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Melton Grove Scandal

Melton Grove ScandalFor some months, titbits of information have been dropping into our lap about Melton Grove.

Hushed whispers came to us to suggesting it needed a good dose of looking at, and that all was not well there. Our sources were well established in the local community, and very reliable, but they could produce nothing tangible, only hints that there was something fishy going on.

When that sort of thing happens, we usually keep an eye out for what's going on, because in our experience, fire generally follows smoke.

So in 'Melton Grove Mess' we took a first look at the recent background which led to what appeared to be the sale of Melton Grove to a local developer.

Since then, we have received a great deal more information, from a wide variety of sources, and we have stitched it together and reproduced it below, with grateful thanks to our contributors, advisors and readers, some of whom took risks to provide us with the information.

We have uncovered an appalling tale that, in our opinion, rivals Fylde's now infamous, 'Streetscene' debacle.

The spin dished by Fylde BC to local news media (and indeed to Melton Grove's residents) on this topic suggests the sale of Melton Grove is a done deal, and there are just a few T's that need to be crossed as contracts are exchanged. Existing tenants will be 'protected' and all is well.

That's far from accurate, and it's about par for the course in this matter - where most of the goings-on have been deliberately hidden from view.

We believe there is a hidden agenda in play here, which at least some members of the Council are concealing from the public (and from other councillors), and in which some officers, at least, appear complicit.

We regard what is happening political chicanery, (possibly for party political advantage). There is also tax avoidance, and manipulation of accounting that is probably within the law, but morally and ethically plain wrong.

It's just possible, that when all the facts come out, some people will believe the end justifies the means.

We disagree.

However laudable the end might be (and we believe it is), the use of deception, sleight of hand and half-truths to keep some elected councillors, residents, (and the public) in the dark until it's too late to do anything - whilst other councillors would be able to line up events that could produce an election-winning, blockbuster news release at the expense of the needs of the (mostly elderly) residents in Melton Grove - is a disgrace that we today expose.

We also accuse those involved of putting at risk the legacy they were left by the Clifton family, and by generations of honourable councillors before them.

We do so with a heavy heart because the 'end' that we believe may have led some councillors to promote this situation is, indeed, very worthwhile, and it is something we would like to see happen. - But no matter how much we value the end, if democracy and civic ethics are damaged or diminished to achieve it, then no end can be worth that price.

Standards and morals matter more than bricks and mortar.

So what is it that's happening?

Well in our last article, we showed how the plan to sell off Melton Grove was initially hatched back in 2007.

At that time the reason for sale was to raise the funds for the Commissar's White Elephant New Town Hall.

However, it gradually dawned (even on the Commissar) that they couldn't assemble the 7 million needed for his 'Accommodation' monument, and the pressure to sell-off all the assets eased a bit.

We don't yet know the precise date, but probably in 2009, the logic underlying the work that had been done to prepare Melton Grove for sale in 2007, changed.

The new rational seems to have been this: managing social housing was now a very specialist job, and far too complicated for something like a Council to manage, especially when it was actually a six man Board of Directors that were doing it.

Not that any of them got their hands dirty.

Not that any of them went out to cut the grass, or fix a tap, or paint something.

That work was all undertaken by New Fylde Housing - working on contract to the Board.

New Fylde Housing (as it then was) had something like 2,000 houses under management, so they knew a bit about how to manage houses. Some people liked what they did, others didn't, but they did have expertise. They were formed from the Borough Council's previous Housing Department when the Large Scale Voluntary Transfer of Fylde's council housing stock was made.

So there was no shortage of expertise available to the Board of Clifton Housing. (And if they didn't like New Fylde Housing, there were others they could have used)

Well what about the financial side of things? Had the Clifton Housing company run out of money? Was there a debt-mountain forcing the sale?

Surprisingly, there was no great accumulating debt. Quite the reverse in fact. The Associations books - even the most recent ones for the year ending 31 March 2010 show a small surplus (Total current assets (minus all the liabilities) stood at 57,873 which was up from a value of 48,738 the previous year) Disbelievers can follow this link to download a copy of the accounts.

And there was a waiting list as long as your arm for the delightful little properties which were reserved for worthy local people.

But managing them was (apparently) all getting too much for those Councillors that were the Board of Directors. So they restarted the selling process.

We say that if they weren't up to the job, they should have resigned, and let someone who could do it, take over from them.

Actually, 'taking the easy life' is what we prefer to think of as the reason they restarted the selling process - because this is the most charitable explanation we can devise for what they decided to do.

If, on the contrary, they had what we believe to be present 'end' in sight at that time, (all will be revealed shortly Dear Reader, just bear with us for now), then those Councillors have all moved downward a significant step in our table of respect.

Readers might wonder why that should be so? Why might we think less well of them?

After all, things do have to change don't they? And Councils are notoriously bad at running some sorts of things aren't they? So perhaps it might be better to hand over to a private developer might it not?

Well, to understand why it would be wrong, we need to go back to the start.

During the 1950s the, then, Squire was giving thought to his, and the Clifton family's legacy. The Melton Grove project was settled on.

But, the Clifton finances were not then as robust as they had once been - and the, then, Lytham St Anne's Corporation sought ways of securing the future of the project whilst retaining an involvement for Mr Clifton.

So a private limited company was formed. It is a private limited company with a nominal share capital of 1,000 created on 11 September 1952.

The first principal shareholders were in effect Mr Clifton and members of the Lytham St Annes Corporation The signatories to the Company incorporation are Charles Rimmer (the Estate Cashier) and John Kennedy (the Surveyor). Directors were appointed: the articles provided that one share should be allotted to each but for those who were Councillors, their right to hold the share would cease on them ceasing to be a councillor.

Even though they held a share, the Director / Shareholder Councillor was never intended to have a proprietorial interest in the company.

Indeed, the Town Clerk of the day required the councillors, when transferring the share to them, to sign a declaration that they held the share in trust for the Corporation and that they had no beneficial interest in it.

When a tenancy vacancy occurred at Melton Grove, the Director / Shareholders met to discuss filling it. By this time, of course, the Clifton family was no longer active hereabouts - but to the best of our current knowledge, the Clifton share was never transferred, and it remains an interesting point what right, if any, it still confers.

So far as we know, Mr Clifton never made the declaration that councillors were required to make (about not holding the beneficial interest in the share) himself.

The waiting list for properties was long, and, when assessing candidates, regard was had to the contribution which the individual had made to the day-to-day life of Lytham St Anne's. So, for example, someone who had been a porter at Lytham Hospital would receive priority over someone who had been a porter at Billingsgate.

So it follows that to answer a question we posed in 'Melton Grove Mess' the Melton Grove land, and the buildings on it, are owned by a private limited company (Clifton (Lytham) Housing Association Limited).

The outstanding question is really about the proprietorial interest(s) in that company.

The Corporation (Now FBC) went to great efforts to demonstrate that they were the owners, but the question of the Clifton share remains an interesting one, and it is a matter we are looking into at the moment. There is also another issue that few have yet picked up on that is also being followed up.

Whilst the issue of the Clifton share remains in the air, one thing is clear. The wishes of the Clifton Family, even in the times of economic hardship they faced in the 1960's, were that the Melton Grove project would be their legacy, and it should be a perpetual haven of safety and security for worthy local people.

It follows that the Cliftons must have seen it as more important than their own financial difficulties - otherwise they would have put their effort and resources into something else.

So whilst FBC's current Director/Shareholders might have got fed up with it, we believe they ought to have had more respect for the wishes of the originators and former Councillors of greater ability and - as Churchill might have said, they should have - 'Kept Buggering On'

Some Councillors might actually have thought it an honour to serve their community in this way, but we see little evidence of that in the money-grabbing asset-stripping approach most of the present Councillor / Directors have adopted.

(Readers might wish to remember that the former Commissar was still running the show at this point)

By September 2009 they were secretly planning to acquire the freehold of the land. But there was no report to the Council on this matter even though FBC Claims the Council is the owner.

And in November, the Board of Directors considered a report brought by Fylde's Chief Executive Philip Woodward, who is also a "Company Officer" (although he seems to have spoken in his capacity as Fylde's CE on this occasion).

His report set out a proposal to invite quotations for a 'Housing Options Appraisal' for Melton Grove, and four companies were subsequently invited to quote.

The Board also considered a draft letter to be sent to "existing tenants at Melton Grove outlining the proposed housing options appraisal arrangements"

It will be important to note later on, that this letter is probably the same as the one dated 4th December 2009 which was received by tenants of Melton Grove, and that it was sent out before the options appraisal was conducted. At best, therefore, it could only have advised tenants that an appraisal of options was going to be considered, it could not have sought views on proposals for the future - because, at that time, options for the future had not even been considered, let alone had a preferred decision made about them.

Readers can follow this link to download a copy of the letter.

This will become important because, so far as we can see, the statutory right that all tenants enjoy, (to be consulted on proposals that affect them), can not have taken place in advance of anyone knowing what those proposals were. So we argue that due process has not been followed, and there was no consultation with tenants before the arrangements with the developer were put in place.

It follows that, any claim that this letter of 4th December 2009 constituted a consultation with tenants, is entirely fallacious.

It was actually two months later, in February 2010, that Mr Barry Dean of 'Morris Dean' was presenting his options appraisal. This set out two options for retaining Melton Grove in the Council's control, and six other options for disposing of it.

(With that sort of weighting toward disposal, we wonder who wrote the brief he was working to?)

The Board of Directors then opted for one of his 'Asset Disposal' options (Actually Option 3) and, in doing so, they set in train the process to abandon Melton Grove as a public asset, and with that, the principle that local councillors, elected by the local community, should be deciding which local people were the most worthy future tenants.

They decided to 'invite expressions of interest' from four Registered Social Housing Landlords, and to open discussions with them on the protection of rent levels, covenants and so on.

Note here that there was no open tendering. No specification of the required service was advertised to see who could provide it at the lowest cost.

This is not Councillor / Directors acting in the best interests of their tenants. We think this is abandonment of responsibility, and dereliction of their duty.

By November 2010, the sticky subjects of money and tax implications were in the air. There seem to have been three options, each of which would have varying tax implications. - (Readers have to remember at this point that we are not dealing with the Council as such, but a limited liability company). So it was likely that a large sum in Corporation Tax would fall due on the sale of the asset.

Each of the three people who had expressed an interest, (They were 'Community Gateway' 'Windmill Group' and 'Progress Housing' - the latter is the new name for New Fylde Housing) had wanted the acquisition to be structured as a transfer of the land and buildings to their ownership.

Again, this demonstrates that the 'invitation' to express interest in acquiring Melton Grove was allowing prospective purchasers too much latitude to set their own terms. This approach suggests the Directors were looking for a process that would generate the maximum cash, without too much worry about the service they were supposed to be delivering and the future tenants in whose trust they were - or should have been - working.

Many people would call this practice 'Asset Stripping'.

The Shareholder Directors were advised that a transfer of the land and buildings would give rise to tax liabilities. BUT - and here is the first evidence of the intention to which the proceeds of this sale are intended to be applied - those tax liabilities could be offset if they used some of it to make a donation to a registered charity.

The Board then heard from Mr Dean again.

After emphasising the "financial and timescale implications" and "subject to tax planning measures" he advised that the Windmill Group should be the preferred option.

We note the 'Windmill Group' is registered in the Isle of Man where there are very different tax laws to those here on the mainland. Whether that has any bearing on the decision the Directors made, we don't know.

Mr Dean did "inform the Directors that if the Board sought to proceed with Option 2, in firming up the terms, he would seek reassurance from Windmill that there would be no pressure on the current tenants to terminate their tenancies"

That's OK then is it?

The Councillors who we elected, the same Councillors who should have been doing the best for the existing *and future* tenants, could - just like Pontius Pilate - wash their hands of the problem and let someone else sort it out.

We are utterly amazed that they were not more vociferous and demanding on behalf of the people for whom they were acting in trust.

But, of course, by now they had smelled the filthy lucre.

The "increased offer" by the Windmill Group (so much for open tendering, so much for transparency, so much for honesty and openness) was said to increase the tax liability on the deal by 188,000.

We figure that's a 'deal value' (God preserve us) of around 1.3 or 1.4 million.

So here is the evidence that, outside the sensible and time-honoured processes of 'open tendering' to achieve the best value with public funds, we have Councillor / Directors negotiating for increased bids from an invited developer company.

Readers might wonder what it was that might induce an 'increased bid" from a developer. (But then again, our readers are not fools, and by now we're pretty sure they have already worked out what must have been 'on offer' from the Councillor Directors)

We warned that this sort of thing would happen when we highlighted the changes to the Council's Constitution in October 2009.

Furthermore, the Directors were advised that in order to minimise the tax payable, the plan should be changed to sell the Company, rather than the assets (They would simply transfer with the company) to its new owner.

Or at least that's what was planned.

So it was that in November 2010, the Board of Directors decided:

  1. To instruct Mr Dean to negotiate with Windmill Group for the acquisition of the properties at Melton Grove, preferably on the basis of a share transfer;
  2. Mr Dean, was asked to speak with Windmill Group about the likely effects on trees as a consequence of any proposed new residential development and to seek assurance that there will be no pressure on existing tenants to vacate their properties and that any termination of their tenancies would be at their convenience; and
  3. "That an Extraordinary meeting of Clifton Housing be called to seek approval to amend the articles of the company to facilitate a transfer of shares to a third party and to consider any other necessary changes to the articles."

As we said in Melton Grove Mess, that change took place on 5 January this year, when the Directors, without reference to the Council, (or indeed, anyone else so far as we can currently ascertain) changed Article 6 of their Articles of Association, (which is about control and transfer of the shares), and they omitted the words

'"shall not allot the same except to members of the Fylde Borough Council (hereinafter called "The Council") nominated by the Council'"

and they substituted some new wording which said:

"may allot and dispose of or grant options over the same to such persons, on such terms, and in such manner as they think fit".

They also deleted several other Articles.

In doing that, they were agreeing to pave the way for non-elected people - such as Windmill Housing - to have control of the property and tenants that they should have been looking after themselves.

So we have both asset stripping, and throwing in the towel of public ownership and lettings based on decisions by democratically elected people from the local community.

But the Councillor / Director's decision had another - and in our view more sinister - implication.

Clearly, plans for development were in the air. Otherwise why would Mr Dean, be asked to "speak with Windmill Group about the likely effects on trees as a consequence of any proposed new residential development"?

So the Councillor / Directors at least knew that Windmill planned to put new and more houses on the land. We can't help wondering whether that was the reason the Windmill Group "increased its offer" and whether the idea for development came from the Councillor / Directors - in order to increase the offer to them.

There is some evidence - as yet unconfirmed, that the original offer was just short of 1m and it was subsequently increased to around 1.3 or 1.4 million.

It is alleged by a usually reliable source, that the sum will be payable to the Council / Councillor / Directors in two parts: One on completion of the sale, and the other on the grant of planning permission for development or re-development.

If that doesn't stink of an attempt at selling planning permissions we don't know what does.

It is, at least, shameful if true.

We have since learned that the plans permit the purchaser to redevelop part of the site. When 5 bungalows have been vacated, that area can be
redeveloped, but 15 bungalows will continue to be made available as 'affordable housing' for social rent, or for 'special needs groups'.

At least 15 existing or new bungalows will be retained for affordable or special needs accommodation 'ad infinitum' and there will be not more that 22 dwellings retained or built on the site.

There are all sorts of implications running through these plans.

We see nothing about restricting tenants to local worthy people (or even local people) which was the reason the property was provided in the first place. We see nothing to prevent high rental (income-producing) troubled families or individuals with special needs being imported from, say Manchester or Liverpool. We see nothing to maintain the current peace and quiet by not accepting tenants with children whose boisterous needs might not sit well with the existing community.

And none of this has been the subject of consultation with existing tenants before it is about to be presented to them as a fait accompli at a meeting on 23 Feb at Lowther pavilion where the Councillor Directors, the Company Officers and the potential developer will be "Updating you on the current situation and consider any questions or queries you may have on future arrangements."

And what of the tenants themselves?

Well, we were moved by the comments we heard from one elderly lady who said "I'm now quite old. Money doesn't mean anything to me at my time of life. What I want is peace and quiet and to be able to see the trees, and the squirrels, and the birds, when I look out of the window."

Quite.

We figure that means she doesn't want to look out on another over-developed site where the squirrels and birds can no longer find the trees they once called home, and which gave them shelter and food.

So who is it that made the decision to sell? Who are the Councillor / Directors?

They are:
- Chairman Cllr Pat Fieldhouse
- Councillor Brenda Ackers,
- Councillor Tim Ashton,
- Councillor Albert Pounder,
- Councillor Louis Rigby, and
- Councillor Roger Small

We say shame on them - except one.

Since our last counterbalance - where we said we were surprised that Cllr Louis Rigby would allow this to happen - we have heard that he has two letters sitting at his house that he has refused to sign. We also heard of a visit to his house by council officials to persuade or encourage him to sign the letters, but we are told he is steadfastly refusing to do so.

It's therefore likely that he is holding up the sale at the moment.

We're lucky to have Councillors with such integrity and honour. And if it is the case that Cllr Louis Rigby is able to frustrate the 'asset disposal', we salute him as giant amongst his fellow Councillor Directors.

And we make very clear at this point that we have not spoken (or otherwise communicated) with Councillor Louis Rigby in any way in the preparation of this article. Nor has he contacted us. We would not expect him to have done so.

Now: our readers might be forgiven for asking when they are going to be told what the money is to be used for.

What is the worthy "end" we spoke of at the beginning that has prompted the abdication of such public responsibility?

What is the Registered Charity that is (or was) to be the beneficiary of a huge donation from - as they are often described - "cash-strapped Fylde Council"

We believe the answer, Dear Reader, is Lytham Hall.

In a hollow echo of selling part of Ashton Gardens for 500,000 to match fund the lottery grant there (which we say was equally wrong when the Council had 2 million sitting unused in its reserves) we believe a sizeable part of the Melton Grove money is planned as match funding to secure a lottery grant for the Hall.

As we said at the outset, we reveal this belief with a heavy heart, because the 'end' that might have led some councillors to promote such a benefit to the Hall is, indeed, very worthwhile, and it is one we would like to see happen. But no matter how much we value the Hall, if our democracy and civic ethics are damaged or diminished to achieve its restoration, then it is a price that is not worth paying.

Readers have grounds to believe this tale of woe - (which we think rivals the now infamous Streetscene debacle for incompetence) - is bad enough, but with at least one councillor being implicated in both of the debacles perhaps it's only what we should expect.

But, just when you think it can't get any worse...

It does.

Last week, Fylde's Cabinet met to consider the budget and medium term financial strategy they will recommend the Council to adopt on 2 March.

Speaking as the Finance Portfolio Holder, Cllr Karen Buckley proposed the budget to Cabinet. Press releases were issued about how well the Council had done to manage its money during the year so they hardly needed to make any cuts now, and weren't they doing well.

She dwelt of the positives and - well, let's just say quickly skirted over - some of the negatives (money given to the Council for business improvement and tourism that was cut, and overly optimistic suppositions on staff savings and 'homes bonus' income) that will no doubt appear at the budget meeting.

As someone said: "her presentation was the best presentation of a budget I've heard in many a year" And indeed it was, (as has been the case with much of the former Commissar's administration) the *presentation* was brilliant. Cllr Buckley is a good and clever advocate.

And to be fair, Fylde *has* done a decent job of sorting its money out. We don't think they deserve quite as much credit as they're claiming, but with the exception we're about to expose, they have done well, if not excellently.

But the exception to which we refer in this year's accounting is in the 'Capital Receipts' section.

We've said before that the present Finance people at Fylde are very competent but a bit too secretive for our taste. Well here's an example of what we mean about being 'secretive' and not being straightforward.

If you look at the agenda for the Cabinet Meeting of 16 February 2011, the Medium Term Financial Strategy (MTFS) report says (page 128 para 18.9) "In constructing the Capital Programme a capital receipt is expected from the disposal of the Clifton (Lytham) Housing Association Ltd during 2011. However, the date of contract exchange has not been determined and no assumptions are therefore made in the forecast on this matter."

This gives us confirmation that it is the Clifton (Lytham) Housing Association itself, and not the land and buildings that the Council are being asked to dispose of.

And we believe if this MTFS is approved as part of the budget-setting process, it will later be cited as approval by the Council to dispose of Melton Grove. No specific reports. No requests. No debate. Just a line in a strategy that could commit the Council to disposal.

That appears to be how business is done in Fylde these days.

And the disposal is being structured in this way to avoid paying the tax that is due if the land and buildings were being sold.

We've all seen the protests across the UK as Sir Philip Green's 'Topshop' empire was assailed for possible tax avoidance. Campaigners have targeted large Topshop stores where they blew whistles and chanted, and even in some cases glued themselves to the shop window in protest. They said his missing millions need to be reclaimed and invested into public services, not into his wife's bank account (because she is a resident of Monaco which is a tax haven).

We see some similarities here.

We wonder if we will now see them picketing Fylde's Town Hall for similar tax avoidance measures being taken by a Local Authority.

And still it gets worse.

Further on in the MTFS (Appendix F page 150) it shows the Capital receipts that are anticipated over the next five years.

Sure enough, there is a heading "Capital Receipts - Clifton Housing" and a zero is shown in each year from now to 2014/15.

Why would they do that?

Why would they put an item into the future budget that didn't have any income or expenditure?

Why put in an item that just wasted a line of zeros?

The answer is partly because of the comment at page 128 para 18.9 which is looking to authorise the disposal when the MTFS is adopted at Council on 2 March. But we believe it is also partly for a different reason.

The stated logic for the income not being included in the forecast is because contracts have not been exchanged, and no date has been set for an exchange, so until something was more definite, they didn't think it was right to include the potential income in the forecast.

There's a word for this. It begins with B and ends in ollocks.

Two lines below the 'Clifton Housing' entry, is another which says "Capital Receipts (Town Hall Accommodation)". This shows an assumed capital receipt of 5.8 million in the current year which has been revised down to 3.0m for next year (2011/12)

This income is in connection with the Town Hall redevelopment, and is the income expected from the disposal of various Council-owned sites (Public offices, St David's Road dept and so on)

But these sites have only been advertised for sale this week. They haven't even had contracts prepared yet. They haven't had terms agreed, (let alone not had contracts exchanged). They're *well* behind the proposed disposal of Melton Grove. But the assumed income from them *is* included in the MTFS forecast.

We've seen this sort of thing happen before.

It originated as a Ken Lee budget accounting sleight of hand when they were selling off part of Ashton Gardens. The item was included in the draft budget with a set of zeros for income, then, when the arguing about what should and shouldn't be a priority item in the budget was all settled, and the Capital budget for that year had been approved, a week later, up popped the magical mystery half-million from the sale of part of Ashton Gardens.

And because they had just settled all their budgets, this could usefully go as match funding for a Heritage lottery grant couldn't it?.

What this did was lawful (just) but it rendered the 500,000 from the land disposal completely outside the debate about budget priorities. It was not tested against the other items that had been included or removed from the Capital Budget.

It was snuck in when no one was looking.

We assert that's what some Councillors and officers are up to with Melton Grove.

They're planning to set a Capital budget without taking the Melton Grove income into account - and at some point after the budget is set for the year (in our view timed nicely to co-incide with the election), they expect to produce the Windmill Group's 1.3million or whatever it is out of the hat as a magical 'extra' lot of money and say a large part of that has to be spent with Registered Charity on a worthy cause.

And the most likely candidate for the sort of money we're looking at is Lytham Hall.

So they're artificially excluding the Melton Grove money from being considered in with all the other priorities at the budget debate.

If it's OK to assume the income for the Town Hall site disposals will come in the next five years, it must be OK to assume it will also do so for Melton Grove (which, according to what the Council's press releases say, is much further advanced and really only needs the a few t's crossing).

That's why we said at the beginning, "We regard what is happening political chicanery, (possibly for party political advantage). There is also tax avoidance (if not evasion), and manipulation of accounting that is probably within the law, but morally and ethically plain wrong."

We sincerely hope Councillor Rigby is able to frustrate the sale, by holding true to the values that generations of Councillors before him have prized.

We support the Council contributing to lottery match-funding for Lytham Hall, but that contribution needs to be weighed in the balance against all the demands on money that Fylde receives, and the right place and time to do that is the 2nd of March Budget Meeting of the Council.

In conclusion, we also wish the embryo Melton Grove Resident's Association (that was formed today) all the success it can muster in its endeavours to challenge the actions of the Council in this matter, and to secure their rights and privileges.

We'll update our readers, and report on the meeting that formed the Melton Grove Resident's Association, shortly.

In the meantime, we don't think the decisions made by the Councillor / Directors are anywhere near done and dusted.

Nor do we think the outcome of their meeting next Wednesday is at all cut and dried if - it goes ahead at all.

And we believe there's quite a bit more to come into the public arena about this story.

Dated:   19 February 2011


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