Millions of pounds owed to Brighton and Hove council unlikely to be repaid

Millions of pounds owed to Brighton and Hove City Council look unlikely ever to be repaid.

The money is owed by a cash collection company called Coin Co International (CCI) which went bust owing the council more than £3.2 million.

Some of Coin Co’s assets may even be in places such as Tunisia, out of reach of the specialist accountants known as administrators who are trying to settle the bankrupt firm’s affairs.

The administrators said that they were still trying to pay Coin Co’s creditors after the company collapsed owing more than £10 million to councils, charities and bureaux de change.

A report updating councillors on the Coin Co situation is going before the council’s Audit and Standards Committee tomorrow (Tuesday 24 July).

The report said that in its last audited accounts in December 2012 the company was shown as solvent with assets of more than £1 million.

However, a review of the accounts by the joint administrators showed that the company had debts of £2,182,973 and was insolvent at that date by more than £570,000.

No reference is made in the accounts at that time to how much Coin Co owed the council.

The report said that this information “provides the strongest evidence to date that the company was operating fraudulently, in breach of customer contracts, and was wrongfully trading while insolvent”.

In June, the four directors, former Metropolitan Police officer John Baker, 71, and his wife Doreen Baker, 72, of Hassocks, their son Sean Baker, 48, of Burgess Hill, and daughter Joanne Baker, 46, of Belton Road, Brighton, were banned from running any business for eight years each.

Coin Co was paid almost £300,000 a year to collect more than £11 million cash from council parking meters and £8 million cash from council offices and schools. The company also handled £21 million in cheques.

Administrators are still trying to recover the company’s assets to repay secured creditors such as banks and mortgage lenders.

Brighton and Hove City Council has increasingly switched to parking payment by phone, app or debit card since the Coin Co scandal

A court order has given the joint administrators until Monday 26 November to do so.

The report said: “The joint administrators have made a number of recoveries to date, mainly through the sale of CCI’s premises.

“However, this is not sufficient to meet the amount owed to the secured creditors, particularly after the joint administrators’ costs are taken into account.

“Further recoveries being attempted are not likely to meet the secured creditor’s liability in full and are therefore highly unlikely to enable a ‘dividend’ to be paid to the unsecured creditors, which includes the council.”

In August 2014 the council ended its contract with Coin Co after payments from the company had become too late and sporadic.

The contract allowed Coin Co to keep hold of money for up to 10 days, meaning that it could earn interest on top of the handling fees that it was paid by the council.

Coin Co collected between £200,000 and £300,000 a week for the council and at one point held £4.7 million of council cash.

It could legitimately hold £400,000 to £600,000 under the terms of the contract before paying over the money.

It should have been paid into a separate and safe account by Coin Co but it was not.

Coin Co went into administration in November 2014.

As well as owing the council money, Coin Co also owed more than £65,000 to Brighton and Sussex University Hospitals – the NHS trust that runs the Royal Sussex County Hospital.

  1. Tax payer Reply

    This was clearly a well-planned and audacious confidence trick pulled on the council. The mastermind knew exactly what he was doing and what he could get away with. This money will never be recovered. It will have been laundered beyond recognition by now. I just hope a couple of lessons can be learnt;
    1. Outsourcing to save costs is a false economy.
    2. Existing bankruptcy legislation gives too much protection to company directors.

  2. MegA Reply

    Criminal negligence by someone in BHCC – Coin Co International (CCI) went bust owing the council more than £3.2 million – how on earth the amount outstanding was allowed to accrue to £3.2 million is anyone’s guess.. Police should look into it.

  3. David Taylor Reply

    This on top of the £40m or so never likely to be returned from the I360 fiasco. What other financial disasters are hiding in the BHCC accounts? a council who basically does nothing other than monitor outsourced contracts.

    Taxpayer 2

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