Marketing Gloucester to ‘cease trading immediately’ with loss of seven jobs
By James Young, Andy Merrell and Mark Owen | 14th February 2020
Marketing Gloucester has been declared insolvent by its board and the company will close with the loss of seven jobs.
Staff at the publicly-funded organisation have been widely applauded for the creation of the success stories such as the Tall Ships Festival, and others that have promoted and celebrated the city.
In a short announcement, a spokesperson for the board of the arms-length, city council-owned company said that it will cease trading immediately.
The spokesperson said: "It is with deep regret and sadness that Marketing Gloucester is in the position of having to commence insolvency.
"Following widespread reporting of the difficulties the organisation has been going through, a detailed review of finances has revealed that the financial position is untenable.
"Staff have been informed of this decision today and the company will cease trading immediately.
"We would like to extend our thanks and support to the staff for all their hard work over the years.
"We appreciate that this will be a difficult time for them and their families, but unfortunately the board have been left with no other option."
The full extent of the issues within the company that was set up to make Gloucester look good came to light when it went to the council and asked for a £240,000 rolling funding facility in the final months of 2019.
That request led to the city council commissioning two urgent reviews into the management and finances of the company.
One of those reports, by Grant Thornton, laid bare the full extent of what we now know to be a crisis and confirmed that the company was in fact insolvent.
It recommended that the company be effectively split in two with the event management side of its operations transferring back to city council control .
Marketing Gloucester was to still exist and operate, the report recommended, but purely as a destination marketing organisation.
In the wake of the report's publication, the CEO of Marketing Gloucester Jason Smith was dismissed from his post for 'gross misconduct.' The company's bookkeeper Richard Brooks was also sacked.
Earlier this month, the former non-executive chairman of Marketing Gloucester Paul James confirmed to a city council meeting that he had no rol e in the day-to-day running of MGL.
Cllr James was also forced to make a written apology after a motion said the chairman and leader of the council "was responsible for the financial and organisational crisis that has hit MGL."
At the meeting, Cllr James successor as leader Cllr Richard Cook said "I have never seen a company run so badly.
"I have worked for a major multi-million pound company and ran two businesses myself. It [MGL] has been the victim of mismanagement and too many people ignoring their responsibility."
Councillor James stood down from his role with MGL in May 2019. And in November announced that he was standing down as leader of the council.
In recent weeks, documents relating to the financial problems at Marketing Gloucester were leaked to Punchline.
Some of those documents related to a 2014 whistleblowing investigation in to MGL.
In 2014, two whistleblowers used the Gloucester City Council whistleblowing policy to raise concerns about the way the company was being run.
Punchline has seen e-mails that say the report had been reviewed by a member of the MGL board and they were "satisfied there was no case to answer."
A year later, an internal audit report carried out by the Gloucestershire Audit and Assurance Partnership for Gloucester City Council raised concerns about the MGL finances.
That report, seen by Punchline, outlined serious concerns over financial accountability at the company.
On top of this it also outlined how council spending in the company had increased 73 per cent between 2009/10 and 2015/16. In 2015/16, the council allocated £464,000 to Marketing Gloucester.
The company used some of that money on events such as The Tall Ships Festival and celebratory events throughout the year.
The audit report also mentions an external audit from 2014/15 in which Kingscott Dix confirmed the year-end balance sheet deficit of £70,104.
A year before that, in 2013, the city council discussed the future of MGL saying that the relationship between it and MGL needed to be "strong and rigorous.
Documents at the time said: "Councillor James will continue in this role [as non-executive chairman of MGL] until an alternative can be found to avoid a conflict of interest."
Council funding has been cut in the years since as the local authority budgets have shrunk across the board.
For the most recent financial year, funding was cut from £496,338 for 2017/18 to £290,934 for this year, although Marketing Gloucester still had the same events portfolio .
However, the company's recently-filed annual report showed that salaries had gone up by 12.6 per cent, despite the company employing one less member of staff.
Travel costs went up by 72 per cent, sundry expenses rose by 53 per cent and the amount spent on booking keeping rose by 131 per cent. The loss for the 2018/19 financial year was £98,473.
By that time a full internal investigation into the firm was underway, and that the board of Marketing Gloucester had "shared their concerns over financial matters" with the police.
Gloucestershire Constabulary confirmed to Punchline that they had "received information which has been reviewed and that there is no evidence of criminality at this stage .
They added: "We're aware that an internal investigation is ongoing and we will review any criminal allegations once this had concluded."
Reacting to the announcement, Cllr Richard Cook, leader of Gloucester City Council said: "We are saddened to hear of the decision the board have taken and we know this must have been a very difficult decision for them to make.
"We remain committed to place marketing and will be reviewing how we can best move forward with this in the future.
"We will be following up with stakeholders to hear their views to help us with this process."
Copyright 2020 Moose Partnership Ltd. All rights reserved. Reproduction of any content is strictly forbidden without prior permission.