Councillors have ordered an investigation into the £106 million purchase of a shopping centre in Camberley which is now believed to be worth around half the purchase price.
Surrey Heath Borough Council bought The Mall (now called The Square) in 2016 and its fall in value led to a motion at a full council meeting on July 22 for an external investigation.
The motion was amended to the effect that the probe will now be an internal one by the council’s performance and finance scrutiny committee which will report back to a public meeting on September 9.
It will be led by the council’s LibDem leader, Cllr Sashi Mylvaganam, who had initially wanted the external probe.
Cllr Mylvaganam said he is not confident internal processes were followed in the purchase and said he feared documents were kept from the public eye for a long period. He also said he wanted to establish if the council overpaid for the centre.
Cllr Kristian Wrenn questioned how the purchase came about and suggested there had been a ‘gung ho’ approach under the previous chief executive Karen Whelan.
He added: “And that’s very concerning because this isn’t something to be gung ho about. It’s not something where we should be buying as much as we possibly can.
“I understand the reason is the lack of funding we are getting from the Government and the councils are put in positions to take decisions to make whatever money they can.
“And what’s concerning is we might have made a bad one. What we need to do is establish whether or not it is a bad decision, what impact does it have on us, and what impact does it have going forward.”
Cllr Edward Hawkins said he had an issue about the proposed investigation.
He said: “It’s a valuation loss, not a real loss. It’s only a real loss when you sell something and The Mall – now The Square – was bought as a long-term regeneration issue as was pointed out at the beginning of this debate.”
He said it was bought through advisers who are governed by the requirements of RICS and was approved by the Treasury which signed off the purchase.
Cllr Rodney Bates said he opposed the purchase at the time and said, while it had been bought for purposes of regeneration, it was also intended to produce revenue.
Cllr Morgan Rise said many residents had raised concerns with him over how the purchase was made.
He went on: “While it may seem that it’s uncomfortable for certain members of the council to have to deal with this issue, many residents do bring it up, especially regarding the price and the value of the shopping centre at the time – including the House of Fraser building – over £100m. And now it is being estimated that the value of this property has decreased.”
He added: “Let us not forget that before the coronavirus outbreak began, the valuation of this property was decreasing on a yearly rate.”
Cllr Victoria Wheeler said an external investigation would be throwing good money after bad, adding: “I think everyone in the chamber knows those buildings are not worth as much as we paid for them.”
In a video posted online after the decision was taken, Alasdair Pinkerton, LibDem parliamentary spokesperson for Surrey Heath, said : “I think this will be the start of shedding light onto a very sorry episode of Surrey Heath Borough Council history.”
He said the estimated reduction in value of around £50m was before the Covid-19 pandemic.
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