Here’s today’s Guardian piece about alleged money laundering in Scotland.

A few years ago, a well-known building in Larbert near Falkirk was renovated at a cost of several million pounds. It was widely advertised as a fabulous new hotel: a big asset to Falkirk. But some local hoteliers and business folk thought there was something odd about it and came to talk to me about it. A well-known, large, local hotel had gone into administration shortly beforehand. The new owner of that hotel, fairly recently a barman/waiter at another local hotel, was picking up prizes for turning around the failing hotel and now apparently investing millions not only in Falkirk but also other sites in the region. The pattern appeared to be for decent old enough buildings which had seen better days to have large amounts of money spent on them prior to being marketed as 5 star hotels.

The local business folk couldn’t understand where the money was coming from. First, the older local hotel seemed to be doing the same level of business which had led it into administration. Second, the new local hotel didn’t seem to have enough rooms – just 5 or so – to justify the capital expenditure. Third, the new hotel group appeared to come from nowhere and did not seem to have a track record anywhere else in the world, and there were no signs of a new corporate management team.

I have no business experience of the hotel trade, of course. And I was aware that Scotland has always had a terrible shortage of decent hotel accommodation. At face value, here was an entrepreneurial young local man who’d spotted that local hotels were struggling because their spec was too low for the modern market, so the extensive ‘bus tour’ trade was going to nicer places beyond Stirling to Perth and into the highlands. He’d taken some risk, found some funders, created higher quality establishments and was reaping the rewards. I spoke to a few other locals – I was told that the hotel owner had a close friendship with someone wealthy overseas whom he’d made a pitch to and who’d seen the potential in central Scotland. A senior official with the local council, responsible for granting alcohol licences, felt that the complaints of local hoteliers was simply sour grapes.

I spoke to an enormously successful Scottish businessman, who has made a lot of money out of knowing when and where land is on the cusp of being granted permission for houses (‘I look at a field like a farmer looks at a cow’); he felt that the purchase may be followed by an attempt to gain planning permission for houses – on that beautiful, greenfield site, such planning permission would have been worth many millions. He said that he felt there was no chance that the site would be allowed to be developed for housing, but did also say, cannily that his own great success had come though spotting opportunities everyone else had missed. Indeed, fantastical planning applications (to be fair, successful applications often begin with fanciful notions and exaggeration of local benefit) did indeed follow. One for housing and one for a vast expansion of the present building. These did not succeed.

Before I gave the local folk my view, I did a couple of other things. I asked a couple of people to book a room at the ‘fabulous new award winning’ local hotel and they found that they couldn’t. The telephone wasn’t answered by the hotel but by the front desk at the other hotel which had previously been in administration. The fabulous hotel did not, in fact, operate as a hotel. It was used for wedding receptions only and the rooms could only be booked in conjunction with a booking for a wedding. I asked another couple to attend a wedding ‘open day’, one of whom was a former cop. He told me that the inside of the building had in his estimation indeed had several millions pounds spent upgrading it.

I mentioned the wedding prices and the approximate cost of the ‘hotel’ refurb to another businessman and he felt that the business as it stood could only be losing substantial amounts of money. This wasn’t a complete condemnation, of course. I had no idea of the wider plans of the hotel owners – perhaps they hoped to get planning permission to expand the hotel some time in the future? “Maybe”, said the businessman, “but even Gleneagles up the road is struggling in the present market, as are all the other hotels in the area. And they all have plenty of land they’d love to develop. It isn’t just about refurbs for high-spec places, it’s about the economy and international trends. It would be a brave investor who would risk millions competing with the likes of Gleneagles at a time like this. They’re pouring good money after bad, so assuming they’re not insane then then they might have the kind of business model where accepting substantial losses are an occupational necessity, if you get what I mean”.

My tacit conclusion was that the notion of planning permission for a future vast development was unlikely. The group didn’t seem to have the local development knowledge essential for such a plan. So I took a look at the hotels themselves; as I have again just now. This one, which has always pleasant restaurant attached and is a perfectly decent stop-off for car tourers, today remains advertised as a very fine destination indeed yet rooms are priced at between £20 and £79 and the hotel gets mixed reviews, at best, on TripAdvisor.  While this one and this one, certainly the subjects of substantial upgrades, aren’t actually hotels at all. People in the business told me you can’t run a venue like that on a wedding a week. In short, the cheap places seemed to be trading modestly as they always had; the refurbished places looked like a rich person’s house used for weddings at the weekend to recoup a little of the running cost.

Finally, the group’s website looked – and still looks, since it hasn’t altered in several years – peculiar. Modestly-priced hotel rooms in Scotland sell mainly through agents, on the internet and through websites like People looking for fairly cheap touring accommodation aren’t also for the top-notch glamour and flamboyance characteristic of this hotel group’s claims. Vice-versa, people looking for glamour are likely to be suspicious of the very cheap prices and the variable TripAdvisor reports. The claims on the site of 5 star venues, particularly located very close to a real 5 star hotel, Gleneagles, sit uneasily with both types of client. Moreover, the hotel websites are pages of the group site, but clicks to images reveal the same images for rooms across all the hotels. As you click through the site, it feels like a locally-designed thing done quite cheaply. It doesn’t flow to room bookings; its language is quaint and ridiculously overblown. There are some super hotels in Scotland’s countryside and plenty of glamorous wedding venues, but even from the websites it’s fairly easy to see how they work hard to fill rooms, run weddings, pitch themselves realistically as high-grade but not necessarily world-beating 5 star venues. Clients are hard-headed and spot nonsense. Maybe this is harsh of me, but I felt, and still feel, that the website of the Falkirk-area group looks more designed to present a glamorous presence for its own sake rather than maximise trade. Maybe they just need a website upgrade?

Quite a long time ago, a friend of mine was a fairly senior drug dealer in a major English city. I was doing an MBA at the time nearby and he took me out for the night to a super-glamorous club filled with soap-stars and big guys driving amazing cars. My job at the time, a little unusually, required me to carry a gun in my civilian clothes as I went about my fairly unsexy daily business. This detail helped me bond a little with the folk I met in the club. Having asked me about my weapon (which I wasn’t carrying at the time) they told me about theirs and even asked me if I’d like a piece of the action. In due course they told me about their clubs and publications and hotels, and in broad terms how they put their drug money through these businesses. All of these businesses traded, often involving a lot of cash; they paid local managers to run the places and PR people to ensure that the businesses had profile. But the businesses were carrying losses – indeed they said they often paid tax on money the businesses hadn’t earned in order to conceal the losses from the HMRC. Of course, these losses represented the price of money laundering.

When I started looking at this local hotel business, there was a story in the Scottish press about the owner receiving another award in Glasgow at exactly the time his original hotel was going up in flames. That was unlucky, I thought at the time. He’s had more luck since, though. He’s often in the papers, the subject of what look awfully soft-soaped pieces about how many cars he has, or maybe these pieces are really just disguised advertorials? In any case, he has a super personal story – from one of the poorest housing estates in Scotland to great wealth and success in a few short years. I know a few very rich Scots who made all their own money in much this way and when you meet them they’re an impressive, smart and highly socially-aware breed. They most certainly do not forget their roots nor fail to put something back. The more of this genuine type of person around, the better, as far as I’m concerned.

Anyway, After looking at the whole hotel situation back then I formed a firm view about the situation in and around Falkirk and central Scotland; then I promptly spent a few years spectacularly self-destructing and took it no further. I’ve spoken to folk of it at dinner parties; about how the Scottish media seems weirdly uninterested in investigating really serious stuff like money laundering even after this Telegraph story, how sometimes local officials just see what they want to see.

I see that the Guardian’s story says that all of the money allegedly coming into that particular hotel group from, it seems, Libya via Panama, is linked to a single domestic address in Dunfermline. It’ll be interesting to see how that story pans out, then. Perhaps the business in question above had nothing at all to be worried about. And let’s not forget that even if there’s dodgy money floating around, it’s perfectly possible that local managers new nothing about that.

Elsewhere, though, if I were an investigative reporter in Scotland, I’d be looking at some Business profiles a little more closely that seems to have been happening up until now….