Peter Grant – 2022 Speech on Economic Crime and Corporate Transparency Bill
The speech made by Peter Grant, the SNP MP for Glenrothes, in the House of Commons on 13 October 2022.
Being a Scot, and in deference to the sensitivities of supporters of Celtic, Rangers and the Scottish women’s football team, I will maybe not talk about football, if that is okay by everybody else. Hopefully we will still have somebody left in Europe after tonight.
I welcome this long overdue Bill, but let us not kid on that it was made necessary by the illegal war crimes that have been committed in Ukraine over the past year, or even by the illegal war crimes that started in 2014. This Bill was needed 20 years ago, if not earlier. I welcome it because it gives us the opportunity to turn Companies House into what most people probably thought it was: an effective regulator playing its part in the fight against fraud, rather than an innocent bystander that watches while companies on its register scam our constituents out of billions of pounds every year and enable some of the most evil regimes and criminal gangs on the planet. Companies House has become a spectator because this Government and generations of previous Governments could not be bothered to give it the powers to be anything else.
My criticism of the Bill, like that of most other hon. Members who have spoken today, is that in too many areas it does not go anywhere near far enough. As has been mentioned, it is completely silent about one of the biggest obstacles to tackling corporate fraud: the fact that literally any company can easily dodge the existing requirements, and the requirements in the Bill, just by making sure that its ultimate owner is not a human being but a brass nameplate on the door of a building, probably in some dodgy Crown dependency. And while we are talking about Crown dependencies, why is it that we still allow Crown dependencies and British overseas territories to be such willing enablers of the evil perpetrated by Putin and so many others? That has to stop.
A few hon. Members have reminded us that, as well as enabling large-scale acts of barbarity around the world, economic crime hits our constituents very hard. I do not apologise for bringing up Blackmore Bond again; I will keep bringing it up until Phillip Nunn and Patrick McCreesh have been properly brought to book. They were able to move on from the £1 million they had made on the fringes of the London Capital & Finance fraud to set up their very own £46 million scam called Blackmore Bond.
At about that time, Nunn and McCreesh were directors of 35 companies registered at Companies House. Last time I checked, those 35 companies had collected 59 formal notices of disciplinary action—59 formal notices of compulsory wind-up—because they were acting illegally. They were failing to comply even with the woefully weak requirements currently imposed by Companies House. There was no way of flagging up the fact that the same directors were in charge of all those defaulting companies. There was no way of totting up their offences, like bookings for a footballer or speeding points for a motorist. Indeed, it was as if the motorist were able to get off by arguing that his licence could not be taken away because each time he was caught speeding he was in a different car.
We need to tighten that up. We need to be able to identify those who are directors of several companies that are all in default. There must be an accumulation of culpability; there must be speedy action, which means not just closing down the companies—that is often exactly what the directors want to happen, and it was certainly what Nunn and McCreesh wanted to happen—but taking effective sanctions against the directors.
A year or two before Blackmore Bond finally collapsed, it said in the accounts that it submitted to Companies House that it was relying on incoming money from future investors to pay back what it had previously claimed was guaranteed money to previous investors. In other words, the directors sent a document to Companies House, which put it on the website, saying, “We are a Ponzi scheme.” No one at Companies House noticed, because it was no one’s job to notice.
The auditors who signed off the accounts of one part of the group, which was a plc, were required to express a view on whether the company could be truly regarded as a going concern, but they were under no obligation to run up a red flag and say, “Not only can we not be sure that it is a going concern, but this company is designed to collapse, and it is going to collapse very soon.” Because they were under no obligation to tell anyone, client confidentiality meant that they were under an obligation to tell no one.
I commend to Members who have not seen it the BBC’s “Panorama” programme on Blackmore Bond—and not just because I am in it for about 10 seconds; the rest of it is very interesting as well. From that programme, I learned that Phillip Nunn—poor diddums—had been declared bankrupt. What a shame! I checked the Companies House records this morning, and found that he was still a registered director of two companies. I thought it was an offence for a bankrupt person to be a director of a company. Why has no one picked up on that? Perhaps we can at least find something for him to be charged with while the Serious Fraud Office and others are carrying out their checks.
However, you do not need to set up a company to get rich. Mr Nunn’s latest scheme is to set himself up on social media as some kind of lifestyle self-help guru. To be fair, helping himself is something that he seems to be quite good at. No one could fail to see what this is about. He is going online in order to reach a much wider audience. He comes across as very plausible and very personable, but he is grooming innocent victims, not just in the UK but all over the world, until he is ready to say to them, very confidentially, “Do not tell anyone else, but I have just found about a brilliant investment scheme: you are guaranteed to get money back.” It will be Blackmore Bond and LCF all over again, and at present there seems to be nothing anyone can do to stop it. They know it is going to happen, but they have to wait until it is too late and then try to console the victims.
Let me draw attention to one feature of many corporate scams and frauds. Instead of setting up one company, people set up a whole sequence of small companies. They run a company for about 18 months to two years, and just at the point when they have to publish a set of accounts, they close it down, shift what is left of the assets to a different company and start all over again. It is possible to run a business for 20 years without ever having to tell Companies House, or anyone else, anything about the money going into and out of the accounts. That should raise the reddest of red flags. If the same one or two directors are seen to be setting up a sequence of fairly small companies that never seem to do anything and are then wound up, Companies House should be looking at that, as should the fraud squad, because 90% of the time fraud will be the answer.
Between 2019 and 2022, a gentleman called Richard Philip Wells set up 24 such companies. Members who are interested in motor racing may recognise the name, because Richard Wells owns a motor racing team; he is not a poor man. Most of those 24 companies have never filed a set of accounts, and most have lasted for less than two years before being wound up. The few that have filed accounts have filed them on the basis of being dormant: it is basically, “Nothing to report, Sir.” But just how dormant were those companies?
On 15 November 2020 two of his companies, SHP Litigation Ltd and SHP Security Trustee Ltd, were set up on the same day. Companies House knows that two weeks later, on 30 November 2020, SHP Litigation granted a charge—effectively, a mortgage—to SHP Security Trustee. The charge document was signed on behalf of one company by its only director, Richard Wells, and a wee bit further down the page Richard Wells signed on behalf of the other company to confirm that he agreed with the conditions of the money that he was lending to himself.
A few months later, the same Richard Wells certified on the accounts of both companies that they had not traded, that they had been dormant and that they had carried out no activities during the previous 12 months. One of the statements that he submitted to Companies House has to be a lie. We cannot possibly have money being lent back and forth between two companies and then say that the companies did nothing—unless a company that did not have money lent money it did not have, secured against the assets of another company that had no assets at all. There is clearly something very sinister going on in that network of companies. On 5 July 2022, he shut down both companies, because by that time they had achieved their purpose.
It is noticeable that a lot of Richard Wells’ more recent companies had SHP in their names. One of them, SHP Capital Holdings Ltd, he set up on 29 November 2019. He used that company to buy a funeral plan company called Safe Hands Plans Ltd, which we have all now heard of. Why would somebody buy a funeral plan company that would never be able to comply with the Financial Conduct Authority’s requirements for the running of a funeral plan company after July 2022? Why spend money buying a company when he knew it would be illegal to operate less than two years later? The reason was that he was not interested in the company; he was only interested in an associated company where its money lived.
That money was not the company’s, but the customers’. The previous directors had lied to the customers that the money was held securely in an independent trust, but it was held in an associated company, with the same shareholders and the same directors. One of Mr Wells’ first acts was to sack the fund manager and move the fund management to a different, newly set up company that was run by his best mate. Fast forward a couple of years, and the whole façade crumbles. Safe Hands Plans goes into administration, thousands of people discover that their funeral plan money has disappeared and nobody knows where it has gone. I know where it has gone, Madam Deputy Speaker, and so does the Serious Fraud Office. I hope that it can quickly establish that sufficiently to bring charges.
There is no legitimate, lawful business reason for Wells, Nunn, McCreesh or dozens of others to set up so many tiny companies for a relatively small-scale operation. Companies House records show all the hallmarks of the kind of company set-up that is a red flag for money laundering, but nobody at Companies House spotted it. Nobody looked more closely to see whether there was a legitimate reason for it or whether it was a scam in preparation, because nobody in this place had ever made it the job of anybody at Companies House to prevent fraud, rather than to try to chase down the money afterwards.
I ask the Minister to confirm, in summing up, where in the Bill Companies House is given the responsibility, the legal powers and the resources to identify and investigate suspicious patterns of company formation and dissolution. If it is not in the Bill just now, will the Government undertake to bring forward an amendment in Committee to enable that?
I also ask the Government to consider some other amendments. HMRC has the power to look through the labyrinth of a company’s structure and tax the company based on what it does, rather than how it structures itself. Why do we not give the same powers to bodies such as Companies House? Why do we not extend the circumstances in which directors can be held personally and speedily liable in civil and criminal courts for their misconduct? Why do we not just outright ban the registration of any company whose ultimate owner is not a person with a pulse? The Minister may be able to explain why it is sometimes necessary to allow a computer bot to own a company that trades in the United Kingdom. I cannot think of an answer, but I hope he can enlighten me on that.
Why do we not base the reporting and audit requirements on the total size of the undertaking, rather than ignoring the fact that if we chop a big company into 30 bits, they all become so wee that they do not have to publish accounts and nobody is allowed to see what is going on? When the Financial Reporting Council publishes a sanction against a company’s auditors because of some flaw in the company’s accounts, why not also require that company to lodge the same document at Companies House so it appears on the front page of the record, rather than as a footnote on page 26 of the accounts in a couple of years’ time?
The Bill will make things better, but it will not make them anywhere near better enough. There is very little in the Bill that I am opposed to, but there is a lot that I am disappointed not to see in it. I became interested in this subject, as I suspect many Members did, after having people break down in my surgery because they had been cleaned out by people like Wells, Nunn, McCreesh and so many others. It became obvious to me quite quickly what changes needed to be made to legislation, first to stop these chancers scamming our constituents, and secondly to make sure that those who do it in the future and those who have done it in the past are brought speedily to a court of law, dealt with and locked up.
If I were the sort of person who broke into someone’s house and stole £1 million, no police force in these islands would rest until I was safely behind bars. If I set up a company and stole £20 million, the chances of me getting away scot-free would be very high indeed. The Bill makes it a wee bit more likely that I would get caught, but if I were criminally minded, it would still be a gamble worth taking. Until we make the law tight enough that economic crime never pays, our constituents will continue to pay the price of our failure.
