Ujima - the depths to which social landlords and their 'regulators' can sink

The Inside Housing article linked to below* tells the story of the decline of Ujima Housing Association, the first HA ever to go bust in the UK, in December 2007. The Housing Corporation (HC) - at the time the official government 'regulator' of HAs - ignored several whistleblowers who worked for Ujima and who contacted the HC to express concern at Ujima's dubious financial and ethical practices. Instead the HC continued throwing money at Ujima, awarding it millions of pounds in grants. The HA was led by Chief Executive Keith Kerr (a former British Airways executive, pictured above) who had massive empire-building expansion plans - seeing himself as like a Biblical prophet, he named his property egomania plan ‘Project Jerusalem’.

"Under him Ujima would become one of the England’s five largest housing associations within five years, it proclaimed".

Well, it didn't end up quite that way - instead Ujima collapsed in a heap of debt and fraud charges and the supposed 'regulator' - the Housing Corporation - was left with lots of egg on its face. One can speculate that the HC was happy to fund the expansion of property speculation by its HA Chief Executives - especially one who brought with him the baggage, attitude and status of a former BA 'captain of industry' such as Kerr. One can imagine the HC 'regulators' turned a blind eye to the whistleblowing of 'minor employees' and kept throwing money at Ujima just so long as Kerr dazzled them with corporate buzzwords, optimism and slick progress reports - and generally made them feel good about what clever and important people they believed they were. In this trance-like state the Housing Corporation bosses continued to hand over wads of cash to Kerr's house of cards - until finally the inevitable happened.

*The Ujima article is here.

Mr Kerr was not one of those charged, but he was dismissed when London & Quadrant HA took over Ujima after its financial meltdown. But he claimed racial discrimination against L&Q and it was revealed at the employment tribunal hearing that;

"The previous December, Ujima had become the first housing association to go bust following its attempt to enact an ambitious expansion plan dubbed ‘project Jerusalem’.

The plan’s financial assumptions were described to the tribunal as ‘incredible’ by David Montague, chief executive of L&Q. According to the trust’s analysis, Ujima suffered a loss of £28 million while implementing the project - the highest recorded in the history of the social housing sector.

Mr Kerr was appointed chief executive of Ujima on 16 January 2006 on an initial salary of £100,000, the tribunal heard. This was increased to £120,000 in June of the same year and then to £130,000 a month later under delegated powers operated by Sandra Ebanks, vice chair of Ujima’s human resources sub-committee.

Although Mr Kerr had never worked in a housing association before, he had been on Metropolitan Housing Trust’s board and chaired its audit committee."

Most people get one pay rise a year if they're lucky; but in the surreal world of social housing management you can award - sorry, negotiate - yourself three pay rises in seven months. Pretty good wages too for flushing £28 million down the bog... A nice bit of 'regulation' that was.

The Housing Corporation has since been replaced as regulator by the Tenant Services Authority, who have today launched their new "regulatory framework" for social housing landlords. It promises many improvements for tenants - but whatever is written in the document, the proof of the pudding is in the eating - and any improvement for tenants will depend on Housing Associations being regulated in practice much more strictly than in the past. It would mean an end to the blatant bias in favour of the landlords' interests shown by the Housing Corporation for many years. As a regulator the HC and its Ombudsman was generally worse than useless - as many tenants who brought complaints there can testify, and as the Ujima incident proves.

Inside Housing is always worth a read to check up on what's happening policy-wise (and scandal-wise) in the world of social housing. The comments under articles (often by dissatisfied tenants) are worth reading too. There are also discussion forums; see this thread for example, where fed-up tenants have a good moan about their appalling HA landlords. (London & Quadrant Group HA, who took over Ujima after its collapse, comes in for plenty of criticism.)

---

A short article in the latest edition of Private Eye no. 1250 (27 Nov-10 Dec 09) gives further info on the Ujima collapse;

HOUSING
To Kerr is human

KEITH "Charismatic" Kerr, last chief executive of the black housing association Ujima, which went belly up owing £28m, had a novel explanation for the disaster: his dismissal for gross incompetence was, er, racist.

Ujima's collapse in December 2007 left a huge hole in the provision of housing and specialist support for young black people. Its 4,600 homes were handed to the housing association London & Quadrant, which promptly sold off its care homes and shed staff. A police investigation into alleged fraud at Ujima has led to three people being arrested. Two of these have been charged, but the third is on the run. The alleged fraud was not of sufficient scale to bankrupt Ujima.

Kerr, the former whizzkid special adviser to Charles Kennedy and ex-managing director of Bournemouth Airport, failed last month to convince an employment tribunal that his dismissal from Ujima amounted to racial discrimination. He insisted he was never "ultimately responsible" for the association's financial position - despite drawing a £130,000 salary to run the show. So who or what was responsible for turning Ujima's £7m surplus in 2004-5 into a £28m loss in just two years - the highest recorded in social housing history?

Losses mounted as a result of "Project Jerusalem", Kerr's overly-ambitious expansion plan, dreamed up with a crew of expensive consultants soon after he took over in January 2006.

The man supposedly checking Ujima's books was George Avwunu, the chief financial officer who was appointed personally by Ken in February 2007 even though the recruitment firm handling the appointment had not recommended him for a second interview. Avwunu was later suspended following claims he had been involved in fraudulent business activity in Nigeria. Avwunu is now on the run from police after failing to make a bail appearance in May. He was arrested last year with Rose Avwunu, who police describe as "a housewife", and Paul Campagne, a consultant - both of whom were charged with money-laundering offences in September.
Management accounts which were meant to provide monthly snapshots of Ujima's finances dried up following Avwunu's appointment.

Meanwhile the association showered outside consultants with cash. Avwunu recruited an IT consultant for £2,000 a week to do work that would normally command a salary of £25,000 a year; and Kerr hired a human resources consultant for £10,000 a month. Staff meanwhile leapt at an over-generous redundancy scheme sparking a mass exodus costing £600,000.

Kerr and Co also enjoyed benefits unusual in the housing association world. Ujima - Swahili for "working together" - rented an executive box at Reading football club, while its Wembley office complex had a £2m makeover by Metro Design. Kerr himself pocketed £32,000 in expenses in his two years as boss.

The Housing Corporation, the housing association watchdog, eventually appointed statutory advisors to Ujima's board in October 2007. Kerr was suspended in November and dismissed two months later. Staff are said to have applauded when they heard the news.