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Pallet network Fortec has defended its vetting procedures after it emerged that a company it had granted a franchise has a number of serious questions hanging over it. The firm in question is Stockton-on-Tees-based Caveman Consultants Ltd, which trades as The Logistix Group, run by Mansoor Hussain. The Logistix Group gained the Fortec franchise for some of the Newcastle postcodes after it bought the goodwill of collapsed haulier Eric Short Haulage (ESH), which joined the network in October 2008.

When it joined, Fortec says it had an excellent credit rating, yet according to the administrator's report, barely a month later it was suffering severe cashflow problems. Fortec MD Neil Hodgson maintains that its vetting procedures are robust. It undertakes a "rigorous financial and operational check" before any prospective member is approved. He adds: "Any financial or operational issues that occur are very swiftly and diligently reviewed."

ESH had been bought from its previous owners - Eric and Patricia Short - in December 2007, with Alex Rawlings taking over as director and Shahid Hussain as secretary. However, former owner Eric Short remained with the business during the handover period - he says that Mansoor Hussain was working at ESH from "day one". He adds: "I was told by [him] that he was now running the company. I assumed he was an employee of [Alex] Rawlings and [Shahid] Hussain."

Hodgson also confirms that it dealt predominantly with Mansoor Hussain  at ESH and understood him to be "responsible for the business". The relationship between Rawlings and Mansoor Hussain is a complex one. Hussain, through Caveman Consultants - then trading as CC Finance - previously provided factoring services to another of Rawlings' companies, European Freight Link, from October 2008; EFL went into administration in November that year.

The pattern was similar at ESH; the administrator's report says the business was experiencing a cash crisis in February 2009 and therefore "it entered into an agreement with... The Logistix Group, and this company now arranged suppliers to maintain the company's fleet". ESH went into administration on 21 April, with its goodwill subsequently sold to The Logistix Group for £25,000.

However, there is some confusion as to when the business transferred: ESH's customers were sent letters in March - a month prior to the administration - telling them that they would now be invoiced by The Logistix Group for all haulage services. VOSA too is in the dark; it says it has not been told about the administration of ESH. It says it received an application on 20 April from Caveman Consultants to add a new operating centre in Newcastle to its O-licence. It says no decision has been made on the application and no interim authority has been granted.

Hodgson adds: "Fortec did not have any evidence of any problems with Eric Short Haulage during the term of membership with the Fortec network. Fortec has a very strong relationship with all its 65 licencees." We asked The Logistix Group to comment on these particular matters, but it has yet to provide a detailed response. However, a statement adds: "An offer was made to bolt Eric Short Haulage onto The Logistix Group in order to save jobs and merge the core work together. This has been done very successfully."