On 20th December 2011, activists from Occupy London occupied the disused Old Street Magistrates courthouse in Shoreditch, London, with the intention of holding mock trials of the “one per cent” who have “tanked the global economy [and] slashed Britain’s social services”. Two weeks later, some in the group calling itself Occupy Justice agreed to vacate the premises after 20 days following a court agreement with Mastcraft Ltd, the company that owns the listed building and plans to turn it into a luxury hotel. Corporate Watch takes a detailed look at the suspicious-looking company and asks what it and Occupy might gain or lose from such an agreement, which many in the movement seem to be unhappy with.

Courted

The occupiers appeared at the Clerkenwell and Shoreditch County Court on 3rd January to contest an application for an interim possession order made by Mastcraft Ltd, represented by Stratford solicitors firm Bowling & Co. During the hearing, however, an agreement was reached between the occupiers and the owners, with the former promising to hand back the building by 23rd January. The agreement, described by Occupy's press team as “amicable”, was presented to and agreed by the judge.

A press release by Occupy London said the group “would like to thank Mastcraft for having the imagination to work with us in giving this fine building a new lease of life – as well as perhaps the last ever trials to take place in the building – while it awaits redevelopment. We hope this agreement will serve as a model for others to follow.”[1]

However, Occupy's legal team told Corporate Watch the decision to go ahead with the agreement with Mastcraft was taken by one person representing the occupiers in court without consulting with the legal team or the lawyers they employ. Neither the person, described as “an experienced squatter”, nor Occupy's press team have responded to our requests for a comment.

In any case, Corporate Watch has spent some time looking into Mastcraft and its dealings, and has found out some interesting information that the occupiers may find useful, from the building's history and how it was taken from proposed community use to become a luxury hotel, to the company's accounts, which reveal that it has not paid any taxes for the past few years.

'Redevelopment'?

The building that houses the disused Old Street Magistrates Court and Police Station, at 335-7 Old Street, is a Grade II-listed building situated in the London Borough of Hackney, opposite the old Shoreditch Town Hall. Designed by John Dixon Butler, it housed two magistrates courts since 1903, until they were decommissioned in 1996. In 1999, the empty building was put on the English Heritage Buildings At Risk Register. Any application for planning permission would therefore also require an application for a change of use.

Until 2006, when Mastcraft acquired the building, the courthouse and police station were owned by the Greater London Magistrates' Courts Authority and the Metropolitan Police Authority respectively. In September 2004, the MPA bought the courthouse from GLMCA and entered into years-long negotiations with the Community Advice Project (CAP), which wanted to use the building for a project called the Community Courthouse Initiative.

The Community Courthouse Initiative was a flagship scheme of the Society of Black Lawyers of England & Wales to address the “declining public trust and confidence in the justice system”. The reasoning behind it was that a high proportion of the the black and other ethnic minority groups in the area found that “discrimination and prohibitively high legal fees were limiting [their] opportunities to succeed”.[2]

The scheme involved projects and services acting as “an interface between socially excluded communities and the wider criminal justice and legal systems”, including a Youth4Justice education programme, a business law clinic, law mentoring and work experience programmes, an ICT learning centre, and a prisoners advisory service. In addition, affordable business units and office space for black and ethnic minority businesses with a bespoke range of support services were to be provided.[3]

The project would have also involved the preservation and adaptation of the listed building and the redevelopment of the rest of the site for social housing purposes. The broad intention was for the MPA to sell the site to CAP, which would grant a development lease to its development partner but retain the community accommodation.

According to official documents, CAP struggled to meet its negotiation deadlines, largely due to the complicated and costly planning permission process required by the local council and English Heritage. CAP's development partner requested that the MPA make a legally binding commitment to proceed with the sale of the property if and when planning permission was granted. The company was concerned that the costs associated with the planning application and surveys were rising, and that it would be “adversely exposed to risk” without a concrete assurance from the MPA.

The MPA, however, was advised that such an agreement would not be “a prudent step for the Authority to take before planning permission is granted”. Negotiations with that developer thus failed to produce a “mutually satisfactory conclusion”. In a report dated 24 February 2005, the MPA's committee discussing the deal, and acting on the advice of the director of Property Services MPS, recommended that the Old Street police station and courthouse be placed on the market.[4]

In discussions with the the Hackney council, CAP was told that it would be “highly unlikely” that any development would be permitted unless it provided a proportion of social housing or space for community use and retained the central staircase, the two courts, the entire façade, as well as some of the original cells. Such strict conditions do not appear to have been imposed on Mastcraft's applications to convert the building into a luxury hotel.

In July 2007, Mastcraft Ltd submitted a planning application for the conversion of former magistrates court and police station building into “a 128-guestroom hotel, including restaurant, bar, lounge, conference/function rooms, health & fitness areas and basement parking for 16 cars”.[5] A council report dated 4th August 2008 recommended to grant conditional Listed Building Consent and conditional planning permission subject to completion of a legal agreement under Section 106 of the Town and Country Planning Act 1990, which allows the local planning authority to enter into a legally-binding agreement with the land owner in association with the granting of planning permission. The application was withdrawn by the applicant, ADZ Architects, representing Mastcraft.

In November 2010, another application was made by Mastcraft to convert the building into a 128-room luxury hotel, involving “consent for alterations, extension or demolition of a listed building”. [6] The plan also included “a new or altered vehicle and pedestrian access to the public highway”. The rear north-east parts to be demolished amount to more than 12 per cent of the listed building (1,921 cubic meters out of 15,630). Nonetheless, planning permission was granted on 8 November 2011.

Mastcraft

Mastcraft Ltd is a real estate and property development private company limited by shares, with head offices in Poland Street, London, and another office in West Kensington. It employs some 250 people, including 15 family members. According to the company's official records, its four owners and directors are all members of the same family: Joginder Sanger (also the company's secretary) owns 38 per cent of the shares; his wife Sunita Sanger owns 30 per cent; his son Girish and younger sister Reema own 8 per cent each. The rest of the shares, 16 per cent, are owned by a company called Rosumund Inc.

Mastcraft Ltd has many, overlapping subsidiaries: Abchurch Construction Ltd (mechanical and electrical engineering); Heathlands Ltd (hotel operation); Hindustan Travel Service Ltd (travel agency); International Luxury Hotels Ltd (hotel management); Kesara Ltd (hotel management); Mastcraft (Old Street) Ltd (real estate and property development); Nicol's Worsteds Ltd (travel agency and property management); Palms Hospitality Ltd (hotel management); Surejogi Gms Ltd (hotel management); Surejogi Group Ltd (hotel operation); Transatlantic Life Assurance Co Ltd (insurance). All are based in England and are 80 to 100 per cent-owned by Mastcraft Ltd. Another subsidiary, travel agents Janta Travel (Pvt) Ltd, is based in India.

Mastcraft (Old Street) Ltd is a private limited company that seems to have been set up by Mastcraft Ltd in 2006 specifically for the Old Street luxury hotel project. The company's stated business area is “property holding, development, dealing and management”. Its directors and given address are the same as the parent company's, Mastcraft Ltd. Its 2010 accounts show that the company's turnover and profit for that year and the previous one were both zero, and it had only £307 in the bank. The only transaction appears to have been £58,319 spent on “administration expenses”. Yet its fixed assets were worth £5,476,828, which were roughly the same in the previous year and are presumably related to the Old Street building. However, the company also appears to owe £6.5 million to its parent company, leaving it at an apparent loss of over one million. This does not seem to show in Matscraft Ltd's accounts for the same financial year.

Mastcraft Ltd owns another courthouse-turned-hotel in central London: the Hilton Kempinski hotel on Great Marlborough Street, near Regent Street, which was rebranded in 2008 as Doubletree. This is also a Grade II-listed former magistrates court and has 112 luxury rooms, in addition to several original features, including prison cells transformed into bar booths.

Mastcraft's other hotels – through its subsidiary the Surejogi Group – include Waldorf Astoria (formerly known as The Bentley) in South Kensington. Like the Doubletree, this is also managed by a subsidiary of Mastcraft Ltd under a franchise agreement with Hilton. Mastcraft also owned the four-star Washington Hotel in Curzon Street, Mayfair, and the run-down Thornecliffe Hotel, next to the M4 in west London.

The latter, which was at the time being used by the Home Office for asylum accommodation, was at the centre of a 2004 inquiry into a missing three-year-old asylum-seeking boy. Media reports subsequently revealed that the owners of the hotel, Mastcraft Ltd, were being paid £4 million to house asylum seekers at this “bleak” 400-room establishment in “cramped conditions”.[7] According to the Evening Standard, the facilities in the hotel amounted to “one TV in a room furnished with a tatty sofa. The only other area for socialising was a dirty corridor.”[8] Asylum seekers housed there told the paper the building was “overrun by cockroaches” and some showed bite marks on their arms which they claimed were caused by bedbugs.

Profits and taxes

According to Mastcraft Ltd's accounts, the company's net worth at the end of the financial year 2010 was £5.3 million, with current assets of £21.6 million. Its net income for the same year was a mere £1.24 million, all of which was recorded as pre-tax profit, with a profit margin of 57.3 per cent. The accounts also show that the company paid almost no taxes in that year, and in the previous years that Corporate Watch has examined. How? The devil is in the details.[9]

According to the company's records, its total assets have for years been the same as its total liabilities, and its net sales the same as its net profits. In other words, the assets were financed by borrowing money (liability) rather than the owners' money (equity) – except the money in this case is sometimes 'borrowed' from the owners themselves.

The company's 2010 accounts show that more than half of these liabilities are owed to Mastcraft Ltd's subsidiaries. Of the £2.96 million borrowed by the company in 2010 and due within one year, £1.6 million was borrowed from subsidiary companies. Mortgages and loans secured from banks amounted to £15.6 million, down from £19 million in 2009. The company's stock of properties in both years was worth almost £19 million.

Lending and borrowing money to and from subsidiary or parent companies, with high interest rates, is a typical tactic employed by companies to move money around within the company so as to avoid paying taxes, because it looks in their accounts as if they are not making much profit, or even losing money. [10]

Mastcraft Ltd's turnover of £2.1 million in 2010 – which is derived mainly from rent, insurance and service charges – was all recorded as gross profit. This, in addition to other income (just over £600,000), was split between administration expenses (£1.5m) and operating profits (£1.2m). Previous years' accounts show a similar story. The operating profits were split between directors' remuneration (£140,000) and loan interests (almost £300,000), in addition to depreciation and auditors' (Parker Lloyd) remuneration. The figures don't seem to add up.

More importantly, the company has paid next to no taxes. In 2010 it only paid £171, but a round zero in the previous few years. Mastcraft declined to comment on this.

Finally, while the company's return on assets in 2010 was 5.2 per cent, and 5.9 per cent on capital, the shareholder's return in the same year was 23.1 per cent. Similar trends can be observed in previous years. This may perhaps explain the Sanger family's multi-million house in Hampstead, with two Mercedes, a convertible Jaguar and a Lexus four-by-four in the drive. With at least 15 appointments as company director or secretary, Joginder Sanger is certainly earning a lot of money.

Born in 1942, Joginder Sanger came to the UK from Jalandhar, India, over 50 years ago. He started his own travel agency in 1965 and subsequently began operating chartered flights to India. In 2011 he was named “the Asian of the Year” at the 24th edition of Asian Who's Who International.[11] Last year he also took over as the chairman of the UK branch of the Bharatiya Vidya Bhavan. The UK Bhavan is the largest Indian cultural and education institute outside India.

Who's on trial?

When the 50 or so activists from Occupy London, including ex-servicemen and women calling themselves Occupy Veterans, drove a small tank, dubbed the 'tank of ideas', to the former court in Shoreditch on the morning of 20th December, their main aim was to use the building for conducting trials of the “one per cent” of bankers and corporations whom they accused of “financial greed and tax avoidance”.

Working with real solicitors and judges to construct cases based on English law, Occupy Justice wanted to provide “a much needed space to bring a sense of accountability to those whose actions have been in contravention of the public interest”. These would not be show trials, they insisted, but “public airings of wrongdoing perpetuated by those in positions of authority”. In a press release, Occupy London quoted one of its supporters saying the intention behind the latest occupation was “to put the building back into public service” and satisfy a need for justice that the government has been “unable – or more likely, unwilling – to meet”.[12]

Now, given Mastcraft's reputation (alleged tax dodging, profiting from asylum seekers' misery, making vast profits from turning public listed buildings into luxury hotels, and so on and so forth), we may ask: should the occupiers enter into negotiations and agreements with the company? Shouldn't Joginder Sanger be one of those on trial at the 'people's court' instead of being thanked for “having the imagination to work with us”?

Occupy's legal team seem to agree with us and say they are determined to carry on with holding corporate criminals to account, with plans to develop contacts and resources to “allow lawyers across the country to get involved in real or mock trials against the one per cent”. Yet the question remains: what do grassroots campaigners and activists gain from engaging with companies?

Previous experiences have shown that, at best, such engagement exercises are used by companies as a a holding tactic, to delay dissent until some legal or other solution is found to overcome it. As the planning applications examined above show, Mastcraft is determined to go ahead with its luxury hotel plan and needed to buy some time until the construction work starts – not to mention that by agreeing to leave the building voluntarily, the occupiers are saving the company the legal and eviction costs.

A statement like the one by Occupy's press team mentioned above would almost certainly be used by the company to polish its image and counter public resentment or grassroots action in the future, as evidenced by the positive media coverage of the court hearing at which the agreement was reached. And let's remember that such public relations (PR) strategies have a long history in managing public perceptions of corporate activities while carrying on with business as usual. (For more on this, see this special issue of the Corporate Watch Magazine on the 'rules of engagement'.)

References
[1] http://occupylsx.org/?p=2692
[2] www.mpa.gov.uk/committees/mpa/2005/050224/10/
[3] http://legacy.london.gov.uk/assembly/assemmtgs/2008/plenarymar05/item07/04a-CommunityAdviceProject-1-23.pdf
[4] www.mpa.gov.uk/committees/mpa/2005/050224/10/
[5] http://idox.hackney.gov.uk/WAM/showCaseFile.do?action=show&appType;=Planning&appNumber;=2007/1535
[6] http://idox.hackney.gov.uk/WAM/showCaseFile.do?action=show&appType;=Planning&appNumber;=2010/1930
[7] www.thisislondon.co.uk/news/article-13618149-revealed-the-asylum-tycoon.do
[8] Ibid.
[9] All figures in this section were obtained from the Lastcraft Ltd's financial records filed with Companies House, as well as other specialist databases.
[10] For another example of this, see www.corporatewatch.org/?lid=4138.
[11] www.indianexpress.com/news/joginder-sanger-named-asian-of-the-year-2011/879112/
[12] http://occupylsx.org/?p=2602