Eric van der Kleij, the Government’s east London tech tsar responsible for overseeing millions of pounds’ worth of taxpayers’ money, has had to take out an Individual Voluntary Arrangement to rescue himself from personal bankruptcy, The Kernel can reveal.
The Kernel has learned that Eric van der Kleij, chief executive of the Tech City Investment Organisation, is the subject of an active Individual Voluntary Arrangement (IVA), a formal alternative to personal bankruptcy.
Mr van der Kleij said this evening: “I ran up huge personal debts building my business and didn’t get a good enough exit to cover [them]. This was the only solution.”
Public records show that van der Kleij, who is responsible for an annual budget of £2.1 million of public money, took out the IVA in 2008, two years into his position as “entrepreneur in residence” with UK Trade & Investment, a government department established in 1999 to encourage inward investment into the UK.
Van der Kleij’s entry on the Public Insolvency Register has been online for four years, listed as case number 0002227 with Brighton County Court. This revelation will put van der Kleij under intense pressure to explain whether the IVA is the result of mismanagement of his personal business ventures. It will raise further questions about his suitability as chief executive of an organisation with such a large budget.
It will also come as an embarrassment to the Government at a time when its reliance on quangos is becoming the subject of heavy criticism. Was David Cameron informed that van der Kleij was personally insolvent when in 2010 he appointed him to his current role?
Tech City is a pet project of Downing Street, which holds regular networking breakfasts for its east London entrepreneurs and investors at No. 10. News of its chief executive’s troubled finances are likely to embarrass David Cameron, whose judgment has already been called into question over the engagement of former communications director Andy Coulson.
Both appointments raise questions about the Government’s due diligence processes. Mr van der Kleij told The Kernel this evening: “[I've] never hidden this. [It] was fully declared to [the Government] who also did their own full checks.”
Cameron’s enthusiasm for Tech City, despite his insistence in interviews that the M4 corridor and not east London is “the UK’s Silicon Valley”, is starting to raise eyebrows. Technology commentators point out that the Prime Minister appears to be investing a lot of personal credibility into an area that, by and large, detests him.
George Osborne was recently dispatched to open a co-working space run by far-Left activists who shred Korans, Bibles and Torahs as “art projects”, one of whom was photographed on the front page of the Observer participating in the recent “sit-in” protest at Fortnum & Masons.
An income-based IVA can last up to five years. Debtors in an IVA and bankrupts are listed publicly on the Government’s Personal Insolvency Register and details of these arrangements are recorded by credit reference agencies.
Although an IVA does not statutorily restrict a debtor from obtaining credit, it may do, depending on the terms agreed with his creditors. It is viewed more positively than bankruptcy, as it does indicate a commitment to repaying debt, which is why the debtor is normally allowed some control over keeping their home.
But an IVA is likely to have the same effect on a debtor’s credit rating as full bankruptcy. Both stay on a debtor’s credit file for 6 years. If an individual fails to keep up with repayments under the terms of an IVA, the usual next step is full bankruptcy.
One east London entrepreneur, who spoke to The Kernel on condition of anonymity, said: “I’ve never been happy with the way Tech City spends so much money on marketing and sponsoring parties. Now I know that its chief executive is the subject of this kind of arrangement I feel even less confident about being represented by them.”