Decision

Decision for Mafuwer Logistics Ltd

Published 8 October 2021

1. WEST MIDLANDS TRAFFIC AREA

2. DECISION OF THE TRAFFIC COMMISSIONER

3. PUBLIC INQUIRY HELD ON 27 SEPTEMBER 2021

4. OPERATOR: MAFUWER LOGISTICS LTD, LICENCE OD2033517

5. Background

5.1 Application details

Mafuwer Logistics Ltd was granted a standard international licence (OD2033517) for three vehicles on 11 December 2020. The sole director of the company was (and remains) Harun Omar. The nominated transport manager from grant of the licence until his resignation on 20 August 2021 was Paul Fernley.

In considering the application, the central licensing office in Leeds (CLO) noted that almost all of the company’s financial resources had been provided by a £50,000 bounceback loan (BBL) in May 2020. CLO therefore sought and obtained the company’s agreement to a finance undertaking under which the company would provide, by 30 June 2021, evidence of sufficient finances for three vehicles (£17,000) over the three-month period 1 March to 31 May 2021.

On 29 June 2021, the operator’s agent duly provided copies of the company’s bank statements from 1 March to 31 May 2021. They showed an average available amount of [redacted], far below even the £8,000 necessary to support just one vehicle, let alone three. The agent’s letter acknowledged a shortfall and accounted for this by saying that the company had purchased a vehicle in December 2020 for [redacted] and had experienced a lower volume of work than usual owing to Covid-19. However, the balance in June had undergone a significant improvement – it stood at around [redacted] on 22 June 2021. The agent requested an extension to the period in which to demonstrate financial standing, although the maximum six month period permissible under Regulation EC 1071/2009 for such extensions had already elapsed.

In putting the matter to me for a decision, CLO commented that a perusal of the company’s bank statements showed that the BBL appeared to have been used to fund personal (as well as company) expenditure. The statements contained an unusually large number of items which seemed to constitute personal use of funds – food, shoes etc and tax for two cars which were registered to Mr Omar personally not the company.

I noted that the company had been incorporated in 2014 and had traded since, albeit seemingly at a low level. Its turnover appeared to be far short of the £200,000 necessary to qualify for a BBL of £50,000 (BBLs being at a maximum level of 25% of turnover or £50,000 whichever is the lower).

In view of the company’s failure to demonstrate financial standing, and in view of the strong suspicion that it had improperly obtained a BBL and that its director was making improper use of company funds, I decided to consider the matter at a public inquiry. Because the issues related to company finances and the conduct of the director, the transport manager Paul Fernley was not called.

6. Public inquiry

The inquiry was held in Birmingham on 27 September 2021. Present were director Harun Omar and barrister Harry Bowyer, representing. The operator had produced finance, maintenance and drivers’ hours records in advance, for which I was grateful.

Mr Bowyer immediately accepted that the operator had not been able to demonstrate financial standing for three vehicles, although the latest balance, at [redacted], did cover it. He indicated that the operator was requesting a voluntary reduction to one vehicle, to give it time to rebuild its financial position.

Mr Bowyer further explained that Harun Omar would not be answering any questions relating to the obtaining of the BBL or to the use of company funds for personal items, as the questions would not be under caution and he did not want to incriminate himself in case of future legal proceedings. Mr Omar did state that Mafuwer Logistics Ltd had been a vehicle for his self-employment as an HGV driver from 2014 until he had decided to become an HGV operator in 2020.

I noted that the maintenance documentation supplied showed large gaps between safety inspections. Such inspections were supposed to take place every six weeks according to the promises made on the licence application form: so far, the vehicle had been inspected on 3 January 2021, 4-8 March 2021, 13 May 2021 and 25 August 2021. Between the May and August inspections there was a gap of 15 weeks, during which the vehicle had travelled over 47,000km. I also noted that, on each of the trailer inspection sheets dated 8 March, 13 May and 25 August 2021 the maintainer had written “advise loaded trailer for next brake test”. Clearly, this advice had never been acted upon: the brake tests all recorded insufficient axle weight.

Looking at the drivers’ hours records, I noted that the first infringement reports were dated 12 August 2021, implying that no analysis of driver tachograph card and vehicle unit data had been carried out before this date.

The missing mileage records provided by the operator showed that there were two instances of driving without a tachograph card, in August and September 2021 (data for other months not of course available). Vehicle FJ15 UZM was driven without a card for 49 km on 5 August and 37 km on 8 September. Mr Bowyer said that Mr Omar accepted that he had been the driver: he had erroneously believed that he did not need to use his card when driving to the maintainers. [After the inquiry I realised that the dates of driving without a card did not coincide with the vehicle’s visits to the maintainers. Asked to comment, Mr Bowyer accepted on Mr Omar’s behalf that he had driven without a card when the vehicle “was not working”. It was further accepted that this provided little mitigation against the falsification offences, and that the September instance disguised driving by Mr Omar for 10 consecutive days, which constituted a serious weekly rest offence].

Taken together, the maintenance and drivers’ hours records suggested that the transport manager Paul Fernley had had little or no involvement with the operator. I asked Mr Omar how often Mr Fernley had attended. Mr Omar stated that he had seen Mr Fernley twice: once when he had agreed to be the nominated transport manager (before the application was submitted, therefore) and then in around July 2021, a month before Mr Fernley had resigned. Mr Omar said that Mr Fernley had not informed him of his resignation: the first he had heard of it was when he received a letter from the traffic commissioner’s office. I noted that Mr Fernley had communicated his resignation to me by email dated 20 August 2021 and that the call-up letter to the inquiry had been sent out on 10 August 2021.

Mr Omar said that Mr Fernley had not attended the operating centre much owing to Covid. He had phoned from time to time to ask whether the safety checks were being done on time; he had never asked to see any maintenance documentation.

When Mr Fernley had visited in July he had advised on what equipment to get to do the tachograph analysis. Until then he (Mr Omar) had been downloading the cards but had not been able to do anything with the data.

Mr Omar said he was now nominating John Potgieter as transport manager. Mr Potgieter had put matters on a much better footing and he was confident that, with Mr Potgieter on board, the company would comply with all requirements in the future.

Concluding, Mr Bowyer made the following points:

i) Mr Potgieter was a respected transport manager and was prepared to put his reputation on the line for the operator;

ii) roller brake testing had at least taken place, albeit unladen;

iii) the vehicle and its trailer had been presented for some safety inspections, albeit not every six weeks;

iv) the actual level of drivers’ hours infringements, which the analyses carried out in August and September had identified, was not major;

v) there were two instances of Mr Omar driving without the card in August and September 2021 (data for other months not available). These were caused by him erroneously believing that he did not need to use his card when driving to the maintainers (but see paragraph 12 above);

vi) the operator wished to reduce its authority from three vehicles to one;

vii) Mr Omar was prepared to undertake to attend an operator licence management course (he had already attended the DVSA’s seminar for new operators).

7. Findings

Having considered the evidence, I make the following findings:

• the operator has not fulfilled the promise made on application that vehicles and trailers would be given a safety inspection every six weeks (Section 26(1)(e) of the 1995 Act refers). There have been significant intervals of up to 15 weeks, during which the vehicle has travelled tens of thousands of kilometres without any safety inspection;

• the operator has failed to fulfil its undertaking that it would ensure the observance of rules relating to drivers’ hours and tachographs (Section 26(1)(f) refers). There is no evidence apart from Mr Omar’s say-so that tachograph data was ever downloaded until 12 August 2021. Even if it was, it was not analysed until that date, eight months after the vehicle was specified on the licence. Drivers’ hours infringements were therefore neither identified nor addressed during that period. Mr Omar himself drove without a tachograph card, thereby making a false record, on two occasions in two months;

• given Mr Omar’s decision not to answer questions relating to the bounce back loan or to his use of company funds to pay for personal expenditure, I have little alternative but to find, on the available evidence, that the company has improperly obtained a bounce back loan of £50,000. Its turnover in 2019 was nowhere near £200,000, the amount required to qualify for a BBL of £50,000, for in 2019 the company’s income was simply the amount Mr Oman would have invoiced in his capacity as a driver. According to information submitted during the application process, Mafuwer Logistics Ltd’s income in 2020 before the licence was granted was slightly under xxxxxx per week (around xxxxxx annually). The BBL was received on 19 May 2020 yet the company’s bank statements show that by 3 August 2020, less than three months later, this sum had shrunk to less than xxxxxx, with the vehicle not yet having been purchased and the operator licence not yet having been granted. Throughout 2020, available bank statements continued to show numerous payments to bodies such as [Rdeacted] I find that Mr Omar has failed to distinguish between personal and company expenditure and has in effect used the BBL (which his company was not entitled to by reason of an insufficient turnover) to fund his own lifestyle. The improper obtaining of a loan by certifying that turnover was at least £200,000 when this was simply not the case is not reputable conduct. I find that the company lacks the required good repute (Section 27(1)(a) refers);

• the company was without the required professional competence (Section 27(1)(a) refers) from the start of its licence in December 2020 until early September 2021, when Mr Potgieter started to advise it (Mr Potgieter is still not the official transport manager, as his nomination was only received on 9 September 2021 and is still under consideration at CLO). I find that Paul Fernley completely failed to exercise the required continuous and effective management of the licence. Had he done so, he would have seen that vehicles were not being presented for maintenance at the promised six-week intervals (or anything approaching that); that the maintainer’s repeated recommendation that trailer and vehicle be brake-tested in a laden condition was being ignored; that tachograph data, if it was being downloaded at all, was not being analysed and drivers’ hours infringements were not therefore being identified or addressed. Covid is not an acceptable excuse for such negligence. For one thing, the Covid crisis was already in full swing when Mr Fernley agreed to be the transport manager; for another it would still have been perfectly possible to review maintenance documentation and drivers’ hours records remotely. Mr Fernley did not do so. I find that he has been a transport manager in name only. He resigned in August 2021 after I had called the operator to a public inquiry and appears not to have informed the operator. There is a huge question mark over his good repute, and he will need to attend a separate hearing to discuss this;

• even with its £50,000 BBL, the operator has lacked financial standing for its three-vehicle licence throughout almost the whole of its life. The operator was given the maximum six months (Article 13.1(c) of Regulation EC1071/2009 refers) upon the granting of the licence in which to demonstrate that it could satisfy the financial standing criteria on a permanent basis. When that deadline arrived, it had insufficient resources even for one vehicle. I find that the operator lacks the necessary financial standing (Section 27(1)(a) of the 1995 Act refers).

7.1 Balancing act

On the negative side of the balance are the above findings. I attach significant weight to the improper obtaining of the BBL, the long absence of professional competence (which heavily outweighs the last minute nomination of a new transport manager), the long gaps between safety inspections and the failure to analyse tachograph data. On the positive side are the points listed by Mr Bowyer. But several of the positive factors are tinged with a negative and they are thin gruel compared to the weight of the negatives. I have no hesitation in concluding that the negatives heavily outweigh the positives.

7.2 Priority Freight and Bryan Haulage questions

Before I asked myself these questions I noted that this operator should never have been granted a licence at all. It was not entitled to a BBL of £50,000. The lower level loan of some xxxxxx to which it would have been entitled would not have provided sufficient funds for a three-vehicle standard international licence.

I then asked myself the Priority Freight question of how likely it is that the operator will comply in future. Because Mr Omar has shown that he is prepared to operate in practice without a transport manager and prepared to operate a vehicle intensively (both day and night shifts according to the tachograph information) without submitting it for the promised six-week safety inspections but instead at much longer intervals, my conclusion that it is not very likely.

I have considered the Bryan Haulage question of whether the operator deserves to go out of business and answer it in the affirmative. The operator should never have been in business in the first place; and its conduct over the life of the licence shows that it gave a lower priority to complying with its regulatory obligations and undertakings than it did to its business of carrying goods as an Amazon contractor.

8. Decisions

8.1 Operator licence

Having found that the operator lacks good repute, financial standing and professional competence, and having answered the Priority Freight and Bryan Haulage questions as I have done, I must revoke the licence. I am doing so with effect from 0001 on 28 October 2021, in order to give the operator time to wind down the business.

8.2 Director – disqualification

I omitted to address the issue of disqualification in the public inquiry so I am not able to make a disqualification order. However, if Mr Omar ever wishes to re-enter the industry in the future, he will need to acquire a much greater knowledge than he presently has of the laws relating to company finances, director responsibilities and the operation of HGVs.

Nicholas Denton

Traffic Commissioner

30 September 2021