Author Topic: 1: The Business Plan and the £450,000 Loan to Digital City (UK) Ltd  (Read 29689 times)

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Offline Chris Watts

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Re: 1: The Business Plan and the £450,000 Loan to Digital City (UK) Ltd
« Reply #20 on: February 07, 2010, 11:41:28 AM »
When incorporating a company you need to stipulate if boardroom decisions are carried with unanimous or majority vote, including exceptions. In my previous questions to scrutiny 14/12/09 I asked if the council had right of veto in boardroom decisions. I received the following answer:

“The Council has one Director representing its interest on the Digital City Board. The Board of Digital City totals 3 Directors (including one chair). The Council exercises a high degree of control over the period of the loan e.g.: Delivery of agreed milestones, before releasing the next phase of funding.”

I can take it from this response that the answer to the question is “NO”. Having a degree of control regarding the releasing of the next phase of the loan is a council decision and not a Digital City board room decision. The council in this answer also admit they only have the ability to exercise any degree of control of Digital City over the period of the loan. This leave the council exposed on two fronts:

1.   Profit Sharing and Dividends: In the event of Network City not reaching targets and SBC withholding further advance on the loan, Digital City will have to raise capital through internal or external investment. The SBC share within Digital City will be compromised unless this is matched proportionally by SBC investment. (In this case real cash, not a loan.) SBC have stated that they will not be investing further into Digital City. I suspect that because of the lack of board room veto or contractual protection SBC would be powerless to stop share percentage erosion.
2.   Social Inclusion: In the event of targets not being met and / or too high a percentage of non paying WiFi user compromising bandwidth for the paying customers, tough business decisions would have to be made. This could include throttling back on the bandwidth / time allocated to the free WiFi users or even withdrawing the free service all together. This would be a difficult business decision, but again with no power of veto or contractual protection SBC would be powerless to stop this move by the board.

These are the two key elements regarding this investment from the SBC and the tax payers’ point of view and therefore must be shown to be adequately protected.

I have asked the council to clarify this postion in the questions posed to scrutiny 25/01/10. I have not received answers as yet.


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Offline komadori

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Re: 1: The Business Plan and the £450,000 Loan to Digital City (UK) Ltd
« Reply #21 on: February 07, 2010, 11:57:45 AM »
SBC have stated that they will not be investing further into Digital City.
Have they? The only statements I have seen have been to the effect that they are under no obligation to invest further. Not being under an obligation to invest does not mean that they won't. And given the level of secrecy over the initial investment, would any of us get to know about it if they did?
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Offline Chris Watts

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Re: 1: The Business Plan and the £450,000 Loan to Digital City (UK) Ltd
« Reply #22 on: February 07, 2010, 12:04:52 PM »
SBC have stated that they will not be investing further into Digital City.
Have they? The only statements I have seen have been to the effect that they are under no obligation to invest further. Not being under an obligation to invest does not mean that they won't. And given the level of secrecy over the initial investment, would any of us get to know about it if they did?

I stand corrected, thanks K.


in the scrutiny meeting dated 25/01/2010 i have asked the following question:

7. Can you assure the public that if further capital investment is to be made into Digital City, that this will be done with full Cabinet approval and with full visibility to scrutiny and the public, if not passed to the full council for approval.

I await the answer.
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Offline Geoff Reid

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Re: 1: The Business Plan and the £450,000 Loan to Digital City (UK) Ltd
« Reply #23 on: February 07, 2010, 12:58:57 PM »
I've made a couple of edits to my last post  :)

Excellent contributions by everyone, thanks  :)

Komadori makes two very pertinent points.
 
Quote
Loan versus investment: I would regard a loan as an investment: nothing to get concerned about there.  If your investment is a loan then you're a creditor and in this case (from what the Cabinet Member Briefing note suggests) it's a partially secured loan, so the chances of getting something back are much better.

and

Quote
Length/strength of the Business Case: It's not that uncommon for relatively large amounts of money to be handed out on the basis of rather thin documentation, but in those cases they usually are 'hand outs': grants and other such payments where no financial return is expected. (And not all grants are given that easily, some require masses of detailed documentation). However, this is not a grant. As Mr Bluh is so fond of telling us, he'd like it to be treated as 'an investment', a business 'opportunity'. If that's the case, it needs to be treated as such and have a proper business case. It might not be very long, but I'd expect significantly more than a couple of pages.

Where are we now?

Regarding the WiFi 'Investment'.  I think it is becoming clearer by the day that SBC Cabinet members are unilaterally making large financial decisions using 'delegated powers', without reference to or discussion with other cabinet members or the full council.

I also think that, in making the WiFi loan/investment, SBC carried out a very minimal diligence exercise on Digital City and the leadership has deliberately prevented wider discussion of the proposed deal.  Had the deal been discussed more widely I suggest it would not have gone ahead, and with good reason.

The business case, far from being:

Quote from: Rod Bluh
"thoroughly investigated and discussed and it had ultimately been determined to be a sound commercial venture"

..has actually been hushed up, hidden and not referred to unless absolutely necessary and the politically embarrassing nature of this is viciously protected when challenged, e.g, the sad case of Councillor Michael Dickinsons' recent public humiliation and private castration.

I don't think the loan & investment in Digital City should have been made on the basis of the apparently very weak business case given to Councillor Bluh and subsequently shown to Councillors Mallinson and Bawden but, nevertheless, the loan was made and the commercial partnership began.

What say other members?:   Shall we add a few poll questions to this thread to test opinion before moving on to examine 'Delegated Powers' - the constitutional amendment which allowed Councillor Mark Edwards to stealthily, and unilaterally take the decision to lend Digital City taxpayers cash without reference to any other elected councillors ?   

If you think SBC's position thus far is weak, I think you'll find their use of 'delegated powers' to be equally knock-kneed  :)

What does TS think?

   

Offline Chris Watts

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Re: 1: The Business Plan and the £450,000 Loan to Digital City (UK) Ltd
« Reply #24 on: February 07, 2010, 03:27:11 PM »
Business Plans. At best speculative but at worst complete BS. (Very much like a CV in that respect) In general a business plan used for the purpose of raising capital needs to be taken on advice as it will be loaded with the Pro’s and light on the Con’s. If it is not in your area of expertise it needs to be vetted using external independent expert advice.

I would suggest that this was not an area that SBC could consider themselves industry experts and were further stifled by the condition that this was conducted under commercial confidentiality else digital city would walk away from the deal. The only injdustry advice seems to have come from digital city.

Therefore I would say that it is not so much the content of the business plan but the way in which SBC verified the business plan before providing the loan considering this is out of the SBC comfort zone.
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Offline komadori

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Re: 1: The Business Plan and the £450,000 Loan to Digital City (UK) Ltd
« Reply #25 on: February 07, 2010, 06:44:17 PM »
There's another aspect which I would expect the business case to cover. None of the companies involved have much of a history. From what I can see from Companies' House records, none of Digital City UK Ltd, aQovia UK Ltd and Avidity Consulting Ltd were active before September 2009. With such limited track records for the companies, I would expect the track records of the individuals concerned to be covered in some detail, both in terms of financial history and experience in this and related markets.
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Offline moley

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Re: 1: The Business Plan and the £450,000 Loan to Digital City (UK) Ltd
« Reply #26 on: February 08, 2010, 11:23:45 PM »
Wanted to throw some interesting links I found into the discussion on reviewing the business case/plan.

(It didn't take that much Googling to throw these up so one would hope the council might have had a look).

The (eventually not built) Google + partner municipal network for San Francisco:

http://www.ptc.org/past_events/ptc07/program/papers/W12_Heather.pdf

(discusses problems with business models for free wifi, the challenges of building wifi networks in complex topographical areas (Swindon isn't as challenging as San Francisco, but Old Town / Shaw Ridge / bits of the town centre and Blunsdon/Highworth would definitely have challenges))

http://www.cedmagazine.com/meshing-things-up.aspx

It would be interesting to understand the Signal network architecture (although I guess they'd probably view that as proprietary).  This article talks about how to make mesh networks scale and some of the problems including

[xquote]"That became painfully clear in the Lompoc, Calif. city-wide mesh network launch, which was designed to provide DSL-comparable Internet service to city residents. According to reports in the Lompoc Record, the network experienced "widespread" difficulties with signal strength and coverage, and according to one city official: "We're not getting the network performance we expected. It's all over the city. There is no pattern."

There's no service either. The city has stopped accepting subscriptions while it addresses those technical issues."[/xquote]

Finally an article about plans to build a similar network in Montreal:

http://www.thejehm.net/newsblog/2007/06/

with some concerns about technical issues with it.

Now I'll admit that these articles are all 3-4 years old - but I'm not sure that many places have tried to build municipal wifi networks in the intervening period!!

Offline MsD Meanor

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Re: 1: The Business Plan and the £450,000 Loan to Digital City (UK) Ltd
« Reply #27 on: February 12, 2010, 09:37:10 AM »
Hello, this is  my first post and it may be controversial but I just feel I need to know ( as though I'd get a straight answer!)   :2funny:

All these relevant questions are being asked and lots of peoples' knowledge of the correct application of  transparent processes are clear - and I did notice a throw away remark on one of the earlier posts- ( which wasn't engaged with)  but not one of them are being responded to by the people who are in a position to reassure us.

To me as an outsider in the process looking on, it appears fairly obvious that there is some secret (Masonic?) influence in a lot of funding decisions being made in many areas of "development" in Swindon and this one is just the tip of the iceberg.

Does it appear like that to anyone else?  Or am I being naive?

And now, how could we possibly be  convinced that it isn't true- that we do have some genuine input into decision making ?

I wonder if there will be any response - or is it even more insidious and widespread than  even I think? 

In which case what do we do then? I guess  we may as well just stop  :bash:

Offline Steve Wakefield

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Re: 1: The Business Plan and the £450,000 Loan to Digital City (UK) Ltd
« Reply #28 on: February 12, 2010, 09:51:33 AM »
I am not on the square and I do not know the grand order of all things that happen in Swindon, but Masonic influence is not something that is lodged within the culture of SBC. There may be an influence of some sort  somewhere as no one can guarantee anything 100% that there is not. However I am being on the level as a non mason when I say this, I believe speculation in that direction detracts from the real issue of Governance, and scrutiny of the executive (Cabinet), which are legitimate processes within local government.

We as members of the council must all, and that includes ordinary people and the groups working and representing individuals/interests in the community hold the executive to account for decisions it makes. Ultimately through the ballot box, if all other processes fail. Last night I attended the recycling meeting and only one member of the public was there to participate, perhaps we should hold meetings during the day in the coffee bar in the new library to get more public participation and scrutiny? :coffee:
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Offline Alex

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Re: 1: The Business Plan and the £450,000 Loan to Digital City (UK) Ltd
« Reply #29 on: February 12, 2010, 11:45:44 AM »
I am not on the square and I do not know the grand order of all things that happen in Swindon, but Masonic influence is not something that is lodged within the culture of SBC. There may be an influence of some sort  somewhere as no one can guarantee anything 100% that there is not. However I am being on the level as a non mason when I say this, I believe speculation in that direction detracts from the real issue of Governance, and scrutiny of the executive (Cabinet), which are legitimate processes within local government.

We as members of the council must all, and that includes ordinary people and the groups working and representing individuals/interests in the community hold the executive to account for decisions it makes. Ultimately through the ballot box, if all other processes fail. Last night I attended the recycling meeting and only one member of the public was there to participate, perhaps we should hold meetings during the day in the coffee bar in the new library to get more public participation and scrutiny? :coffee:

It might attract a few but the reason a lot of people move to Swindon is becasue they can commute- so many people who are affected by decisions made have to ability to be present as they're working or travelling. These days - esoecially as "presenteeism" is how people think they will keep their jobs, e-engagement is necessary  to get input  and scrutiny.

Offline Muggins

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Re: 1: The Business Plan and the £450,000 Loan to Digital City (UK) Ltd
« Reply #30 on: February 12, 2010, 01:22:00 PM »
Maybe it's not so much Masonism as rotary clubism, anyway it's fairly tight club that few can penetrate. 

ITC or coffee in the library, all methods count. What is it they say, the triumph of available technology over praticality.  ITC still excludes a lot of people and usually those hearder to reach groups.
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Offline komadori

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Re: 1: The Business Plan and the £450,000 Loan to Digital City (UK) Ltd
« Reply #31 on: February 12, 2010, 08:13:54 PM »
To me as an outsider in the process looking on, it appears fairly obvious that there is some secret (Masonic?) influence in a lot of funding decisions being made in many areas of "development" in Swindon and this one is just the tip of the iceberg.

Does it appear like that to anyone else?  Or am I being naive?
I'm with Mr Wakefield on this one. The source of influence or patronage isn't overly important. Openness in the decision making process and effective scrutiny are there to stop patronage, whatever its source. I'm far more concerned about the secrecy that has surrounded this decision and anything untoward that may have been hidden as a result, rather than which particular flavour of untowardness might exist.

And now, how could we possibly be  convinced that it isn't true- that we do have some genuine input into decision making ?
Genuine input into decision making has always been limited. Law requires consultation on a number of council matters, but the only truly effective input is via the ballot box.

I wonder if there will be any response - or is it even more insidious and widespread than even I think? 

In which case what do we do then? I guess  we may as well just stop  :bash:
No, keep digging and questioning. Eventually, someone somewhere might take notice.
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Offline Bobby Bingo

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Re: 1: The Business Plan and the £450,000 Loan to Digital City (UK) Ltd
« Reply #32 on: February 13, 2010, 09:06:20 AM »
A briefing for all councillors on the Business Plan etc. is being held in Room 6 (how they will all get in God knows) on Tuesday 18th Feb 6.00pm to 7.00pm.
Perhaps we will now get some answers but do not hold your breath. The briefing is from Hitesh Patel and yes, you guessed it, Rikki Hunt.
Bobby

Offline Richard Shaw

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Re: 1: The Business Plan and the £450,000 Loan to Digital City (UK) Ltd
« Reply #33 on: February 13, 2010, 09:38:37 AM »
Bobby,

This is the way it should have been done in the first place unless there is a very fat carpet somewhere, but then I could be wrong of course.

Offline Geoff Reid

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Re: 1: The Business Plan and the £450,000 Loan to Digital City (UK) Ltd
« Reply #34 on: February 13, 2010, 11:47:49 AM »
A briefing for all councillors on the Business Plan etc. is being held in Room 6 (how they will all get in God knows) on Tuesday 18th Feb 6.00pm to 7.00pm.
Perhaps we will now get some answers but do not hold your breath. The briefing is from Hitesh Patel and yes, you guessed it, Rikki Hunt.

The briefing DOES NOT mention the business/financial plan in any way. It says simply:

Quote
"A briefing on WiFi has been arranged"

Members shouldn't get too excited about this, Rod Bluh has still not provided the written answers he'd previously promised to Chris Watts' scrutiny questions, so it's unlikely he's going to suddenly spill his guts to a group of councillors.....most of which he can already whip.


Offline Richard Shaw

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Re: 1: The Business Plan and the £450,000 Loan to Digital City (UK) Ltd
« Reply #35 on: February 14, 2010, 09:44:13 AM »
A briefing for all councillors on the Business Plan etc. is being held in Room 6 (how they will all get in God knows) on Tuesday 18th Feb 6.00pm to 7.00pm.
Perhaps we will now get some answers but do not hold your breath. The briefing is from Hitesh Patel and yes, you guessed it, Rikki Hunt.

The briefing DOES NOT mention the business/financial plan in any way. It says simply:

Quote
"A briefing on WiFi has been arranged"

Members shouldn't get too excited about this, Rod Bluh has still not provided the written answers he'd previously promised to Chris Watts' scrutiny questions, so it's unlikely he's going to suddenly spill his guts to a group of councillors.....most of which he can already whip.

I got very excited about this Bobby, but have now had a reality check and can only hope this is one occasion that Geoff is wrong, but somehow I doubt it.

Offline James

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Re: 1: The Business Plan and the £450,000 Loan to Digital City (UK) Ltd
« Reply #36 on: February 14, 2010, 01:53:14 PM »
Quote
Rod Bluh has still not provided the written answers he'd previously promised to Chris Watts' scrutiny questions,
This is sounding worse and worse to me.


Offline Chav

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Re: 1: The Business Plan and the £450,000 Loan to Digital City (UK) Ltd
« Reply #37 on: February 14, 2010, 02:54:19 PM »
Quote
Rod Bluh has still not provided the written answers he'd previously promised to Chris Watts' scrutiny questions,

This is sounding worse and worse to me.


There is always:
http://www.swindonhalfmarathon.co.uk/sbc-foi-publicationscheme.pdf
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Offline Geoff Reid

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Re: 1: The Business Plan and the £450,000 Loan to Digital City (UK) Ltd
« Reply #38 on: February 14, 2010, 06:08:33 PM »
Quote
Rod Bluh has still not provided the written answers he'd previously promised to Chris Watts' scrutiny questions,
This is sounding worse and worse to me.

It is, especially if your surname has four letters, begining with 'B', ending in 'h' and includes a 'u' and 'l'.

This will not go away for Bluh and the gang. the more he tries to evade answering questions the harder people will look at the answers and the less room he has to wriggle.

There's a joke circulating through the civic offices at the moment: 'Who is writing the labour party manifesto for Swindon? - Rod Bluh is!"   :-X

Offline Geoff Reid

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Re: 1: The Business Plan and the £450,000 Loan to Digital City (UK) Ltd
« Reply #39 on: February 14, 2010, 06:27:31 PM »
A briefing for all councillors on the Business Plan etc. is being held in Room 6 (how they will all get in God knows) on Tuesday 18th Feb 6.00pm to 7.00pm.
Perhaps we will now get some answers but do not hold your breath. The briefing is from Hitesh Patel and yes, you guessed it, Rikki Hunt.

Actually, the Members (Councillors) WiFi briefing is on Thursday the 18th of February.

I hope it is well attended and that a good many questions that we've asked here are also asked there.

I expect there won't be any answers to difficult questions and members will be referred back to the scrutiny process, that's right, the scrutiny process which Councillor Bluh seems determined to bypass because he doesn't seem to want to answer Chris Watts' scrutiny questions......