English Council claims Dubai-based businessman misappropriated £150 million

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Thurrock Council has accused Dubai-based businessman Liam Kavanagh of misusing around £150 million he invested in bonds backed by solar farms, spending some of the money on buying a luxury property, a jet and a yacht.

The local authority in southeast England, which filed for bankruptcy in 2022 largely because of its dealings with Kavanagh, made its claims in High Court documents made public for the first time this week.

Thurrock has filed a lawsuit against Kavanagh and his company Rockfire Capital over the nearly £400 million the company invested in bonds backed by British solar parks between 2017 and 2020 as part of deals with the businessman.

The council initially invested almost £270 million and claimed it had provided further money due to “fraudulent misrepresentations” by Kavanagh and Rockfire.

The agency, which had accumulated huge debts to finance the investments, also claimed that Kavanagh had used some of the money to make purchases that were largely “for his personal benefit.”

Court documents accuse him of embezzling funds to spend £13.7 million on a yacht, £9.1 million on a Bombardier jet and £20.75 million on a 232-acre estate in Hampshire.

The council alleged that Kavanagh deliberately arranged for an external valuer, the Association for Public Service Excellence, to be presented with “totally unrealistic” assumptions regarding electricity prices, resulting in an overvaluation of assets.

“We are not responsible for the investment decisions of others, nor do we undertake DD on behalf of others. [sic] “…electricity prices go up and down, valuation goes up and down,” Kavanagh wrote to a colleague in January 2020 after another employee expressed doubts about the pricing assumptions.

Kavanagh's email, quoted in court documents, said the deal with the council was a “very long-term game” and that it would be no problem for the council to make up for “revenue declines”, including due to prices or “outages, whatever”.[sic]the sun doesn’t shine.”

He added: “These funds will be used, along with existing funds, to establish a new family investment office and build wealth for years to come. That has always been my plan.”

In a written statement provided to the Financial Times by Kavanagh's lawyers, he argued that Thurrock's lawsuit was not legally binding and that he “vigorously” denied the allegations.

Kavanagh added that he had asked the Supreme Court to dismiss the case on the grounds that the court lacked jurisdiction and that he would “fully defend” himself if the court allowed the case to proceed.

APSE, which is not accused of wrongdoing, said it had “acted with the utmost integrity” and was “awaiting the outcome of due process of law.”

Rockfire Capital liquidators did not respond to a request for comment.

Thurrock Council filed its lawsuit against Kavanagh and Rockfire Capital in March, but court documents were not made public until earlier this month. The council is seeking damages.

In July, a Supreme Court judge ordered that Kavanagh be served with the documents through a law firm in the United Arab Emirates.

Thurrock is one of the most indebted local authorities per capita in the UK and was effectively declared bankrupt in December 2022 after accumulating debts of around £1.4 billion.

The council was run by the Conservatives throughout his association with Kavanagh. In May, Labour won control of the authority.

Thurrock's budget deficit for 2022-23 was estimated at £470 million, more than three times annual spending.

The council is just one of several local authorities that have run into difficulties after attempting to use commercial investment to offset cuts in government funding during the years of austerity following the 2008 financial crisis.

The British accounting firm has now launched an investigation into an unnamed auditor in connection with Thurrock Council's investments.

John Kent, Labour leader of Thurrock Council, said: “We have a duty to the people of Thurrock to leave no stone unturned and to vigorously pursue all available legal avenues to recover as much money as possible so that Thurrock Council can get back on a sound financial footing.”

Thurrock's dealings with Kavanagh were uncovered a year ago by an investigation by the London-based nonprofit Bureau of Investigative Journalism.