One of the Midlands’ best-known businessman has accused a former partner in a regeneration project of “embezzling” funds designed to help the people of one of the poorest wards in the country.
Pertemps chairman Tim Watts was giving evidence at a four-week trial in the High Court in Birmingham over a £1.9 million shortfall in the funding of an ambitious project that saw the regeneration of Nechells Baths.
The £5 million-plus project was completed in 2007 but Midlands Regen, a company set up by Birmingham Community Foundation, the charity behind the project, is suing former city clergyman and treasurer of Birmingham Cathedral David Collyer.
Mr Collyer was the chief fundraiser behind the project and has claimed money paid to him and his company Linton Marketing was owed in fundraising fees and the repayment of loans.
Although the charity said it sought answers over the shortfall as the trial progressed it did concede some of the 19 payments paid out to Mr Collyer or the companies he was involved that totalled £1.9 million were justified. It agreed that evidence had now come to light which indicated credit could be given for £615,000.
Mr Watts said: “He said he had found the funds and it was a prepackaged, turn-key, debt-free project.
“We trusted him and his team. It was the Reverend David Collyer who brought it to us and we voted on it unanimously.” Mr Watts said the organisation, which raises funds to support disadvantaged communities in the region, initially had a chequered start before taking off and establishing itself but needed to grow.
He told the hearing Mr Collyer seemed the ideal candidate to raise the funds for the project as he had already done some preliminary work on it and because he was seen by the trustees as an expert in obtaining grants.
The project transformed the dilapidated Edwardian baths into a new community facility. It was initially expected to cost £4.135 million but ended up costing £5.3 million. A company, Midlands Regeneration, was set up to handle grants for the project from the European Regional Development Fund, the Heritage Lottery Fund, Advantage West Midlands and other sources.
However when it also took on other projects Mr Collyer was involved in the charity was advised to set up another company Midlands Regen to handle the funding.
An obligation by the charity to cover some of the project’s costs through a parental guarantee signed as part of the funding process was highlighted by Mohammed Zeman QC for Mr Collyer.
He said this meant it could be liable for a voluntary contribution of 25 per cent of the costs – a sum in excess of £1 million. But Mr Watts supported evidence given by fellow trustee David Bucknall that Mr Collyer pledged the project could be delivered “debt free” at no cost to the charity.
Mr Watts said he was aware that Mr Collyer and Linton Marketing would be entitled to a fee of ten per cent of the total funds raised, which it was thought would be around £470,000 by the time costs had increased and accepted Mr Collyer had made a £150,000 loan from his “life savings” which Mr Watts said he reimbursed.
“He assured me it was his own personal money. I paid £200,000 in to cover that. I believed what David Collyer told me he had paid in but subsequently I have not seen any evidence of that,” Mr Watts said. Under cross examination from Mr Zeman Mr Watts said he had “not a doubt in his mind” that Mr Collyer had been dishonest. He said: “We believe he has embezzled considerable funds from the people of one of the top five poorest wards in the country.”
Mr Zeman suggested Mr Watts knew the project would cost more than £4.135 million from the outset.