the three.
The letter is reproduced below.
The OFT is to be wound up at the end of this month.
Campaign against Residential Leasehold Exploitation urges anyone reporting serious issues to officials at the OFT or its successors only to do so through them or, Sir Peter Bottomley or Ed Davey, the Energy Secretary, and LibDem MP for Kingston and Surbiton.
It is vital that substantive issues concerning the current investigation into leasehold management are copied to these MPs and recorded.
The tiresome “cleverness” displayed by the OFT over the Cirrus inquiry erodes trust in our protective institutions.
The OFT treated the Campaign against Residential Leasehold Exploitation whistleblowers badly.
They were strung along for years to co-operate with an investigation where it was already decided to offer leniency, and they were not informed.
Then they were threatened with criminal prosecution if they tried to interest any outsiders in the injustice of the Peverel-Cirrus price-fixing.
From Andrew Groves to Susan Wood, March 3 2014
Dear Ms Wood,
Thank you for your email of earlier today. I address each of the issues you raise in turn:
- I understand why you find the grant of immunity in this investigation extremely frustrating particularly given, in your view, Peverel’s conduct was already in the public domain. However, as I set out in my email of 12 November 2013, The Times article does not go as far as alluding to the anti-competitive conduct (collusive tendering) which has been found in the Decision and its content is unlikely, on its own, to have been sufficient for the OFT to launch a formal investigation under the Competition Act 1998.
- I note the information you have provided in respect of why Peverel applied for leniency however, as set out in my email (as well as in Mr Elithorn’s letter of 19 September 2013 and Ms Naylor’s letter of 11 December 2013), a company’s motivation for applying for leniency is not relevant when determining whether or not leniency is available.
- You have also asked why the OFT did not disclose the dates Peverel ‘turned themselves in’ when it was originally requested. It is not the OFT’s policy to disclose this sort of information about a leniency application during the course of an investigation. In certain circumstances, the situation can be different after the close of the investigation.
- On the issue of leniency, you will understand from Mr Elithorn’s letter of 19 September 2013, that the exact timing of Peverel’s leniency application in relation to The Times article was not relevant in determining whether or not leniency was available to Peverel. The question is whether certain other criteria were satisfied, including whether the OFT had commenced an investigation into the conduct. These criteria were satisfied and the grant of immunity was automatic – in line with the OFT’s published guidance.
- The public version of the OFT’s Decision in this investigation is on the OFT’s website at: http://www.oft.gov.uk/OFTwork/competition-act-and-cartels/ca98/closure/access-control-alarms/
Please follow the link, under ‘Related Documents’, to ‘Public version of the OFT’s Infringement Decision’
- The fines imposed are summarised in the table below. They are also set out in the Decision and on the website at the above address.
- To date, the OFT has recovered £1,777 in terms of the fines it imposed. You will see from the OFT’s Decision that two of the three companies upon whom the OFT imposed fines are in administration. I can confirm that, as a matter of general practice, the OFT takes appropriate steps to recover outstanding fines, including from companies in administration.
- The OFT requested that you and the other interested individuals we engaged with kept the OFT’s investigation confidential up to the issue of the Statement of Objections. It is OFT standard practice not to publicise certain details about its investigations before the issue of a Statement of Objections. The request we made in this investigation was in line with that practice. You have asked what would have happened if you had ‘flouted’ that request. This is hypothetical. However, it is highly unlikely the OFT would have provided you with any further information or briefings in relation to the investigation. Additionally, there may have been a risk, depending on the information disclosed, that the person who disclosed the information would have committed a criminal offence contrary to Part 9 of the Enterprise Act 2002. In this respect, I note our records show that this risk was brought to your attention – for instance, at the meeting of 27 September 2012.
I very much hope the information provided above is useful and I do genuinely understand why the issues arising from this investigation are both frustrating and unsatisfactory to you.