Documenting Past Failures: (9) the collapse of LBWF’s pet charity, O-Regen
The registered charity O-Regen was set-up in 1997 as part of the redevelopment of Cathall estate, and charged with running community facilities in the south of the borough together with various programmes to benefit local residents.
From the start, O-Regen appeared blessed. It was presented with a £4.5m endowment as well as a portfolio of 16 leasehold properties yielding an income of £120,000 p.a.; its board of trustees included many of the borough’s ‘great and good’ – at one time or another, the likes of Michael Polledri and Guy Davis (‘big players in the business and construction scene in Waltham Forest’, as the Waltham Forest Guardian described them), plus a raft of councillors, including Matt Davis (Leader of the Conservatives), John Macklin (Leader of the Liberals), Khevyn Limbajee (Labour portfolio holder), and Terry Wheeler (Labour portfolio holder); and in addition, benefited from many LBWF contracts, worth £2.2m. from 2003-04 onwards, no-one can say how much before.
Yet, in spite of its many advantages, on 5 May 2011, O-Regen was placed into administration, with the loss of 28 jobs.
What had gone wrong? There are some clues.
First, it is evident that, notwithstanding the apparent financial and administrative expertise of its board, O-Regen was poorly run. Thus, a forensic investigation of 2011 found amongst other things that ‘Little useful information or files were available in the company’s offices and no budget files, no financial business plans were available’; ‘The financial system used by the finance department was Sage, but finance staff did not input into the system or have any monitoring process established’; and ‘Bailiffs were in regular attendance at O-Regen offices due to non payment of accounts’ (‘Orient Regeneration – In Administration. Report of the Administrator As At 6th June 2011’, paragraph 3).This was just before O-Regen’s collapse, true, but on the other hand it is highly unlikely that such substantial failings had appeared overnight.
Second, O-Regen’s broader business model remains puzzling. In every year from at least 2005 onwards, it posted substantial operating losses, and indeed on three occasions the sums involved exceeded £500,000. What is odder is that the management appears to have made little attempt to react, for though it took out a large restructuring loan in 2007, its annual wage bill continued to hover around the £1m. mark. The inevitable outcome was that the initial endowment shrunk drastically, to £2m in 2006, and then a mere £144,000 in 2010. The impression that emerges is of an organisation being run into the ground.
Finally, it is noteworthy that over time O-Regen strayed far beyond its initial core business, getting involved in a bewildering array of borough-wide activities including neighbourhood renewal; fostering assessment and support; the provision of education for pupils in ‘out of school settings’; birth, death, and marriage registrations; and a wide variety of programmes to address worklessness, including LBWF’s Worknet scheme (the subject of the following post in this series).
Of course, if carried out judiciously, such diversification might have been appropriate, but in O-Regen’s case the evidence suggests that this was less a calculated strategy, more something essentially ad hoc, and in quite a few cases a matter of seizing any opportunity offered, regardless of the consequences, either for the charity or for those local residents who were ostensibly its beneficiaries.
Some examples are illuminating. A review of O-Regen’s provision of ‘out of school’ education found that it was offered in an ‘unstimulating and unwelcoming environment’ on an industrial site, and did not offer value for money, ‘evident in the content of the offer to students and the cost per pupil unit’ (‘Review of O-Regen’, January 2010, pp. 9 and 11). And, as will be shown, O-Regen’s Worknet provision often attracted even more withering criticism. One programme involved helping unemployed residents improve their CVs. Yet when a LBWF auditor examined what had been achieved, he concluded: ‘Some of the revised CVs were worse than the original’.
What does all of this add up to? Rumours continue to circulate, but definite conclusions are elusive. Subsequent events have only deepened the sense of mystery. Thus, a police investigation, triggered by a formal complaint from Hackney Council, which had also given O-Regen money, was eventually dropped because ‘The offence of fraud’ could not be ‘made out’ due to ‘the content of the contract’ between the two parties, a gnomic explanation, if ever there was one (Waltham Forest Guardian, 3 January 2013).
So in the end, O-Regen’s collapse defies a neat explanation. The only thing that can be said with certainty is that local people were the losers. For ‘the great and the good’, by contrast, life continued much as before
