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Clyde Gateway told firms to lease from landlord it suspected of dishonesty

GLASGOW east end regeneration agency Clyde Gateway encouraged two firms to sign leases with a landlord it strongly suspected of financial irregularities, the Sunday Herald has found.

The agency got information in mid-2011 indicating the seller of a three-acre plot at 278 Glasgow Road in Shawfield, Norman Pelosi, had overstated the site rental income.

As we reported last week, a court this month found the £2.1 million the agency paid in November 2010 was three times the original valuation.

It has now emerged Clyde Gateway (CG) proposed several times to the site's two tenants, Can Do Recycling and garage Tristar that they could relocate to another site on the same street owned by businessman Pelosi.

In January 2012, the publicly owned regeneration company commissioned a report from architect The McLennan Partnership about the site's suitability for the two firms.

It has also become clear CG failed to tell police of its concerns about the purchase until late 2012, over a year after it had evidence of irregularities.

Glasgow SNP MSP Bob Doris said: "Given the huge amounts of public cash at play, such as £44m from the Scottish Government in the last two years, I will be contacting the Scottish Government to ask them how it can help ensure Clyde Gateway is managing its budget wisely."

Police Scotland confirmed last week they are still investigating the case, having interviewed potential witnesses, including CG officials and the owners of Can Do and Tristar several times. CG, a joint venture between Scottish Enterprise and South Lanarkshire and Glasgow councils, is heavily involved in preparing the east end for the Commonwealth Games.

The 278 Glasgow Road site was valued at £2.4m for CG by Ryden ahead of the deal, though Ryden said the stated rental income of £207,000 looked high. The site had previously been valued at £762,000 for Pelosi's holding company, Strathcroft

Several property sources last week questioned the price paid given that CG planned to clear the site, which was very likely to be contaminated.

Under the purchase deal, Strathcroft was to find new accommodation for the tenants by March 2011.

Strathcroft failed to do so, leaving the agency to evict the tenants or rehouse them. In board papers seen by the Sunday Herald, Clyde Gateway gave the risk of "reputational damage" as a reason not to evict.

Bill Campbell, co-owner of Tristar, confirmed he was under the impression for some months until mid-2011 that ­relocation would be to another Pelosi site at 210 Glasgow Road.

But he was told around that time by a CG official that the agency had fallen out with the businessman and this was no longer an option. Instead, the agency hired Colliers to help find Tristar and Can Do a home.

Colliers sent both businesses a number of options, but none was suitable. Campbell says he was told by a Clyde Gateway official in early 2012 that 210 Glasgow Road had become an option again. Shortly after this The McLennan Partnership published its report, which found a number of relocation risks that were "difficult to assess fully without further investigation".

The two small businesses were in a dispute with CG about their rent, since both said their payments to Pelosi had been lower than the agency believed.

Pressed to begin clearing the site by October 2012, CG upped pressure in that year on the tenants to leave.

Documents seen by the Sunday Herald show CG threatened to stop helping Tristar relocate unless the garage signed an agreement to leave no later than September 2012.

An eviction action against the firm by CG was settled out of court: the two sides reached a deal for Clyde Gateway to buy the business for £253,000. It reached a separate deal with Can Do to pay £214,000 relocation costs.

Both companies got much less than they sought, though both sums were approved by the local district valuer.

Jim Sinclair of Can Do said: "Clyde Gateway are a public body. We would expect to be treated fairly by them but we just weren't."

A spokesman for Clyde Gateway said: "We didn't tell anyone to move to any particular property. We simply put 19 options in front of them."

He confirmed the agency had received evidence from tenants about their previous rental payments in September 2011 but delayed passing concerns to the police until it was in full possession of the facts. He agreed the agency played "hardball" with the two firms, but this was first because it thought they had underpaid rent and later because it needed to begin site clearance. Pelosi did not answer calls; Ryden was not available.

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Local government

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