Whitby Regatta – Fact & Flannel
An ‘In My View’ article
– by Nigel Ward
IN THE PUBLIC INTEREST
The many supporters and admirers of the Whitby Regatta Committee (WRC) will perhaps be interested, following my ‘In My View’ article “REGATTA(S) AHOY!”, to learn of a letter dated 11th August (received on 13th August 2012) from the ‘Secretary’ of Whitby Regatta Limited (WRL), on behalf of the ‘President’, to the Whitby Town Clerk, Mrs Pam Dobson, of Whitby Town (Parish) Council.
Interested, indeed – but not, I imagine, best pleased. And rightly so – for the letter is evasive and misses the point completely
The writer, Mr R.I. Winspear (who styles himself ‘Secretary’) informs the Council that he writes at the behest of the ‘President’, Cllr Jane Kenyon, in response to a number of questions posed by the Finance & General Purposes Committee of the Whitby Town (Parish) Council. Mr R.I. Winspear is not presently registered as a Director of Whitby Regatta Limited at Companies House. He has no innate authority to address the Council on behalf of Whitby Regatta Limited; he has been delegated beyond his authority – whether by the ‘President’ or the Board of Directors of Whitby Regatta Limited remains unclear.
Amongst many smaller misconceptions stands one BIG one; the Council is offered the assurance that “a public meeting was held the Whitby Regatta Committee invited the townsfolk of Whitby to a public meeting at the Royal Hotel on 16 February 2012. The invitation was publicised in the Whitby Gazette with the discussion concerning becoming a CLG the main agenda item.”
What the writer omits to mention is that the formation of Whitby Regatta Limited, having been registered seven months previously on 5th July 2011, was already a done deal. Shop-window dressing.
It is therefore obvious that there was no legitimate consultation process, as I have consistently inferred. This is not openness or transparency, it is ‘swallow the medicine that is already in your system and make believe the choice was yours’.
I have reproduce the letter, here below, with my annotations inserted between square brackets in bold italic script, [thus]. I have added some further observations directly following the letter.
[including the traditional WR logo]
Patron: THE MARQUIS OF NORMANBY
Vice-Patron: THE PRESIDENT OF THE WHITBY FRIENDSHIP A. R. C., WHITBY FISHERMAN’S A.R.C. & SCARBOROUGH A.R.C.
P.O./Box 50, Whitby, North Yorkshire, YO21 3YN
Mrs P A Dobson
WHITBY TOWN COUNCIL
11 August 2012
Dear Mrs Dobson,
Further to my letter of 30 July 2012 the Whitby Regatta Committee met on 9 August 2012 to address the concerns outlined in your letter of 24 July 2012. The President has asked me to respond on her behalf to each specific item [Noteworthy is the fact that the 'President' - Cllr Jane Kenyon - has delegated this task to another person, not a Director of Whitby Regatta Limited.], as follows:
1. For your records, the Whitby Regatta did not become a PLC as stated in your letter. PLC is the recognised acronym for Public Limited Company. Whitby Regatta became a Company Limited by Guarantee (CLG).
The purpose of becoming a CLG was to protect the Whitby Regatta Committee from possible litigation in circumstances where the Regatta may not be able to service its debts if expenses outweigh income. [This is true. However, it does not explain JK's declaration on her Register of Interests as 'Whitby Regatta - Charitable Trust'.] Moreover, the Committee needed protection from the possibility of law suits if personal injuries were to occur to members of the attending public. The liability is now limited to an amount of £1.00. [This is facile and utterly false. Public & Employee Liability Insurance satisfactorily fulfills that desire and is in no way contingent upon the legal status of the organisation - be it the 'Whitby Regatta Committee', the 'Whitby Regatta - Charitable Trust', 'Whitby Regatta Limited' or any other corporate identity that it was legally able to assume.].
Becoming a registered charity was not an option as the Whitby Regatta does not act as a charity in the strict sense of the word. [This is also true. It beggars belief on what possibly grounds Cllr Kenyon stated to SBC's Gill Wilkinson that Charitable status had been appled for - that was an outright falsehood.]. Even if it were to become a charity there would still be a need to become a CLG to protect the Committee. This is a common procedure for most charities – MacMillan Cancer Support, RNLI (Trading), Guide Dogs for the Blind etc. [This is also utterly disingenuous; the examples cited are all trading arms of bona fide Registered Charities soliciting donations and providing charitable services on a national level. The Whitby Regatta Committee is not a trading body, it has never provided charitable services.].
Becoming a Community Interest Company (CIC) was also not an option for the exact reasons as above. A Communtiy Interest Company can only be set up in either of two formats; “limited by shares” or “limited by guarantee”. [This is a non sequitur: It is clearly the case that the Whitby Regatta Committee is (or was) in possession of reserves built up over many years (if the "Welcome" Message in the Program is to be believed), so protection from debt does not presently arise. The matter of Public & Employee Insurance has been covered, above.].
In considering the possibility of becoming a CIG, [A what?] in tandem with either of the two formats, the Whitby Regatta took the following advice: [From whom? Why not cite the source?].
“Funding bodies each have their individual policies about what sort of organisation they will support; but many will be happy to support either kind of CIC if it offers the sort of services that the funding body approves. Howver, more funding bodies will support a CIC limited by guarantee the one limited by shares, because they know that the directors cannot take a dividend. As a rule of thumb, the more reliant your organisation is on external support (other than sales) to support its work the more suited it is for the “limited by guarantee” format.” [This makes the case for a Community Interest Company - not a Limited Company. In any case, the Articles of Association clearly DO make provision for payments to be made to Directors. The caveat 'other than sales' tells its own story; the Whitby Regatta Committee is not fundamentally about sales - sales are the province of trading Limited Companies; which begs the question "What is the real raison d'être of Whitby Regatta Limited?"].
2. The decision was made by the Whitby Regatta committee following research by our treasurer. Advice was taken from both a specialist and our local solicitor [Why not disclose their identities?] and with assistance from the information centre at Company House. [It is interesting to note that this error (ie: 'Company' House instead of 'Companies House' - its correct name) is the same error as in the statement published in the Whitby Gazette and dissected in my earlier article.]. As the committee instigated the move to CLG all committee members had the opportunity to become directors if they so wished. [There are presently 7 Directors. How many Committee Members wrere there, and how many declined to accept Directorships - and why?]. All members of the committee, including representatives of the rowing clubs were engaged in this process. [But apparently this information was not shared by the representatives of the Rowing Clubs - otherwise, how can one explain the complete ignorance of the matter on the part of life-long Regatta volunteers?].
The wording in section 4 was provided by our solicitor following their review of the constitution which was produced many years in the past. Although the wording does not specifically mention Regatta and Rowing it was considered adequate. [The Limited Company alleged to have been set up to run the Regatta in a new 'safer and more secure' legal format considers it 'adequate' to avoid any mention of the primary objective of running the Regatta?]. It does give reference to marine activities including yachting, yacht races and like events. It also refers to the use of yachts and marine craft. [How very reassuring; that presumably is intended to mitigate the grandiose aspirations of WRL to running 'wet docks', 'dry docks', 'cafés', 'motels', motor-cycle emporia and many other commercial activities.]. That being said, if it is considered necessary by the committee to review the wording to specifically include regatta and rowing we can, although making any changes will incur additional legal costs. [Indeed they will. And it is by no means as straightforward as the writer suggests. Nevertheless, he is conceeding that the registration of Whitby Regatta Limited may have been injudiciously conducted, and that there may be additional costs - one hopes not to be met from the aforementioned 'reserves'.].
3. The Directors are and were Committee members at the time of the change. They agreed to become directors on registration with Companies House. There has been no change to the personnel who voluntarily give up their free time to serve the local community in ensuring that the Whitby Regatta continues to be one of the main attractions on the North East coast. [Unfortunately, relatively few of those volunteers know for whose advantage they are now working. In the past, there was never a doubt. The Regatta has done more than survive - it has prospered. Nothing in this letter holds out even the doubtful promise that WRL serves any useful purpose or is a force for any interests but its own - whatever they actually may be. Talk on the 'inside circuit' is that it has been set up in preparation for taking advantage of the Asset Transfer opportunities that are available under the terms of the Localism Act 2011. The privatisation of all or part of Whitby Harbour has been in discussion for some time now, not least by Whitby Town (Parish) Council. Quite why the Regatta should wish to enter that arena is unclear.].
4. There is no change to the running of the Whitby Regatta. Involvement by the community remains the same as before. The future of the Regatta is to continue in the same format that it has in previous years – “A Regatta at Sea and a Carnival on Land”. [Indeed. So, since WRL offers no extra safeguard in respect of Public & Employee Liability Insurance, and no beneficial influence on any putative debt (other than potentially adding to costs for legal services and accountancy) what purpose is it really intended to serve?].
For your further information, the Whitby Regatta Committee invited the townsfolk of Whitby to a public meeting at the Royal Hotel on 16 February 2012. The invitation was publicised in the Whitby Gazette with the discussion concerning becoming a CLG the main agenda item. [How very transparent. The writer omits to mention that Whitby Regatta Limited was registered on 5th July 2011 - seven months before it appeared on the Whitby Regatta Committe Public Meeting Agenda. In short, a fâit accomplit.].
The decisions made by this committee have been taken to ensure the continuing success of the event and to create an environment that is safe and secure for all its members and participants both present and future. [Then they are very poor decisions indeed].
The Committee now believe that the specific concerns of the Town Council, outlined in your letter, have been answered full. [The Council has articulated only the most obvious concerns and not all of those. The letter falls a long way short of answering even those.]. However, if you consider that your members have any remaining issues or need further clarification, please notify those in writing to the President. [Who is, in fact, no longer the 'President' - at least not according to her Register of Interests, which now, belatedly, record the fact of her Directorship in a commercial Limited Company.].
On behalf of The President of the Whitby Regatta [Mr Winspear, has, I fear, been delegated in accordance either with his willingness to accept a non-explanation or his capacity to spin out a yarn. The whole letter is an object lesson in opacity and misinformation. It may be that Mr Winspear was simply 'following orders', as the saying goes. He deserves the benefit of the doubt.].
Whitby Regatta is the trading name of Whitby Regatta Limited. Registered address: C/O 5 Bobbies Bank, Whitby, North Yorkshire. YO21 1EF Company Number: 7693284
It appears clear to me that the ‘Secretary’ has not been open, with the Council – though, in mitigation, I must add that it begs the question of whether or not the ‘President’ has been open with him.
Throughout the letter, Mr Winspear speaks of the “Whitby Regatta”; the “Whitby Regatta Committee”, the “Committee meeting”, and the “President” – none of which form any part of Whitby Regatta Limited. There is no mention of “the Board”, “the Chairman”, “the Managing Director” etc confirming that WRL in fact plays no practical part in the organisation of the Regatta.
His remarks addressing the Council’s concerns and issuing assurances, have completely missed the point that according to the legalities of the situation (and the public remarks made by Councillor Kenyon), ‘Whitby Regatta’ is now the trading name of Whitby Regatta Limited. The name and the logo – the ‘brand’, worth perhaps £250K – have passed to another legal entity free of charge (and perhaps the contents of the bank account, too). The ‘Committee’ no longer in any meaningful sense exists – neither does the office of ‘President’ – and all decision making powers are now vested solely in the Board of Directors of Whitby Regatta Limited, at an offical Board Meeting.
In short, Mr Winspear evidently does not understand the situation or the implications of the transfer to Whitby Regatta Limited and, in fact, has no mandate to comment on either its behalf.
The content of the letter makes it clear that, in the mind of Mr Winspear at least, both the Whitby Regatta Committee and Whitby Regatta Limited co-exist, side by side. This cannot be so. Either the Committee continues to exist and is responsible for the Regatta, or it has ceased to exist and has passed all of its responsibilities (and assets) to Whitby Regatta Limited.
Let me summarise, as I see it, the present circumstances of the Regatta:
- For the first time – and despite falsehoods claiming that the Regatta is a Charity – it has now been admitted that WRL is commercial, and the Regatta is not (and never has been) a Charity, which vindicates my earlier-expressed concerns.
- Councillor Jane Kenyon has held out that the Regatta is charitable on her Declaration of Interest forms for NYP, NYCC and SBC and has, therefore, lied about the status of the Regatta and falsely stated that the Regatta had applied for charitable status, again vindicating my earlier-expressed concerns.
- Although Directors cannot take a dividend or have shares, the letter glosses over the point that it is entirely possible and completely legal to draw down salaries – which means it is possible (and legal) to siphon funds out of the Regatta – a power that never previously existed and is contrary to the best interests and principles of the Regatta.
- Mr Winspear seems to concede that the Articles of Association are inappropriate and in need of amendment (conceded only now that they have been widely publicized), again vindicating my concerns that the current set-up is inappropriate and even unworkable.
- WRL has not submitted accounts, although it is over a year old and has already been legally responsible for the running of one Regatta (in 2011). Accounts submitted to Companies House (and normally available for public scrutiny) will not be full accounts and will not give a true insight into the finances of the Regatta. Who is responsible for preparing and submitting the accounts?
- There is no mention of the tax position. Registered Charities are not liable for Tax; Limited Companies are. Depending on turnover, the Company may also have to be registered for VAT and will certainly have to be registered for (and pay) Corporation Tax. This will involve the hiring of specialist Tax accountants, which will inevitably be expensive.
Clearly, these are additional costs that the Regatta has never before had to bear.
- What were the costs of setting up this Limited Company in terms of advice, purchase and registration of the Company, headed paper etc?
- What will be the additional costs of changing the Company Memorandum and Articles of Association, (assuming that this can be done without a total reformation of the Company status, or the acquisition of a new Company)?
- What will be the annual cost of preparing and submitting annual accounts to Companies House to complete the annual?
- What will be the cost of creating and submitting the annual tax return?
These are all additional costs that the Regatta has never before had to bear, but with which it is now emburdened because of the move to commercial Limited Company status.
Because WRL is a commercial Linited Company, it may not lawfully solicit donations from the public without a Solicitation Statement. This may be expected to reduce annual income in an amount approximating last year’s collection of circa £1,600.
The effect of adopting corporate status will also significantly increase costs and significantly reduce income. If the purpose of WRL was truly to benefit the Regatta, it has clearly not been properly thought-through.
Which brings us to the liabilities of the Regatta:
- The letter makes no mention of Public & Employee Liability Insurance cover secured either by WRC or WRL. If no such cover exists, this is a major failing and a breach of duty that imperils the Regatta organisers.
- Courts can make Directors personally liable for debts, or for acts of criminal negligence. This may include a failure to properly insure. It is one thing to appear before a Court as a member of a voluntary Committee that organizes an annual local community event – to which the Court would certainly be sympathetic – and another thing entirely to appear before the Court as a Director of a commercial Limited Company that specifically declares its raison d’être to be the commercial management of public amenities and events, from which the Court (and the public) would reasonably demand a very much higher standard of expertise and care. The present arrangement thereby effectively increases the liability of the Directors.
- The situation with the bank accounts is a critical matter. If the bank accounts of the former Committee have been closed and the funds transferred to the new WRL, then WRL is running the Regatta and is subject to tax. If, however, the bank accounts are still being operated by the Committee, then the Committee is unquestionably still running the Regatta, and still retains unlimited liability for it – while at the same time, both WRL and WRC are evading tax by not putting the receipts from the Regatta through WRL’s bank accounts and ledgers of account. This may be false accounting – a criminal offence.
- It is clear that the Regatta is obtaining donations from the public on the basis that they are donating to a Charity, when in fact they are being deceived into donating to a commercial Limited Company. This may well constitute obtaining money by deception and/or false representations.
In summary, it would appear to me that the status of the Regatta is confused and opaque and beset by several legal pitfalls. Why?
Its costs have been increased. Where is the advantage in that?
Its liabilities have been increased. Where is the advantage in that?
Because WRC are, in de facto terms, apparently still running the Regatta (and WRL has, by the word of its own Articles of Association no specified part to play in this) then WRC is still liable for the debts, ostensibly having (a) adopted additional liabilities for taxation, (b) failed to satisfactorily insure, and (c) exposed themselves to the risk of prosecution for tax evasion and the unauthorized solicitation of donations to a Limited Company. Not clever.
It appears to be the case that all that has transpired, here, is that a commercial Limited Company has been incorporated and all the assets, name and logo of the Whitby Regatta transferred to it. WRL appears to be little more than a shell company without trading (the trading – if any – and the organisation continuing to be conducted through the Whitby Regatta Committee, as before. The WRL Memorandum and Articles of Association make it a perfect vehicle for a wide range of activities, far beyond running the Whitby Regatta.
Qui bono? Who benefits?
That is the question that demands an answer from Councillor Jane Kenyon herself.