Teesside Freeport developers deny corruption allegation and say they have ‘nothing to hide’

Andy McDonald, Labour MP for Middlesbrough, claimed “truly shocking, industrial-scale corruption” linked to the Teesworks project needs to be investigated, when he spoke in the House of Commons this week.

He highlighted documents which show the taxpayer is spending millions on decontaminating the Teesworks site, but developers Chris Musgrave and Martin Corney have been handed a 90 per cent stake in a company called Teesworks Limited, which has options to buy valuable parcels of the remediated land for nominal fees and then lease them to investors.

While there is no public record of the two developers directly investing money in the project, led by Tees Valley’s Tory Mayor Ben Houchen, they are due to earn millions of pounds from the lease agreements and the sale of scrap metal from the site.

A Teesworks spokesman said the developers deny wrongdoing and Mr McDonald is looking to “destroy” the project to “advance his own political ambitions”.

Teesworks aims to transform around 4,500 acres of disused industrial land on the bank of the River Tees into a manufacturing hub that will create thousands of jobs and generate billions of pounds for the local economy.

The publicly-run South Tees Development Corporation (STDC) is spending millions of pounds of taxpayers’ money on clearing industrial waste from the site and decontaminating it. Estimates suggest it cost at least £120,000 per acre.

Decontamination work has already been completed on a 90-acre plot of land on the bank of the River Tees, which will be rented to SeAH Wind so it can build a £450m wind turbine monopile manufacturing facility.

A HM Land Registry transfer document, obtained by Private Eye, shows the freehold for the site was sold to Teesworks Limited for £96.79 (plus VAT) in December 2022 by STDC’s subsidiary company South Tees Developments Limited.

According to Private Eye, an investor will pay Teesworks Limited around £70m to £80m upfront, so it can sub-let the land to STDC’s parent company Tees Valley Combined Authority (TVCA), which will then itself rent the land to SeAH Wind for £4.3m a year.

Mr McDonald said: “The only economic growth that is being delivered is being delivered to the accounts of Ben Houchen’s pals Messrs Musgrave and Corney, who, for a bargain £100, will benefit to the tune of £100m. All the while the state remains on the hook for the ongoing environmental costs.”

The Teesworks spokesman said Mr McDonald should contact police if he believes there is evidence of corruption.

“Messrs Musgrave and Corney would be willing to assist any investigative process, as they have nothing to hide,” he said.

“It is one thing to question the professional judgement of Ben Houchen, his professional officers, independent legal advisers, and the boards of STDC, and the TVCA, all of whom have been involved in every key decision, but it is something else to question the integrity of individuals involved in the process and suggest criminal conduct.

“Any wrongdoing would require a conspiracy of such magnitude that dozens of people from multiple organisations would have to be involved.”

He added: “The true facts are already within the public domain, but are ignored by our critics, who in most part are resentful and bitter at the prospect of Teesworks being a success.

"Over the coming days we will explain the facts again, to remind the public of the progress that has been made on Teesworks over the last three years.”

The redevelopment is part of the Teesside Freeport zone, where businesses enjoy tax breaks and lower tariffs, and it has already received over £300m of Government funding and loans.

Teesworks Limited was set up in 2019 and STDC owned half of the company until December 2021, when a share transfer took place, and the developers now own 90 per cent.

Mr Musgrave, Mr Corney and TVCA Chief Executive Julie Gilhespie are currently listed as directors of the company.

Mr Houchen said he has worked with Teesworks Limited, which was set up with the approval of various Government departments and local authorities, to secure more than £2bn of investment in recent years.

BP Exploration Operating Company Limited is expected to sign a agreement with Teesworks Limited and STDC, so it can build a gas-fired power plant and carbon capture facility on a 100-acre plot, as part of a £1.5bn project.

STDC has not revealed how much Teesworks Limited will make from the lease agreements with SeAH Wind and BP, but the company receives half the money made through scrap metal sales.

By July last year, £63m had been made by selling 205,774 tonnes of scrap metal. One assessment, commissioned by Tees Valley Combined Authority, found there could be more than 370,000 tonnes on the site.

Before the redevelopment began, STDC secured a compulsory purchase order (CPO) in 2020 to acquire 1,420 acres of land, which was home to the SSI steel making plant until the company went into liquidation in 2015 and owned by three banks in Thailand.

The CPO inquiry was told that in November 2019 Mr Musgrave and Mr Corney’s company DCS Industrial Limited signed a three-year lease for a 70-acre plot of land on the site, for £489,000.

The inquiry was also told that Mr Musgrave then made an unsolicited offer to the Thai banks for all the land in December 2019.