Saturday, 27 December 2014

Watchdog rules out further action against Novas

The Tenant Services Authority has found there was a ‘collective failure of management’ at troubled housing association Novas Scarman, which drove it into a financial crisis.

The TSA board concluded an eight-month statutory inquiry into the group on Tuesday. It ruled that Novas’ executive team and board ‘failed to exercise proper management of the financial affairs’ of the group and that it ended up unable to pay the £14 million cost of refurbishing its flagship Arlington House hostel in Camden.

Arlington House and Novas’ other remaining hostel in Dean Street, London, were transferred at no cost in May to One Housing Group, which will complete the refurbishment.

But the TSA’s report says that the group is now financially viable after a management change, new board members and a restructure within the last year, and that no further action will be taken. ‘The inquiry report disclosed insufficient evidence to support a finding of misconduct in relation to any individual, despite the finding of a collective failure of management,’ it adds.

Chief executive Michael Wake was made redundant from Novas in May with an £80,000 payment, although this was unconnected to the landlords’ problems.

Novas said in a statement that it welcomed the findings and that its problems had been overcome. ‘We do accept the TSA’s ruling in its entirety and we apologise publicly for our shortcomings during parts of 2008,’ it added.

The group’s 2007/08 accounts, released last week, reveal it posted a £5.8 million annual loss owing to plummeting property values and merger costs.

The accounts show the group was hit by £3.5 million of impairment charges against its property portfolio. The results date from before the TSA launched its inquiry. In 2006/07 Novas made nearly £1.6 million in profit after selling assets for more than £2 million.

The 2007/08 accounts, which were originally due to be filed last September, reveal that the group lost £942,665 on restructuring costs in 2007/08 after merging with the Scarman Trust and Path social justice charities in December 2007. It lost a further £960,677 absorbing the negative equity of these struggling groups.

‘The costs associated with the merger were higher than anticipated and took longer to turn around,’ a Novas spokesperson said.

The group posted an operating deficit of £639,092 for the year - more than twice the £277,658 deficit in 2006/07.

A breakdown of the deficit showed Novas’ social housing management as the only profitable area for the company - netting it around £2 million in profit. Non-social housing activities, such as the group’s social enterprise work, lost £1.5 million, which Novas said related largely to the activities of Scarman and Path.

‘As matters stand today, we have sufficient cash, no borrowings or overdraft and assets of £20 million,’ the spokesperson added.

Readers' comments (5)

  • Really pleased to finally put an end to this process and be able to get on with the good work a number of us are doing at the Novas Scarman Group. I think to get a balanced review your readers should go to our site and read our press release regarding the BDO's findings.

    https://static.novas.org/files/tsafindings15july09-468.pdf

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  • Usual novas spin machine - if you read the novas release only you would think the TSA had praised Novas.

    As an ex-employee I sincerely hope NSG can learn the lessons from this and go on to be successful (if only for the people on the ground who do a lot of good work and many of whom I'd still count as friends).

    Billy

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  • A whitewash as expected. The TSA has thrown away the opportunity to reclaim the moral high ground that the former Housing Corporation had sadly let slip with regard to regulating roque social housing organisations.
    Novas have learned nothing from this process as they are still flouting employment guidelines/law and making people redundant whilst at the same time advertising vacancies within the organisation. These vacancies (jobs for the boys?) should have been ringfenced for those staff being made redundant.

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  • What a joke! TSA have brushed it all under the carpet! Obviously because they are half to blame for letting Novas senior managers do what they wanted with public funds. How anyone can say that a third party org like BDO have put together a one side report is ridiculous! It is disgusting that the Housing corp brought in BDO to do an invetsigation and then basically whitewashed all of their findings to save face! For Novas to come out and publically slag BDO is disgraceful. I hope the full report is leaked and then the public will get to see just how dirty some senior managers really where and realise that pay offs and redundancies were a joke and that some should have been prosecuted!

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  • How is it possible to order an enquiry and then ignore the independent auditors results?
    What a cover up. Novasscarman and the TSA have both swept the findings under the table and supressed the truth. It looks like they have come to some kind of deal.

    As for "balanced review" that statement was written by your PR spin company the Blue Rocket Group. Harldy balanced, quite the opposite.
    I'd prefer to believe the independent auditors, BDO, Wikileaks and the members of the community that have fallen foul of the NSG tactics.

    I would like to know why the report will not be investigated further and also why the public will not be made aware of whats gone on?

    The TSA have failed in addressing this issue in order to save face. It seems like the NSG organisation has abused members of the community and the public purse and got away with it. I am saddened at the way this has not been dealt with. The people named in the report as mismanaging the company are still running the company. Disgraceful.

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