BDO partner admits she didn’t challenge ‘shockingly low’ valuation
Witness in £250m insolvency negligence lawsuit said she didn’t challenge low valuation of One Blackfriars site
The BDO partner at the centre of the £250m lawsuit against the firm said in court yesterday that she didn’t question what the claimants’ lawyer called a “shockingly low” valuation of the One Blackfriars site.
The initial valuation given by CBRE Group, a real estate firm, put the site now known as ‘The Boomerang’ at £2.78m, while estate agents Savills had valued the site at £135m. The 52-storey skyscraper development property was eventually sold for £77.4m.
The partner in question, Sarah Rayment, agreed with the claimants’ lawyer, Simon Davenport QC, that there was an “extraordinarily wide” discrepancy between CBRE Group’s valuation and Savills, and that therefore, “somebody had to have got that very wrong”.
In their role as administrators, BDO had to ensure they did not make assumptions about who was right and who was wrong, instead their role was to make inquiries, to “road-test”, Davenport said. Rayment agreed.
But that didn’t happen, Davenport said.
“There’s no emails, there’s no follow-up, there’s nothing to suggest – and you don’t say in your witness statement – that you asked CBRE to explain how they arrived at their extraordinarily low estimate of value, is there? You never asked them, did you?” Davenport said.
“I didn’t, no,” replied Rayment.
The case against BDO centres around the allegation brought by the joint liquidators, working for CVR Global, that BDO agreed to undertake a “light touch” administration on behalf of the syndicate of lenders. The syndicate refers to Royal Bank of Scotland (RBS), Santander UK, and Allied Irish Bank.
The claimants allege the One Blackfriars site was sold at substantially less than it was worth. The site was sold for £77.4m to Berkeley Group, but 18 months later was valued by the property developer at £232m.
The case is expected to last around six weeks.
Following publication of this piece, a BDO spokesperson contacted Accountancy Age with the following comment: “We properly discharged our duties as administrators and consider the claim to be speculative and without merit. We are defending the matter vigorously in court.”
