BDO sued for £250m: Selling agent accused of conflict of interest

The claimants in the case against BDO over their administration of One Blackfriars Limited have accused BDO of inappropriately using real estate firm, CBRE Group, as selling agents of the One Blackfriars site.

In the second day of her cross-examination, BDO partner Sarah Rayment agreed with the claimants’ lawyer, Simon Davenport QC that CBRE Group was chosen by the banks funding the administration, not by BDO as administrators.

“They [CBRE Group] were the bank’s preferred agents and we were happy to use them,” Rayment said yesterday in the virtual courtroom.

But Davenport went further, putting it to Rayment that BDO didn’t have any input over the appointment of CBRE Group.

Rayment replied: “I think if we had considered that they were inappropriate and didn’t have the requisite skills, and experience, we would have suggested to the banks an alternative agent.”

Earlier in the cross-examination Rayment said that the banks – Royal Bank of Scotland, Allied Irish Bank and Santander UK – were pushing for a quick sale of the One Blackfriars site and that she had felt pressured by the banks to help facilitate that.

The conflict of interest arose because CBRE Group were already engaged in advising the banks over how to sell the One Blackfriars site before then being appointed as selling agents by BDO.

“The point is that they [CBRE Group] were advising the banks, and that they were advising the banks on strategy to look after the banks’ interests and it never dawned on you that that was a conflict, did it,” Davenport asked.

“We didn’t believe that was a conflict, no,” said Rayment.

Davenport then said that this wasn’t assessed by BDO as it “didn’t cross your radar”.

“It isn’t a conflict; they can act for us. I have numerous occasions where if the bank says we’d like you to use this agent and we say ‘yes, that’s fine’, it’s not a conflict. They engage with us and they owe us a duty of care,” Rayment replied.

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 previously mentioned banks.

The claimants allege the One Blackfriars site, known as ‘The Boomerang’, 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.

A BDO spokesperson has reiterated that the case is “speculative and without merit.”

The case is expected to last six weeks.