Many comments on About Peverel have made reference to Price Fixing.
So many have recently found this site, it may be helpful to visitors to the site to have a broad outline as to what the Price Fixing entailed and why it happened?
First, a little understanding of the Tchenguiz business model is needed.
In essence the property portfolio was built up on borrowed money.
Tchenguiz realised that if the owner of the freeholds also owned the managing agent, the profits from the managing agents could be utilised to service the the loan repayments.
In effect, residents would be paying back the loans granted to Tchenguiz, whilst he could spirit the profits off shore in the British Virgin Isles. In a sense it wass a super-sized Buy To Let scheme.
For a while, this was a scheme that "couldn't go wrong". But it did go wrong, horribly wrong.
Tchenguiz companies had started to default on loan agreements and inter-company cross guarantees.
As interest rates rocketed to support the loans, so the need for Peverel to increase their income from residents became critical.
As the holding companies edged closer to financial catastrophe, Peverel eyed up the millions of pounds in service charge accounts (which of course they could not touch).
What they needed to do therefore was find a method of "liberating" service charge funds, so that they would end up with Peverel.
Very senior managers at Peverel (many of which now run Freemont Property Managers) had a meeting at which it was decided that Retirement Developments that were around 20 years old could be targeted for the total renewal of Warden Call/Entryphone systems.
The systems were to be declared obselete and beyond repair and would have to be replaced.
Of course to benefit Peverel, their sister company Cirrus, would have to win the contract.
Thus begun the price fixing scandal.
Working in concert with other contractors, they arranged for those contractors to quote high, so that the Cirrus quote came in lower.
So arrogant and so sure they would never be caught out, Peverel did not even bother to disguise figures, so many developments were price fixed by a straight 20% difference between the contractor and Cirrus quotes.
In some cases the contractor quotes came in on Peverel headed paper!
It is ironic to note that many of the relacement works were carried out by the price fixing contractors (who had been instructed to wear Cirrus uniforms)
The profits from the price fixing (for work that was probably not needed) were used to support the collapsing Tchenguiz companies.
Peverel admitted to the price fixing (after an article appeared in the Sunday Times)
They have offered a "goodwill payment" to some of the affected developments, which is only a fraction of the money they defrauded residents of.
