The corruption scandal in Teesside has threatened a £600m factory investment

Plans to build a £600m cable factory in Teesside could be at risk as a corruption scandal threatens the former steelworks and its Conservative Mayor figurehead.

Global InterConnection Group was founded by British Investor Edi Truell and has planned to manufacture offshore cables and interconnectors on a 4,500-acre site at the former SSI Steelworks.

It is believed that the company now has opened discussions with the Port of Tyne, amid concerns over increasing political pressure on Teesworks, and Ben Houchen the Conservative mayor of Tees Valley who was awarded a peerage Friday as part of Boris Johnson’s resignation honours .

Senior industry sources claim that Global InterConnection Group has lost interest in the project following accusations made by Parliament about sweetheart deals between two local businessmen and the mayor of Tees Valley.

Global InterConnection Group has not been implicated in this alleged scandal.

Sources said that the company wants a 60-acre parcel of land, and they have lined up an operator from Far East to run the factory.

Teesworks won the award because it has a freeport status, which offers generous tax incentives to companies in the zone for a period of five years. It also has access to Redcar Bulk Terminal – a deep sea port at the mouth of the Tees Estuary on the east coast.

claims of cronyism made against Mr Houchen forced bosses into a second thought. Sources say that choosing Teesworks would be “too risky”.

According to sources with knowledge of the situation, the final decision on whether or not to choose the Port of Tyne over Teesworks is scheduled to be made by the end of the month.

This could mean that the independent review of allegations of sweetheart agreements with two local businessmen for developing Teesworks, his signature development and the site of Europe’s largest brownfield regeneration is too soon to be completed.

Mr Houchen supported the call for an inquiry, saying it would clear his name. He also said that Labour’s “smear campaigns” were a result of allegations that he had committed wrongdoing.

The Port of Tyne is a deep-sea port that claims to be the most efficient in the UK. Ministers designated the North East Mayoral Combined Authority as one of the UK’s twelve investment zones in March, despite the fact that the government rejected an application to grant freeport status in 2020.

Mr Truell is a former Boris Johnson adviser who listed a shell company, Disruptive Capital Acquisition Company, on the Amsterdam Stock Exchange in October 2021. The company raised £125m (£125m) from institutional investors.

DCAC and Global InterConnection Group agreed to merge in April. The merger will create three divisions, including a manufacturing division for high-voltage cables, an investment division for electricity interconnectors, and a consulting group to offer advice on grid design, planning, and operational management.

At the time, the group stated that it had chosen Teesside as a “cable manufacturing facility and armouring facilities” along with testing and research centers in Iceland. The company stated that “preferred sites” had been “identified”. The construction of the factories will begin in the second quarter of 2023.

According to Amsterdam Stock Exchange filings, “The Teesside Factory is due to become fully operational in 2025. It will create over 800 new jobs, support dozens renewable energy projects worldwide, and make Britain the world leader in the manufacture of and export of [high-voltage electricity] cable.”

Michael Gove has opened a parliamentary investigation into this development. Angie Ridgwell was appointed last week as the lead reviewer along with two other senior civil service members. She is chief executive at Lancashire County Council, and was previously director general of the Business Department.

Labour MPs demanded that the National Audit Office handle the investigation and claimed the panel was “hand-picked” by Ministers.

Andy McDonald, Labour Member of Parliament for Middlesborough, used his parliamentary privilege to claim “industrial-scale” corruption earlier this year after local developers Chris Musgrave & Martin Corney took a 90% stake in Teesworks even though nearly 250m was spent by taxpayers to remediate parts of the former Steelworks.

Mr Musgrave, and Mr Corney denied the allegations. They said they “had nothing to hide”.

Mr Houchen supported the call for an inquiry but insisted that accusations of wrongdoing amounted to a Labour smear campaign.

Critics of the president claim that the transfer of the stake from the government to two local businessmen did not appear to be a public procurement.

“Regardless of the optics. Last month, Mr Houchen said to The Telegraph that Chris and Martin were in a position of having the keys to unlocking the steelworks. “Or, it remains derelict at a cost of PS20m per year to the taxpayer and we do not create any new job.”

A spokesperson for Mr Houchen refused to comment in order to not prejudice the parliamentary investigation. Global InterConnection Group, and the Port of Tyne declined to comment.