Pall-Ex vetting 0 speaks out
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• Last year CM had a number of calls from readers telling us that a Cardiff f rm, Al Premier Warehousing and Distribution, was about to go under. Sure enough it did, and it was not long before we had yet more calls about one of its directors, Anthony Lewis, and the imminent collapse of his subsequent venture—the "SWF group"— which included SWF Distribution, the Pail-Ex member for Cardiff ( CM15-21 Fob).
Given what we had managed to find out about Lewis and his chequered business history, we were surprised that Pall-Ex, one of the UK's leading palletised freight networks that moves around 4,200 pallets a night, had trusted such a wildcard with the Cardiff membership. And it wasn't long before we started to ask questions. The result was a lead story in CM and a disgruntled Pall-Ex.
"We were quite hurt by what we read," says Pall-Ex MD Hilary Sharpies. "After all we're the market leader, and haven't achieved this by being negligent or lackadaisical."
She does admit Cardiff is "a problem area" but stresses that despite the troubles after SWF failed, the network maintained coverage and the substantial debt owed to other network members was met.
On SWF, Sharpies says: 'There were things going on behind the scenes we didn't know about and they were not for us to get involved in. They were delivering on time, as well as paying and collecting on time.
"But as soon as we realised something was wrong, we sent our accountant down there—he was there for three days. The company was insolvent and had been mismanaged. Within days we had them out of the network."
Negotiations
Questioned further, Sharpies concedes that Pall-Ex did not look into the background of Anthony Lewis: "Our negotiations had been with Phil Barnet and Kim Jackson. One was a lawyer and one a chartered accountant. They were taking over the previous firm (PSW Logistics) so it meant continuity of operations and they had substantial share capital."
The sizeable £44,000 debt left to the network and its members was indeed met—by newly appointed firm, TWT.
The minimum fee to join PallEx is set at £10,000. This is used as a guide, but the actual fee is worked out on the basis of the revenue the member is likely to get back from the area.
When asked why TWT effectively had to pay for SWE's failure, Sharpies explains: "We have had offers of £100,000 to jofri, it goes back to the fact that Pall-Ex is seen as so valuable... we give people a stable base to work from."
Further questions about the vetting procedure came when CMdiscovered TWT was owned and run by disqualified director, Trevor Taylor (CM 22-28 Feb). However, Sharpies maintains she knew the reasons for the disqualification and felt Taylor was in "a very unfortunate situation". She adds: "We looked at their accounts very very closely and TWT had the resources and the balance sheet strength. We looked at the payment record and we even checked with two of our very prominent members who have traded with TWT."
Reacting to this week's news that the VI is looking into TWT, which operates under the JWT licence (see page 4), Sharpies says that as far as she is aware no prosecutions are pending, and therefore it is business as usual.
However, she adds: 'There is a clause (in the Pali-Ex contract) that our brand should not be denigrated in any shape or form", and her colleague, operations director Adrian Russell, interjects: If a company's repute was lost, we would have to take action."
Sharpies points out that the 72 members of the network operate through a trust fund and at any one time there is a surplus of £100,000 in the fund to act as a protection buffer from any member company becoming insolvent.
Pall-Ex used to work through a cheque exchange system, but now "all the monies that exchange hands throughout the network run through the trust fund, which is part-owned by the membership and part-owned by the hub. It's as watertight as our lawyers can get it," she adds.
Set standards
Members are also expected to operate to standards set out in a comprehensive procedures document, the MSA agreement. Pall-Ex has a fining system related to delivery and collection performance. But Sharpies claims: "Our main (criterion) is members meeting financial obligations, and companies are monitored monthly."
After CMs previous stories, we were alerted to two other firms in the network. One was Abacus Transport, which operates in North London. We had receMed complaints about the premises—the depot itself has a burnt out office at the front, and access is tricky. Sharpies admits: "This is a concern" andsays she understands Abacus is moving to a new site. "London is a difficult area—space and rents are at a premium. Abacus does a good job in a difficult area.' However, the sales contact anc transport manager at Abacus knew nothing about a move wher CM checked this week.
The second was Macclesfield-based STD Development, Fred Stevens, who is listed as a director of the firm on the latesi annual return, had previously had a company in the PalletlinE network, but left "by mutua agreement". He then moved tc Palletways and again left.
A credit check on SIC shows two county court judgements against it, and advises that 'parties should seek suit able assurances before entering into dealings".
Sharpies leaps to STD's defence: "If STD didn't pay, ii wouldn't be a member of this network, it's as simple as that The company's accounts havE been qualified twice and them are provisions In place."
While Sharpies would not elaborate on these provisions due to commercial reasons, shE was at pains to explain that cer tam n companies are asked tc provide personal guarantees and bank indemnities to eliminate risk.
"So you see things are nol always what they seem," says Sharpies. "Pall-Ex has turned sc many businesses around. Our members may not like us at times but they know we are the best.'