Durham Cathedral Shop Finances and questionable Saint Stephen the Great payments

Matt Wardman writes:

First of all, let me set the context for this series of posts.

I have covered the rundown of the bookshop chain that used to be known as SPCK over several months. An earlier post covered a story of some leaked correspondence from the time when the management of the bookshop at Durham Cathedral was transferred from the Society of Saint Stephen the Great (SSGCT) to the newly created company “Durham Cathedral Shop Management Limited” (DCSML), which showed a brutal approach to the management of unpaid suppliers to the previous management company SSGCT.

This article is about a debt of almost £100,000 ($165,000+) built up over a mere three month period owed to the new company DCSHL by SSGCT after the new company took over on March 11th 2008, and before J Mark Brewer attempted to put SSGCT into Bankruptcy in Texas on 19 June 2008 (that is the date when the “Statement of Financial Affairs” was filed).

I also take a detailed look at a series of payments comprising well over half a million dollars taken out of the SSGCT organisation during a period of 12 months and paid to J Mark Brewer’s legal firm or to him personally, or to the “Orthodox Christian Mission Fund” of which he is listed as the Trustee.

I need to attach a strong note here that the SPCK mission society who used to be associated with the bookshop chain which includes the Durham Cathedral Bookshop is no longer involved in any way, and that Durham Cathedral are the landlord and not responsible for the management of the Durham Cathedral Bookshop. Nothing in this article reflects on either Durham Cathedral or SPCK.

I should also say that there are a lot of numbers in this post, and I will be pleased to correct any mistakes.

The Financial Context: Turnover of SPCK Bookshops

The turnover of the SPCK Bookshops Chain in previous years has been as follows, using figures drawn from SPCK Annual Accounts

  • May 2003 to April 2004: 6.597 million UKP
  • May 2003 to April 2004: 6.206 million UKP
  • May 2004 to April 2005: 6.003 million UKP
  • May 2005 to April 2006: 6.037 million UKP
  • May 2006 to October 2006: 2.570 million UKP (6 months)

On 31 October 2006, the operation of the SPCK Bookshop Chain was transferred to the Society of Saint Stephen the Great Charitable Trust (SSGCT – Charity No. 1109008).

At this point the financial trail vanishes into a Black Hole, because SSGCT (Charity No. 1109008) filed one set of accounts covering 4 NOVEMBER 2004 TO 31 MARCH 2006, and nothing after then. On 8 August 2007, SSGCT was united by direction of the Charity Commission with the new charity SAINT STEPHEN THE GREAT (Charity No. 1119839) as a subsidiary. As at December 1st 2008 no accounts for the new charity have appeared on the Charity Commission website. Let me be very clear and say that none are required to have been presented yet.

However, that does leave us without trading accounts for the from October 2006 to August 2007 for a bookshop chain with a turnover likely to be in excess of 5 million UKP. That is not a satisfactory state of affairs.

But … as with a lot of other information in this case … we have figures in dollars in the “Bankruptcy Documents”. So, courtesy of J Mark Brewer and his “Statement of Financial Affairs“, dated June 19 2008, we have:

  • Nov 2006 to March 2007: $4.733 million = 2.37 million UKP (using exchange rate of 2:1)
  • April 2007 to March 2008: $7.555 million = 3.78 million UKP
  • April 2008 to Jun 4 2008: $0.299 million = 0.15 million UKP

The savage drop in monthly turnover is mainly due to all of the shops being being transferred to different companies.

The Transfers out of Durham Cathedral Bookshop

The SSG Bankruptcy Schedule of Debtors Continuation 2 document shows an outstanding debt of $165,388 (82,700 ukp at 1:2 exchange rate) owed to Durham Cathedral Shop Management Ltd.

20081201-ssgct-durham-cathedral-shop-debt

Remember, the company to which this debt was owed only came into existence 11 weeks before the debtor filed for Bankruptcy.

Durham Shop Turnover for Interim Period

Let’s compare the size of that transfer with the turnover of the Durham shop in that period.

Within these turnover figures, the turnover of the Durham shop is the largest in the chain, and accounts for around 15% of the turnover of whole chain (*), which gives us an estimated figure of £565k for the turnover for April 2007-March 2008.

The period between March 11 2008 (when the new Durham Company was set up) and May 31st is 11 weeks, and the turnover of the Durham shop would be roughly 11/52 of £565k, which is £120k. That figure assumes a flat turnover profile throughout the year.

(*) I am told by a reliable source.

SSGCT Debt is 70% of Entire Durham Cathedral Shop Turnover for interim period

So – how the hell did the Saint Stephen the Great Charitable Trust manage to build up a debt to the new company running the Durham Cathedral Shop of fully 70% of that shop’s entire estimated turnover between 11 March 2008 when that company was created, and June 4th 2008 when J Mark Brewer attempted to put the Charitable Trust itself into Bankruptcy in Texas? Or, to take a view from the other side, resources or assets equivalent to 70% of the shop’s estimated turnover during the period were transferred out to SSGCT at a time when past suppliers were simply . not . being . paid.

Payments to “Orthodox Christian Mission Fund” from SSGCT

[Note: the "Orthodox Christian Mission Fund of Houston Texas" appears to be a misprint or constituent fund of the "Orthodox Church Mission Fund of Houston Texas" referred to in the linked database below, which is listed in US charity databases as having the same home address as Brewer and Pritchard - the legal where J Mark Brewer is a Principal. The exact relationship between the two is not precisely clear. I suspect that the Orthodox Christian Mission Fund is part of the Orthodox Church Mission Fund or is a simple misprint.]

The Orthodox Christian Mission Fund (Trustee J Mark Brewer) is an organisation listed in the Bankruptcy Documentation with an address the same as J Mark Brewer’s law firm in Houston, i.e., Three Riverway, 18th Floor, Houston, Texas 77056. Further, it is listed as a “Private non-operating foundation” and a “Private Grantmaking Foundation” so it cannot have been supplying servcies to the SSGCT.

This “private non-operating foundation” received from SSGCT:

20081201-ssgct-orthodox-mission-fund-all

If you total it up, that is just under $342,000 in 12 months (when J Mark Brewer attempted to pull off the USA Bankruptcy attempt he was required to disclose payments over the previous 12 months).

There may well be more payments which were made between November 2006, when SSGCT took over the SPCK bookshops, and June 2007 when this disclosure period began.

More than $75,000+ was transferred out of SSGCT less than two days before the attempt to make “Saint Stephen the Great LLC” bankrupt in Houston.

And they have the temerity to claim that a further debt of almost $500k was “owing” after that. Owing for what, Mr Brewer? How does a “non-operating private grant making foundation” have half a million dollars owing from a British Bookshop Chain?

Payments to “Brewer and Pritchard” Legal Firm

Here’s the disclosure in the Bankruptcy documents.

Firstly $110,000 between August and September 2007:

20081201-ssgct-brewer-and-pritchard

And $56,694 still alleged to be owing.

Secondly, just under 50k UKP for “payments related to debt counselling or bankruptcy”:

20081201-ssgct-brewer-and-pritchard-bankruptcy

Finally, $75,000 sought (not paid of course as the bankruptcy application collapsed like a house of cards) for J Mark Brewer as lawyer on behalf on “St Stephen the Great LLC”:

20081201-ssgct-brewer-and-pritchard-bankruptcy-claim

Remember, this is just the 12 month disclosure period before June 2008. There may well be more payments which were made between November 2006, when SSGCT took over the SPCK bookshops, and June 2007 when this disclosure period began.

That’s around $200,000 in a 12 month period.

Comment

Is it any wonder that the whole thing was on the verge of Bankruptcy when it was being milked like this?

Why was any money transferred out of an organisation which had undertaken to run and develop a major 6 million ukp a year bookshop chain, when before taking the bookshops on its entire turnover had been about twenty thousand pounds since it was created?

20081201-ssgct-income-pre-spck

Meanwhile …

Don’t forget. All this money was being shovelled out of the backdoor of SSGCT into other Brewer organisations at a time when Phil Brewer was telling his staff in the Durham Cathedral Bookshop to do this to their suppliers:

Please work with your suppliers as a new entity. Ignore whatever was and whoever was in the past. We are now a new company, with no relationship to the old going forward. So, contact your suppliers, tell them the drill, that you are a new company and that you would like to begin trading. When and if asked about billing, tell them they should process that at vendor-accounts, as you are not aware of how they are paying old invoices, etc. they will need to chase Saint Stephen the Great Trust as they have been doing.

Remember, we are a new company. No need for you to get involved with or diverted with what bills etc are being paid by whom.

What do we say if the suppliers ask about the invoices that we already owe for ?
Since we are new, we can’t owe anyone anything yet.

20080827-philip-brewer-of-spck-aircraft-for-sale-1-smallSSGCT Paid For Flying Club Expenses

Let me identify one further item that caught my eye. We all know that Mr Phil Brewer has an aeroplane. We had some fun with it.

Did you know that the SSG Charitable Trust paid $1637.80 to the Cornwall Flying Club in August 2007?

20081201-ssgct-cornwall-flying-club

There must be more nuggets in the Bankruptcy Documents, but that will do for today.

Wrapping Up

To recap:

  • Durham Cathedral Shop Management Company to SSGCT: $165,000 in 11 weeks in spring 2008.
  • SSGCT to “Orthodox Christian Mission Fund”: $342,000 in 12 months to June 2008.
  • SSGCT payments in legal feed: around $200,000 in 12 months to June 2008.

Surely it is time that someone asked the Fraud Squad to at least run a slide-rule over this little lot to make sure that it is all legal? What it amounts to is J Mark and Phil Brewer diverting hundreds of thousands of pounds from ex-SPCK bookshops to a private “Orthodox” setup, and the ex-SPCK Bookshops being charged around $200,000 for legal fees within a 12 month period. On top of that there are even larger alleged debts still owed in the purported Bankruptcy Documents submitted by J Mark Brewer to the South Texas Bankruptcy Court.

And then there is the initial 9-month period about which nothing is known whatsoever. How much money was transferred out to the Orthodox Christian Mission Fund and charged in legal fees in that period, when – presumably – the chain was stronger?

We need a hero or a group of heroes. Can I politely suggest that it is time that somebody who had a business relationship with this organisation took some action to start a legal process in the UK to resolve this? I can’t do that, because they don’t owe me any money.

What is needs to start is someone who is owed money by the Saint Stephen the Great Charitable Trust to put the Trust into liquidation in the UK under UK Law, as that will get the authorities and the regulators involved – and will at least start to take the lid off the can of worms.

I have no idea how much money you will get back – which will depend on the UK framework of company and bankruptcy law, but it will be a good deed. And it shouldn’t have an immediate impact on the members of staff in the bookshops as they are all now employed by different companies – and we will be on the way to lancing this long-running boil for good.

Or get in touch via the News Blog Contact Page and we will put a group of suppliers in touch to tackle this together.

Then eventually book enthusiasts and local communities that used to depend on SPCK bookshops and the programmes they used to run can start to pick up at least some of the pieces. And when more new well-run bookshops start to emerge, the suppliers to the trade will have a chance to recover.

Let me repeat: the SPCK mission society who used to be associated with the bookshop chain which includes the Durham Cathedral Bookshop is no longer involved in any way, and that Durham Cathedral are the landlord and not responsible for the management of the Durham Cathedral Bookshop. Nothing in this article reflects directly on either Durham Cathedral or SPCK.

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42 responses to “Durham Cathedral Shop Finances and questionable Saint Stephen the Great payments

  1. I’ll add one further comment.

    Where – as happens in several cases – where the bookshop chain has a facility inside a cathedral (e.g., Durham and the large shop that used to exist in Liverpool’s Anglican Cathedral) perhaps selling cathedral branded goods, if a profit-share arrangement of some sort exists then the transfer of money into Brewer controlled organisations would also impact directly on the share received back by the Cathedral – depending on how the transfers had been accounted for, and the figures which had been given to the Cathedral authorities.

    I sure hope that all the various authorities have rights to have open access to the books.

  2. This is an excellent bit of work.

    The ‘Orthodox Mission Fund’ stuff is incredible. I bet their accounts make interesting reading.

    From what I recall, the majority of that initial £20,000 turnover was donations from Mark Brewer himself to SSG.

  3. Valiant for Truth

    The former SPCK arrangements re Cathedral shops, certainly involved a rent based on sales and stock holdings because of the necessity of the shops to hold Cathedral souvenirs, post-cards and guidebooks, therefore any reduction in sales would result in a loss of income to the Cathedral.

  4. I have heard rumours about interest on capital expenditure, % of sales, interest on value of stock etc.

    But I can’t really say much more than that.

    Probably the important thing is to have access to the Books rather than just the annual accounts.

  5. Valiant for Truth

    One organisation owed money is the Church of England Pensions Board, as it is still unclear as to whether pension contributions to be made by SSG as covered in Contracts of Employment, together with Additional Voluntary Contributions actually taken from staff pay and shown as such on pay slips, were ever passed by SSG to the Pensions Board.

  6. Was the Pension Board money in the Bankruptcy Docs? I don’t recall.

  7. The Pension Board is cited in the Bankruptcy Docs.

  8. Pg 16 on the downloads available on the Wardmanwire – couldn’t see the amount. The Pensions Board are definitely owed money. I hope that all this money that the Brewers have shuffled around actually does go to charity. I can’t see how it can go towards buying new churches in England and Wales.

  9. The Church of England Pension board have asked for copies of all my payslips( to see what should have been paid..?).I have also had a letter from the Inland Revenue this week informing me of arrears regarding my NI contributions…..

  10. annie – is that employers or employees NI contributions? Do your payslips record the NI as paid?

    Is there a Guiness world record for the number of agencies investigating a particular company at any given time?

  11. Hi David
    My Payslips “show” what should have been deducted (Pension, NI contributions)
    On asking the Payroll Company hired by the Brewers (Moorepay,Fleet,Hants) I was told that NI and Pensions (although recorded by them) were not in their pay remitance….eg they had Bank transfers to pay Salaries only….

  12. Just thought, this makes sense..
    I heard that a former (newish) employee couldn’t get Job Seekers Allowance on being sacked (much to their shock) as they were told “they” hadn’t paid in enough contributions

  13. Annie: So Pensions and NI were taken from your pay by SSG/ENC and not paid to the Inland Revenue/your pension provider? That’s theft, isn’t it? That is truly dreadful, I don’t know what to say.

  14. Are there records available of Messrs Brewer specifically stating that NI and Pensions payments were being made, with subsequent proof available that they were not?

    That would look like an offence – maybe.

    See the contact page.

  15. Sorry. Asleep. It is there in this thread.

  16. Hmm.

    “”It is a criminal offence not to pay National Insurance contributions within the time allowed for payment. The penalty for employers is that on summary conviction there can be a fine up to £1,000. ”

    http://www.peopleperhour.com/news/SME_employers_face_stiff_penalties_for_failing_to_pay_employee_tax/18424864

    Somebody should report something.

  17. Matt, Many thanks for some brilliant staff work connecting the pieces, as we all try to work out where the bodies are buried on this one. Perhaps the flying club takes the biscuit.

  18. I am a concerned booker buyer (is that correct english?) but worked in the Civil Service. Anyone who has payslips showing NI deducted should contact the Inland Revenue. If the employer hasn’t paid and should have then the IR will ‘deem’ them as being paid so employees national insurance records will be correct. If everyone does that the IR will investigate them.

  19. annie: “The Church of England Pension board have asked for copies of all my payslips…” – I know this is stating the obvious, but please do be sure to send them copies and keep your originals somewhere safe.

  20. PS: And if you need help with the cost of photocopying, postage etc, please shout: we still have some money in the ‘Save the SPCK Booksellers’ fund.

  21. Thanks Phil
    Copies have been sent, intriguing request though, insn’t it…?
    I’ll let you know the outcome….

  22. as an aside, i notice that salisbury’s exterior has been painted over completely in black, leaving no sign of the shop’s spck heritage other than the ‘sign of the pilgrim’ sign attached to the side of the building. I have been really busy lately, so i have stopped trying to blog the story for now and am merely tuning into developments. Matt

  23. Just as a note – on the pensions bit and taken but not paid on – if anyone was paying Voluntary Contributions into their pension scheme and these have been taken but not passed onto the Pensions Board then you are legally entitled to report it to your local police department and ask them to investigate it on your behalf as it is deemed as theft as it is your personal money, however these do have to be your Voluntary Contributions, employers contributions will be investigated by the Pensions Board, but Volunatry Contributions are a seperate thing on top of that, and I would suggest anyone who has been paying them but not had them paid on do make contact with your local Police as this is a serious issue for your future well being as well as for now.

  24. Matt that is really funny. Newcastle shop has been painted red. Well the sign above the shop has.

  25. Valiant for Truth

    Problem is that the Church of England Pensions Board are not letting anyone know as to what the situation is, and until such time as they do, no-one can approach the Police or anyone else.

  26. Squiggle, I’ve always called the AVV situation theft. I hope the Pension’s Board get hold of this situation. For the record, I know about the Pension situation but I’m not directly involved.

  27. VTF, obviously that is not quite the position if they have asked Annie for her payslips as she mentions on a previous post? One supposes without such things as payslips they are unable to know what has been claimed as payed to them etc, so until such things are furnished I do not think it is actaully possible for them to let you know much on the Employers Contribution element.
    However in point of fact you have the right to ask the Pensions Board to confirm your Voluntary Contributions, actaully they are obliged to tell you that information if you directly request it – so long as you put it in writing and provide any proofs of identity etc they may ask for.
    Once you have this info you can go to the police with it as evidence , if indeed it proves there is a discrepancy.
    However even if you ‘suspect’ a crime has been committed you can go to the police and ask them to investigate it. You do not have to wait until you have the proof – Indeed strictly speaking you are supposed to report any ‘suspected’ crime and then leave it to the police to investigate and decide if a crime has actaully been commited.
    - “Whilst there is no legal requirement to report a crime there is a moral duty on everyone of us to report to the police anything that you have seen that may be a crime or something that you suspect may be a crime.” Police Legal National Database Website (https://www.askthe.police.uk/content/Q514.htm)

  28. In my records I have PW Business Services listed as a place I sent invoices. However, checking the addresses on original invoices, they were all sent to the shop, so I think it must have been the place where I sent copies of unpaid invoices for a while (during 2007?). I assumed they were providing invoicing and accountancy services, so it is interesting to see them listed as providing debt consolidation and bankrupcty services.

  29. Mr Baxter, PW Business walked away from their contract with SSG in Sept 07, citing unreasonable behaviour on the part of the Brewers. Up until then they (PW Business) were playing a straight bat and making sure that employees were paid, their NI and tax were paid and the pensions board were paid. I don’t think they had as much control over the payment of suppliers. But it has been alleged that it was the Brewers attitude towards paying those they owed and the verbal abuse the Brewers gave PW Business employees that caused them to walk away from working for SSG. You would have sent the invoices to the shops and the shops would have passed them as ‘to be paid’ and then sent them to PW Business. They had to send all cheques raised for payment to J Mark Brewer in the States and he, and he alone, was able to sign them.

  30. Mr Baxter SGG are no longer bankrupt.

  31. Pax Vobiscum, yes, my impression of PW was that they were ‘playing with a straight bat’ and providing a service as contracted. The last payment I had was by BACS from SSG during the period that PW were providing services.

    asingleblog, PW were listed as providing bankruptcy services in the submission provided to the Texas court as reproduced in the section “Payments to “Brewer and Pritchard” Legal Firm” above – clearly the Brewers thought the business was ‘bankrupt’ or they wouldn’t have applied to court.

    True, the Texas court threw out the application for bankruptcy, but that was on the basis of where trading took place, not on the financial trading position. SSG wanted bankruptcy in the US as they could carry on trading under US law by putting forward their own plan for paying debts over several years.

    Unless (a) business sales have improved massively or (b) they have found some cash to shore up the assets with, they are still as bankrupt (or in UK parlance, insolvent) as when they applied to the Texas court. Moving wadges of money between different companies run by the same people doesn’t count.

  32. >the Texas court threw out the application for bankruptcy, but that was on the basis of where trading took place, not on the financial trading position.

    It was actually on the basis of the Bankruptcy Application having been filed in bad faith. See the first para of:
    http://spckssg.files.wordpress.com/2008/09/sanctions-motion.pdf

    >clearly the Brewers thought the business was ‘bankrupt’ or they wouldn’t have applied to court.

    Personally I don’t think that had anything to do with it, but I’m not saying more on a public forum.

    The questions in my view are about how it became bankrupt, and the timing.

    Just to confirm, are you fully familiar with the Motion for Sanctions placed by the Trustee in Bankruptcy stating that (Mark) Brewer had:

    * attempted to perpetrate a “Fraud on the Court”
    * concealing a fundamental conflict of interest in not declaring that he was representing in a Bankruptcy Court an entity of which he was an officer
    * concealing the true identity of the debtor.

    There’s a lot more, all on a level of deceiving the Court in order to avoid taking responsibility for debts. Mark Brewer himself is a Law Firm Principal. The concept of good faith is not even in the same universe, in my opinion.

    Try the first 3 downloads on this page:

    http://spckssg.wordpress.com/about/downloads/

    I have referred to one above. If you haven’t read them it is worth doing so at least once.

    Rgds

    Matt

  33. David – in point yes you may be right and they may be insolvent – however as no one seems to be taking any action against them this would seem to be hard to prove!
    I had thought an insolvent company wasn’t supposed to keep on trading. Still out of the ashes a PHOENIX arises – oh no wait thats four Phoenix I can see!

    Still it is always advisable that “If a company is insolvent i.e. unable to pay its debts as and when they fall due and/or has more liabilities than assets, the director should seek advice from a licensed Insolvency Practitioner because if they continue to trade the company the director could become personally liable for its losses and could also be disqualified from acting as a director of any other company.”
    http://www.wilsonfield.co.uk/corporate/cva-liquid-admin.htm
    and here are some helpful guidance leaflets for people:
    http://www.insolvency.gov.uk/guidanceleaflets/guides.htm#Dealing%20with%20debt

  34. Matt – thanks for the links – I now realise that creditors only get sent some information by the Texas Court – I assumed I was getting a complete story.

    Paragraph 14 of the Motion for Sanctions is heavy stuff – bad faith amounting ‘to a fraud on the Court’ – but in addition is scathing about his attempts to ‘bring disrepute to the Bankruptcy Courts of the United States’ through the ‘filing of this case in the United States where almost every creditor is located in the United Kingdom’ and questioning how they could operate as a charity.

    I hope the Charity Commission and USDAW have got/been sent these documents?

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  36. >I hope the Charity Commission and USDAW have got/been sent these documents?

    They are certainly aware of them, but they may need to be emphasised again.

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