Decision

Decision for Ammanford Recycling Ltd (OG1148761)

Published 16 November 2022

1. Background

Ammanford Recycling Limited, (“the operator company”), holds a Restricted Operator’s Licence for 3 vehicles and 2 trailers. The two directors are Adrian Leigh Stewart and Richard John Safadi.

At a Public Inquiry on 21st October 2019 I suspended the Operator’s Licence of the operator company for 28 days and attached a number of undertakings having found serious and numerous breaches of the operator licensing requirements.

Mr Stewart was the sole director in attendance, and I found that his repute was tarnished.

An audit report on the governance and compliance arrangements was required as an undertaking on the licence, to be completed by Beverley Bell Consulting by the end of February 2020.

On the 14th February 2020 Mrs Bell wrote to the Office of the Traffic Commissioner (“OTC”) enclosing her compliance report. She identified in the report that Mr Richard Safadi, director, appeared to have undisclosed serious convictions for fraud offences involving HMRC regarding the unlawful avoidance of payment of VAT and failing to declare significant wealth on personal tax returns. He had been sentenced to 2 years imprisonment, suspended for 2 years, on 5th July 2017, having pleaded guilty on 12th August 2016.

An application for an Interim Standard Licence was refused, and the existing licence and the new application were referred to Public Inquiry, having regard to the seriousness of Mr Safadi’s convictions and the apparent failure to disclose matters highly relevant to fitness/repute.

The Public Inquiry was convened as soon after the lifting of Covid 19 restrictions as practicably possible, the call-up letter being issued on 4th August 2020.

2. The Public Inquiry

At the Public Inquiry, the two directors of the operator company, Adrian Leigh Stewart and Richard John Safadi, attended, together with Stuart Goggin, proposed Transport Manager.

Mrs Bell appeared as the operator company’s legal representative. I expressed concern over the potential conflict of interest in Mrs Bell having been so recently involved as a transport consultant and potential witness as to facts in issue. I refer to Senior Traffic Commissioner’s Statutory Document no. 9 – Case Management, paragraph 38. However, Mrs Bell assured me she would avoid giving evidence as to fact and be acting solely as a legal representative and the hearing proceeded.

At the conclusion of the hearing I heard representations from Mrs Bell. These were supplemented by written representations received on the 25th August 2020 for which I am grateful.

3. Evidence

The call-up letter requested copies of maintenance documentation and records at least 7 days in advance of the hearing. Unfortunately, they were not received until 4 p.m. the day before the hearing and were not all in an accessible format. As the principal subject matter of this Public Inquiry was the convictions and the non-disclosure, I determined to proceed in any event, with the agreement of the parties. All files and attachments have now been viewed and considered prior to making this decision.

Evidence was heard from Mr Goggin, Mr Stewart and Mr Safadi and the full account of that evidence is contained in the transcript of these proceedings. Evidence given in closed session is not included within this decision.

Stuart Goggin gave evidence as to his background and experience in the transport industry. He stated that he had assisted with compliance on the operator company licence since the October Public Inquiry. Record-keeping had improved and infringements by drivers had dropped dramatically. Copies of all relevant maintenance records, planners, invoices and monitoring reports had been sent electronically to the OTC.

Mr Goggin stated that he had recently notified the OTC of EPS Material Recovery Ltd going into administration due to the Covid 19 crisis.

Adrian Stewart outlined his role with EPS and the links with the operator company. He explained his long history in the corporate world and detailed how the operator company had grown to now employ around 40 staff.

Regarding the hearing before Traffic Commissioner Nick Jones on the 20th April 2017, he accepted that he had said on a number of occasions that Richard Safadi would have no involvement in the business. He accepted that the situation had changed, and he had failed to notify the OTC. He acknowledged that his reason for concealing Mr Safadi’s involvement was that he did not want to prejudice the business or the licence.

Regarding Morgan La Roche, Solicitors, he was “confident” they were aware of Mr Safadi’s convictions, it was “reputational”, and he “expected” them to know.

Questioned by me, Mr Stewart accepted that he was aware of the convictions of Mr Safadi and the revoked licence. He understood the potential impact of the convictions and past history on fitness/repute and the operator’s licence for the operator company. He conceded that Mr Safadi was not identified as a director at that time because they wanted to keep the licence and knew it would be jeopardised.

He accepted that the evidence given before Traffic Commissioner Jones was false when he stated on three occasions that Mr Safadi would have no direct or indirect involvement in the running of the business. There had been plans to take over the business but when Mr Safadi was reinstated as a director 9 weeks after the Public Inquiry there had been no attempt to inform the OTC.

Mr Stewart accepted that he had signed the GV79 Application Form on 27th September 2016 agreeing to an undertaking to declare all relevant convictions, history and material changes. He accepted that the removal of Mr Safadi as a director on 28th September 2016, the day after making the application, looked suspicious.

He accepted that not revealing matters relevant to Mr Safadi’s good repute could avoid legitimate inquiry by the OTC. He further accepted that he should have “come clean” in October 2019 when Mr Safadi was kept away from the Public Inquiry.

Richard John Safadi gave evidence about his substantial business background and outlined the circumstances of the tax avoidance offences, the commission of which dated back to 2007. He was eventually charged in 2015, 3-4 years after

the initial arrest. He had pleaded guilty in August 2016 and sentence was deferred for him to pay back unpaid tax of £882,000, plus other sums and costs.

On the 5th July 2017 he was sentenced to the suspended prison sentence but the Judge rejected the Prosecution application for him to be disqualified as a director.

He described himself as having been in a disastrous business relationship and stated that his business partner and himself had no respect for the law at that time.

He stated that there was a totally different regime now and he took his commitments seriously ensuring VAT, PAYE etc., were paid monthly and on time.

He said that in 2003 he had been sent to prison for 3 and a half years for insurance fraud. He had been divorced as a result of what had happened but he and his wife were now reconciled.

He outlined the 4 different parts of the operator company involving: scrap metals, end of life vehicles, packaging materials, and, large-scale dismantling of plant, e.g. oil refineries.

He had come on and off Companies House records as a director because of difficulties in obtaining bank accounts as a result of his convictions. He had been advised by Santander and a solicitor.

Regarding the non-disclosure of his 2016/7 conviction, he had met with Mr Stewart and Mr Tim Jones, Solicitor from Morgan La Roche, Solicitors, in April 2017. The solicitor was fully aware of everything. Mr Safadi had walked out of the meeting and did not wish to be represented by Mr Jones. Mr Stewart had continued using him.

At the time of the Public Inquiry in October 2019, Mr Safadi confirmed that he was a director. He was not in discussion with Morgan La Roche at that time, but he was 100% sure they were aware of the convictions.

Questioned by me, Mr Safadi stated that he had been advised by Solicitors not to attend the Public Inquiry in October 2019.

He accepted that he had remained off applications at relevant times because of the likely effect of his convictions on the operator company getting/keeping its operator’s licence. It was evident that the 2003 conviction had never been disclosed to the OTC.

Stuart Goggin was recalled. He was asked to confirm that he had attended a meeting with Mr Jones of Morgan La Roche, Solicitors, in April 2017 together with Mr Safadi and Mr Stewart.

He recalled that Mr Stewart had asked Mr Jones about Richard’s involvement. Mr Jones had said to “park to one side”. He did not know what he meant by that.

4. Findings of Fact

I find that the operator company, through its 2 directors, Mr Stewart and Mr Safadi, has deliberately withheld highly relevant information as to fitness to hold a licence from the Traffic Commissioner. Mr Safadi’s offences, albeit they dated back to events in 2011, were serious offences involving large sums of money being withheld from the public purse.

I find that the operator company, through its directors, has deliberately concealed Mr Safadi’s involvement in the operator company, most particularly in April 2017, and again in Mr Safadi’s non-attendance in October 2019.

In applying for an Interim Standard Licence in July 2020, Mrs Bell wrote that Mr Tim Jones of Morgan La Roche had suggested in an email that Traffic Commissioner Jones was “on notice” about the “pending prosecution” from the 2017 hearing. When that transcript was received it was clear that there had been no mention whatsoever of the fact that Mr Safadi was awaiting sentence at Swansea Crown Court. The only mention of possible criminal proceedings was an investigation by National Resources Wales regarding the waste site which Mr Stewart gave assurances he was dealing with.

In fact, the transcript revealed that on three occasions Mr Stewart stated categorically that Mr Safadi had no interest in the business and would have no future direct or indirect interest in the business. Those statements were patently false as within 9 weeks of the Public Inquiry, Mr Safadi was back on Companies House records as a director and Mr Stewart admitted that Mr Safadi’s involvement had been deliberately concealed at the Inquiry.

Mr Safadi was sentenced by the Crown Court on the 5th July 2017. He was removed as a director on the 4th July 2017 and then reappointed on the 6th July 2017. I find that both directors were fully aware of the significance of these appointments and terminations and I have no doubt that both were aware of their personal duty to inform the OTC. Mr Safadi had appeared before me in 2016 when a licence was revoked because it was held in the wrong legal entity. Mr Stewart had appeared before Traffic Commissioner Jones in April 2017 and given specific denials of Mr Safadi’s present or future involvement.

On 22nd March 2018 he was notified to Companies House as “a person of significant control” and yet neither Mr Stewart nor Mr Safadi saw fit to inform the OTC.

Mr Safadi admitted that he had manipulated the timing of directorial appointments/terminations on Companies House records in order to obtain bank accounts, although this was said to be on the advice of Santander.

As indicated during the Public Inquiry, I have checked the Operator Licensing records in respect of two Licences connected with Mr Safadi:

1. Actionformat Limited - OG1088721
2. Ammanford Limited – OG1147044.

In the case of Actionformat Limited this licence was revoked at a public inquiry before me on 22nd June 2016 for numerous and significant regulatory failings. Whilst Mr Safadi was the sole director of the company in 2016, the application was made in 2009 with Ms Kelly Rowland as director and the substitution of Mr Safadi on Companies House records was not notified to the OTC. The Case Summary states, incorrectly, that Richard Safadi was disqualified but at that hearing in June 2016, I accepted that the failure to notify his appointment as a director and the unauthorised use “had been a question of ignorance rather than deceit”, justifying non-disqualification.

In respect of Ammanford Limited, the application for the Restricted Licence in this case was intended to remedy the revocation of the Actionformat Limited licence on 22nd June 2016 as it was conceded that Ammanford Limited was the correct trading entity.

The application was made on the 25th July 2016 and withdrawn following a request made by the Central Licensing Unit for confirmation as to whether Mr Safadi had any previous convictions and whether he had failed to declare a bankruptcy order from 1994 which was on OTC records. The response from Mr Safadi’s transport consultants on 2nd August 2016 stated:

“The information supplied to myself as a Transport Consultant for ‘Ammanford Ltd’ was submitted on the application provided, I have since discovered that not all of the information was correctly supplied to myself to have been able to input on the application form received by you.

I have spoken to Mr Richard Safadi regarding the application and he has agreed to withdraw the application, I will not be assisting this company any further with regards to this application.

Please withdraw the application with immediate effect and all future correspondence should only be sent to Mr Richard Safadi. We at ‘R W Thomas Transport Consultancy’ will not be assisting ‘Ammanford Ltd’ any further than this email to yourself and I would be most grateful if our company name can be removed from any future correspondence”.

The history of these applications further confirms that Mr Safadi was fully aware of the duty to declare directorial appointments and raises further doubts as to his assertion that he failed to declare his convictions “on legal advice” in April 2017.

Mr Safadi and Mr Stewart are experienced, intelligent and articulate businessmen who I have no doubt fully understood the duties upon them and the seriousness of their deceit.

I find the evidence that they acted on legal advice wholly unconvincing. When Mr Stewart was questioned by Mrs Bell initially he stated that he did not know what Morgan La Roche knew about Mr Safadi’s criminal convictions but he “expected” they knew. After the short adjournment of proceedings he was recalled by Mrs Bell to be specifically asked if he remembered a meeting with Mr Safadi, Mr Jones, Solicitior, and himself in April 2017. He could not recall the advice given, or the exact content of the discussions, but he “believed” they were aware and “think” they advised not to mention it.

Mr Goggin’s account of that meeting is even more vague. All he could recall was Mr Jones saying to “park to one side” Mr Safadi’s involvement at some point.

As far as Mr Safadi is concerned he is adamant that the meeting did take place and that Morgan La Roche were fully aware. He states that he walked out of the meeting in April 2017 and insisted that Mr Jones was not used. Yet, as a director, Mr Safadi was complicit in not attending the Public Inquiry in October 2019 when he knew Mr Jones was acting for the operator company. He also did nothing personally to rectify the non-disclosure and his stated disagreement with the advice.

I find that the number and seriousness of the false declarations and failures to inform the OTC of highly relevant matters is a clear breach of the explicit undertakings made when obtaining an operator’s licence and totally inconsistent with the conduct expected of legitimate operators.

Even if Mr Safadi and/or Mr Stewart believed at some point that they were being advised by their Solicitor to conceal relevant matters, which I very much doubt, they are sufficiently mature and intelligent to challenge or ignore that advice. Both have experience of working in highly regulated industries, Mr Stewart being registered with National Resources Wales as the technically competent person for ensuring permitted waste site compliance. They acquire a personal, legal responsibility as directors, and, sign up to explicit and clear undertakings when applying for, or renewing, an operator’s licence.

I take a particularly serious view of their lack of openness with Traffic Commissioners when giving evidence at Public Inquiries. Witnesses are warned that they are not on oath but that false evidence may count against their repute.

It certainly does in Mr Stewart’s case when, on 3 occasions in April 2017, he stated categorically that Mr Safadi would have no direct or indirect involvement in the running of the operator company. Of course, Traffic Commissioner Jones was concerned about Mr Safadi’s potential involvement because of his past licensing history and an apparent injection of £40,000 from Mr Safadi. His concern would have been all the greater had he known that Mr Safadi had pleaded guilty and was awaiting sentence at Swansea Crown Court for serious fraud offences.

I further find that the operator company has, since the last public inquiry, acquired prohibitions, one an “Immediate” prohibition for a seriously under- inflated tyre on the 8th October 2019, and a fixed penalty on the 10th March 2020, for failing to keep records of other work. These are explained in Mrs Bell’s submissions as being the actions of an agency driver, but they nevertheless reflect on the operator company’s compliance.

I have now had the opportunity to open and view all the email attachments received shortly before the hearing. I accept that the various maintenance records, invoices and monitoring reports show that significant improvements have been made since February 2020 and that the operator company has acted on the recommendations made by Mrs Bell in her audit report.

5. Considerations and Decisions

In considering the fitness/repute of the operator company potential action against the licence I weigh in the balance the positives put forward on its behalf.

I take into account that the convictions against Mr Safadi were voluntarily disclosed to Mrs Bell by Mr Safadi on her audit visit in November 2019 and that the directors have attended the Public Inquiry to “face the music”

I accept that Mr Goggin is a competent individual and that his recent involvement has resulted in significant improvements in records and systems.

I recognise that findings must be made as at the date of the public inquiry and the delay in being able to list Public Inquiries has enabled the operator to demonstrate improved compliance since the last Public Inquiry.

However, the non-disclosure and deception from the directors, Mr Safadi in particular, has been long term, sustained and repeated. It must reflect on the long term commitment of the operator company to maintain compliance when the threat of the Public Inquiry has dissipated.

Mr Safadi has had a previous licence revoked in June 2016 when disqualification was considered but not imposed on accepting that he had acted out of ignorance, rather than by deceit, in operating his licence under the wrong trading entity. There can be no such concession on this occasion and I note that the withdrawal of the Ammanford Limited licence application in August 2016 followed questions from the OTC about the non-disclosure of possibly relevant earlier convictions and a bankruptcy order.

Mr Stewart’s repute was already marked as “tarnished” as a result of the serious breaches of undertakings and compliance requirements at the Public Inquiry in October 2019. Taking into consideration his lack of transparency with the OTC, his false evidence before TC Jones, and his failure to notify material changes there can be no doubt that his good repute would be forfeit on this occasion although in accordance with Skip It (Kent) Ltd, (T/2010/025) I do not make formal findings against his good repute.

Under the Act, the convictions of Mr Safadi and the conduct/repute of Mr Safadi and Mr Stewart as directors are clearly relevant to the operator company’s fitness to hold an operator’s licence.

Paragraph 1(2)(a) of Schedule 3 to the Act provides that in determining whether a company is of good repute a Traffic Commissioner shall have regard to any relevant convictions of the company or of any of its officers, servants or agents”.

Paragraph 1(2)(b)(ii) of Schedule 3 to the Act provides that a Traffic Commissioner shall have regard to all the material evidence, including, in particular, any other information in his possession, (apart from convictions), as to the previous conduct of “any of its directors, in whatever, capacity”, if that conduct appears to him to relate to the company’s fitness to hold a licence.

As stated in the case of Fenlon (T2006/277) trust is “one of the foundation stones of operator licensing. Traffic Commissioners must be able to trust operators to comply with all the relevant laws, rules and regulations because it would be a physical and financial impossibility to police every aspect of the licensing system all day and every day. In addition operators must be able to trust other operators to observe the relevant laws, rules and regulations. If trust between operators breaks down and some operators believe that others are obtaining an unfair commercial advantage by ignoring laws, rules or regulations then standards will inevitably slip and the public will suffer.”

In the Upper Tribunal case of KHJ Limited (T/2009/528) the judgement refers to a significant fraud involving dishonesty against a local authority and falsification of documents in connection with the use of authorised vehicles as going to the heart of the relationship of trust between the Traffic Commissioner and the operator. Whilst Mr Safadi’s offences did not involve the operator company’s vehicles, it did concern significant evasion of sums due to the public purse. The actual conduct may have been some years before the conviction but the sentences of imprisonment, albeit suspended, amount to “serious offences” leading to mandatory loss of repute for individuals.(Schedule 3, paragraph 2 of the Act).

The KHJ judgement further refers to failure to declare the convictions of a director. The judgement states: “The failure to declare material changes was also a clear concern as the Traffic Commissioner relies on such open co-operation from operators and if they cannot be trusted to be honest and proactive in observing obligations of the licence it is hardly indicative of a future likelihood to report routine material changes”.

Having seen and heard from Mr Safadi I am not convinced at all that he is a changed man and the level of compliance of the operator company at the time of the Public Inquiry in October 2019 was poor.

Indeed the DVSA investigation revealed significant failings across maintenance and drivers’ hours. Serious prohibitions had been issued in respect of an Ad-Blue emissions cheat device and having an insecure load. I found that the failings demonstrated “a serious risk to road safety and merit revocation”.

Mr Safadi has had a licence revoked previously for regulatory failings and he cannot be trusted to comply now despite the improvements leading up to the Inquiry.

Considerable emphasis is placed in the submissions on Mr Safadi’s rehabilitatiion and the lapse of time between the commission of the tax offences in 2011 and the final sentence in July 2017. Clearly these were complex matters and Mr Safadi accepts that he maintained a not guilty plea until late in the proceedings on the advice of his lawyers. I do not blame Mr Safadi for the delay but the fact remains, his rehabilitation period does not expire until July 2023. He would also be entitled to far more credit if the intervening years had not been marred by serious and repeated non-disclosures, manipulations of public registers and operator licence compliance failings.

The co-director, Mr Stewart, as previously stated, misled the Traffic Commissioner in 2017 and he failed to take the opportunity to remedy the situation and disclose Mr Safadi’s involvement and background when appearing before me in October 2019.

As a result of my lack of trust in the 2 directors I have no confidence in the ability of the operator company to comply with the operator licensing regime as Restricted or Standard licence holders.

I consider the Priority Freight (T/2009/225) question; “how likely is it that this operator will, in future, operate in compliance with the operator’s licensing regime?” and answer, highly unlikely.

With regard to the Bryan Haulage (no.2) (T/2002/217) question, “is the conduct such that the operator ought to be put out of business?” the answer is firmly “yes”, albeit that this is a restricted licence with different areas of activity and over 40 employees where cessation of the business may not be automatic.

Having regard to all the information in my possession, and all the findings made above, revocation of the operator company’s licence is both appropriate and proportionate.

To do otherwise would send entirely the wrong message to the legitimate licence holders and to the industry at large. If it was perceived that operators who might otherwise be disqualified or lacking fitness could obtain a licence by deceit and then pray in aid lapse of time, past/present compliance and/or the consequences of revocation then openness would be undermined. Of course, in this case, the operator company cannot even pray in aid past compliance. As recently as October 2019 they were before me for serious regulatory failings which I found would have justified revocation at that juncture.

In respect of the Restricted licence held by Ammanford Recycling Limited the licence is revoked, with effect from 1st October 2020,under:

• Section 26(1)(h) – material change, namely that the company and its directors do not meet the required fitness.
• Section 26(1)(b) – breach of the condition to notify convictions.
• Section 26(1)(c)(iii) – prohibitions issued in last 5 years.
• Section 26(1)(ca) – fixed penalties issued in last 5 years.
• Section 26(1)(e) – false statement to notify material convictions and changes.
• Section 26(1)(f) – breach of undertakings regarding keeping vehicles fit and serviceable; observing rules on drivers’ hours and tachographs etc.; informing material changes.

In the call-up letter, the operator company and its directors were warned of the Traffic Commissioner’s discretion under Section 28 of the Act to order disqualification upon revocation of a licence.

Mr Safadi has previously had a licence revoked and both he and Mr Stewart have allowed road safety to be compromised. They have not engaged openly

and honestly with the operator licensing system and I have found them to be untrustworthy in terms of future compliance. In addition, Mr Safadi has the previously undeclared serious convictions from 2017.

I consider that disqualification is appropriate and necessary, and I have had regard to the representations made with regard to the date of Mr Safadi’s offences and the rehabilitation period in determining the length of the disqualification.

The operator company, Ammanford Recycling Limited, is disqualified from holding or obtaining an operator’s licence for 3 years with effect from 1st October 2020.

Richard John Safadi (9.9.69) is disqualified from holding or obtaining an operator’s licence for 3 years with effect from 1st October 2020,

Adrian Leigh Stewart (18.01.66) is disqualified from holding or obtaining an operator’s licence for 2 years. with effect from 1st October 2020,

In respect of the application to upgrade the operator’s licence for the operator company to a Standard National Licence, that application is refused on finding that the operator company is not of the required good repute under Section 13A(2) of the Act.

Anthony Seculer,

Deputy Traffic Commissioner,

1st September 2020