Supposed backer of no-ships ferry firm says it had no agreement | Politics

Chris Grayling’s Brexit ferry fiasco has taken a further twist after the reported backer of the startup company with no ships that was awarded a £13.8m contract said it never had a stake in the venture.

Sources at Arklow Shipping, which operates 55 dry bulk vessels in northern Europe, said it had been in talks with Seaborne Freight twice last year but it “never had any agreement” with either Seaborne or the Department for Transport (DfT) to run a service from Ramsgate.

It raises further questions over the transport secretary’s decision to award Seaborne a contract to operate a ferry route between Ramsgate and Ostend in the event of a no-deal Brexit.

The government cancelled the contract at the weekend, saying it had become clear Seaborne could not fulfil it because Arklow had decided “to step back from the deal”.

Sources at Arklow said it had considered investing in Seaborne and providing two ferries but it saw itself as “just a prospective investor probably in a long line of others”. When it was discovered last week that Seaborne did not have a port agreement in place in Ramsgate, it decided not to pursue its talks any further.

“If you don’t have an agreement with a port, how can you run a ferry service?” the source said. “We never had an agreement with Seaborne, so when it was reported that we were a backer, that was not the case.

“Seaborne approached us a year ago and we had no further contact until the end of December. There was nothing signed, we were just prospective investors that they had approached like many others I imagine. We had no agreements with Seaborne or with the Department for Transport.”

Downing Street said on Monday that Theresa May continued to have full confidence in Grayling amid calls for his resignation over the ferry fiasco.

The contract with Seaborne was announced at the end of December and was quickly subject to ridicule after it emerged that the company had no ships and appeared to have copied and pasted terms and conditions on its website from a pizza delivery company.

Arklow wrote to Grayling on 18 January stating that it intended to provide equity finance for the purchase of two vessels and an equity stake in the project. However, in the last week it discovered there was no deal for access to the port and it decided not to proceed.

The DfT said Arklow Shipping’s backing had given it confidence in the viability of the deal, and it stood by the due diligence carried out on Seaborne Freight.

A spokesman for Seaborne said: “It is with regret that Seaborne Freight is not in a position to add any further comment, as we remain bound by a confidentiality clause with the DfT.”

Grayling is under further pressure to explain how Seaborne was awarded the contract after weekend reports that Ramsgate authorities could not afford to run the port.

The contract was cancelled a day after Grayling contacted Thanet district council to ask it to postpone a budget that would have shut down parts of the port for use by freight shipping.

Questions remain about the viability of Ramsgate’s port for use post-Brexit. It can accommodate ships up to 180 metres long, but modern ships are typically 230-250 metres.

John Davis, a member of the Ramsgate Action Group, said: “You can’t run a double-decker bus service out of a single-storey garage on the side of a bungalow – that’s the problem.”

Questions remain about the procurement process after the DfT relied on an emergency exemption provided for by the Public Contract Regulations Act to award the contract. Eurotunnel has accused the government of “anti-competitive” and “distortionary” behaviour.

Meanwhile, Grayling’s decision to award contracts to three ferry companies, including Seaborne is being challenged at the high court. Eurotunnel, which operates the Channel Tunnel, says the contracts totalling £108m were awarded through a “secretive and flawed procurement process”. But the Department for Transport (DfT) argues that the “extreme urgency” of preparations for Britain’s departure from the EU on 29 March justified the process.

At a hearing in London on Monday, Eurotunnel’s barrister Daniel Beard QC said the procurement process for “additional capacity for transport of goods across the English Channel” had been “undertaken without any public notice being issued”.

Ewan West, representing Grayling, confirmed to the court that Seaborne Freight’s contract had been terminated. West added that the procurement process was only for “maritime freight” services and, therefore, Eurotunnel “could never have provided that capacity” and “could not have complied” with the terms of the contracts.

The judge, Mr Justice Fraser, ruled that an expedited four-day trial would begin on 1 March given the “obvious” urgency of the case and the “very important public interest matters” involved.