Labour Party in Scotland – Masters of Misappropriation – Public Assets Sold for a Pittance – Need to be Made Answer the Question Where Did All the Money Go?

 

 

 

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The Labour party in Scotland and its abuse of power

From 1997-2010 the Labour Party ruled supreme at Westminster, the newly established parliament at Holyrood and had control of almost all of the local councils in Scotland. The health, wealth, welfare and future of Scots was very much vested with Labour party politicians and councillors.

Their performance was disgraceful and rightly the Scottish electorate turned away from them transferring their votes to the Scottish National Party which has provided good governance of Scotland in difficult financial times imposed on the country, first by the incompetent Alistair Darling then followed up with a vengeance by George Osborne.and the right wing extremists of the Tory party.

In the West of Scotland a number of Labour party politicians and councillors compromised their positions establishing links with unsavoury characters of the underworld.

The bubble burst for Labour at the time hints of criminal activity, in office, of the leader of the Glasgow City Council, Steven Purcell were exposed to public scrutiny. His subsequent departure, in disgrace provided opportunity for discussion of his record in office and this revealed a catalogue of misappropriation of public finance measured in £billions.

I posted a number of articles in my blog over the last 3 years, so that the misdeeds of the Labour party in Scotland, the depths of which are unfathomable will remain in the minds of voters.

The accompanying article outlines the unexplained loss of £600 million from a Hedge Fund managed by a man of business, well known in the West of Scotland. The content reveals the extent of links between so called legitimate business and person(s) of ill repute.

The disgraced Steven Purcell resurfaces together with characters linked to the Motherwell based Dalziel Country Club, (venue for the infamous 2002 Red Rose Dinner) Lack of space prevents  more detailed description of events but the full report is available.

 

 

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8 Jul 2007: Float is set to value Mathon man at £140m.

Scottish entrepreneur Gregory King is set to make a £140million paper fortune with the float of Mathon Capital, just two years after launching the finance company. Mathon, which specialises in offering short-term loans to property developers, plans to raise £200million when it joins the Alternative Investment Market. The Glasgow-based business is expected to be valued at about £350 million, making the 40 per cent stake that founder King will own after the float worth £140million. King, a lawyer whose family has run property finance businesses in Scotland for generations, founded the company in 2005. (https://www.highbeam)

 

 

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29 Mar 2010: Bridging Market Continues to Feel Squeeze as Mathon Collapses

The bridging sector was dealt a blow last week after it was revealed that commercial bridging lender Mathon Finance had been put into administration. Accountant and business adviser P.K.F. was appointed administrator of Mathon. The Glasgow based lender was established in 2004 as an asset based lender providing short term finance to brokers and firms in the commercial property sector. The company’s remaining assets have been sold to Juniper Property Finance by the administrator, which has secured the jobs of the five employees. As a result, the administrator received sufficient funds to enable all creditors to be paid in full with statutory interest. (highbeam.com)

 

 

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Heather Capital: How a £600 Million Hedge Fund Vanished – Big named Investors Ripped Off

A trail of land deals and loans linked to the collapse of a £400 million international investment firm led by Scottish businessman Greg King has been revealed.

In late 2008 and early 2009, amid the financial crisis, worried investors pulled their money out of hedge funds across the board. Heather’s clients were no different. Heather quickly stopped giving them their cash, and it was put into liquidation in 2010. Liquidators took control of Heather and began looking for investors’ money. An examination by the Journal has found that some of the money appears to have ended up back in Glasgow, far from the world of high finance.

A chief beneficiary appears to have been Mr. King himself. According to Heather’s financial reports filed at the Isle of Man’s companies registry, he personally took nearly £52 million in fees between 2005 and 2008. The money was paid to a British Virgin Islands company controlled by Mr. King, and the amounts were in large part justified by Heather’s supposedly sterling performance. But performance turned out to be anything but. In 2008, according to the accounts, Heather wrote down £76 million on its loans and £92 million on foreign-exchange losses. There was a pattern. Heather would make large loans, ostensibly for property development. The loans often wouldn’t be paid back, leaving the beneficiaries with the cash. Over the years, much of the cash Heather raised from investors appears to have been disbursed this way.

The probe centred on loans, to develop plots of wasteland and derelict buildings across central Scotland (valued at £336 million) made through Mathon Ltd, a firm linked to Heather Capital (later renamed Harvest Finance), which, it is claimed claimed were bogus and designed to hide evidence that cash had been stolen by “one or more of the directors”. . Liquidators demanded repayment of 42 loans and repossessed secured properties which had been valued at £161million. But they were shocked when the properties sold for just £8million.

Forensic accountants and police are scouring the loans and four men including King, 46, solicitor Andrew Sobolewski, 54, accountant Andrew Miller, 62, and Scott Carmichael, 41, have been reported to the procurator fiscal.

Heather Capital is registered on the Isle of Man where liquidators Ernst & Young have lodged a claim for £100 million against the fund’s auditors KPMG in a bid to claw back cash for investors from around the world. Papers lodged at the Courts of Justice claim that KPMG should have been aware that Heather was being operated in “a dishonest manner”.

Ernst & Young refused to comment on their professional negligence claim against KPMG. A spokesman for KPMG said: “We don’t think the claim has any merit and we intend to defend it vigorously. “We stand by the quality of our work.”

Civil proceedings in the High Court in London have raised the possibility of fraud. In a case in which Mathon’s liquidators sought disclosure of documents, the liquidators said properties valued on Mathon’s books at around £161 million had been sold for just £8 million. They alleged that the loan book was a sham concocted to hide the fact that money may have been embezzled.

The High Court judge hearing the dispute concluded there is strong indication that “fraudulent conduct exists even though the precise nature of the fraud and the identities of those involved still needs to be ascertained.” Investors, meanwhile, have been left with few answers.

 

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The under-noted West of Scotland businessmen secured major cash loans (against derelict land and rundown properties) from Mathon ltd:

 

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The Rea Brothers

Five companies that received 10 loans from Mathon listed boxing promoter Mario Rea as a director or secretary. Another loan was made to a company of which Mario’s twin brother, Carlo, was director and cousin Anthony was secretary. Regulatory filings show that 9 of these 11 loans are still outstanding. The twins were targeted by the Scottish police drugs squad in 2007 during a major money laundering investigation but charges were dropped by the Crown.

They ran several firms in Lanarkshire and formerly owned the Dalziel Park country club which went under owing £2.5 million in 2010. Mario was banned from being a company director for seven years. DMR Assets Ltd, which had Mario Rea, 36, as a director and his twin Carlo as secretary, was given a £4.84 million loan by Mathon, secured against a property in Belhaven Terrace, Wishaw in 2008. The house was later sold for just £425k. When DMR went bust in 2009, administrators were able to claw back just £1.85 million of the loan. Mario Rea was also a director and secretary of Glenavon (Scotland) Ltd which secured a loan from Mathon, against The Winning Post – an abandoned pub in Calderbank, near Airdrie – in 2008. The building was demolished in 2011. The land remains undeveloped. Mario was also a director of Rea Property and Developments Ltd which received a loan from Mathon, secured against waste ground in Main Street, Plains, in 2007. The firm went into liquidation a year after the loan was granted. (1) In 2012 Mario was told by police that IRA hit-men were plotting to kill him over claims he duped them in a tobacco deal.In 2013 both Mario and his twin were convicted of assaulting a member of the Lyons’ crime clan at a cinema a year.

 

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Allan Stewart and Stephen McKenna

The pair once claimed that they wanted to give away 40 per cent of their income to good causes and boasted about their charity work. They gave a job to shamed council chief Steven Purcell in 2010 but denied the appointment was “payback” for a favourable land deal.

Stewart has been declared bankrupt twice. The duo secured a total of 11 loans from Mathon. Nothing paid back. Brechin Developments Ltd, another firm run by the pair, got two separate loans secured against St Columba’s and Maison Dieu churches in Brechin. These were never paid back. McKenna, of Pollokshields, Glasgow, was sequestrated last year over debts totalling £796k. Stewart was banned from being a company director for seven years in the 1990s. Stewart and McKenna Ltd were also taken to court in 2010 over an unpaid tax bill of almost £80k.

 

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Lawrence Gillick

The son a Glasgow Rangers legend, Lawrence, known as Larry, was declared bankrupt following the collapse of a greyhound racing track in Ayr.

He was a director of Towndale Glasgow (Ltd) when they received a loan, in 2006 against derelict land on Yoker Ferry Road, Glasgow – the site of the former Wharf pub. The firm went into administration in 2008.

He was at the centre of a Scottish Crime and Drugs Enforcement Agency operation which saw £6.5 million of Russian mafia money seized from Scottish bank accounts in 2010. Gillick, (who joined ex–England boss Terry Venables in a failed bid to buy Spurs in 1991) attempted to transfer the cash and claimed he was building an oil refinery in Iraq. But police suspected the money was part of a laundering scam involving transfers between accounts in Latvia, Hungary, Russia, America and Scotland and grabbed the cash. It later emerged that some of the money had been transferred to US firms with links to organised crime.

In 1995 Gillick was involved in a scheme which led to the Salvation Army being conned out of more than £8.8 million in an alleged fraud. The charity took legal action forcing him to repay the cash.  (manxforums.com)

 

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Follow-up

5 Feb 2015: Four Scots investigated over £400million collapse of hedge fund

Heather Capital director Gregory King and three associates are being probed over the firm’s collapse, which was related to loans made by Mathon Finance Ltd against a series of land plots in central Scotland. It is claimed the plots were often of low value, despite huge loans being made by Mathon for development which allegedly never happened. Police said the men are the subject of a report to the procurator fiscal. (Daily Record)

 

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8 Feb 2015: Whistle-blower It Was a Cover-Up Not an Investigation

Paul Delaney, a former SNP councillor in North Lanarkshire, is not surprised to learn the parcel of land in Plains is now part of the huge fraud inquiry. But blowing the whistle cost Paul his political career and he’s been out in the cold since. He said: “I wasn’t aware of the latest development but it doesn’t surprise me. I really hope that people in government listen to this now. “There have been things going wrong for years in the council and no one has the guts to deal with it. Other people were suspected at the time but everything was covered up. (highbeam.com)

 

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9 Feb 2015: HSBC helped wealthy clients cheat the UK out of millions of pounds of tax, whistle-blower reveals

Britain’s biggest bank helped wealthy clients cheat the UK out of millions of pounds in tax, a whistle-blower has revealed. Thousands of leaked accounts from HSBC’s private bank in Switzerland show bankers helped clients evade tax and offered deals to help tax dodgers stay ahead of the law. HSBC admitted that some individuals took advantage of bank secrecy to hold undeclared accounts but said it has now “fundamentally changed”.

The documents, stolen in 2007 by a computer expert working for HSBC in Geneva, contain details of more than 100,000 clients from around the world. Offshore accounts are not illegal, but many people use them to hide cash from the tax authorities. Though tax avoidance is legal, deliberately hiding money to evade tax is not. (Daily Record)

 

 

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15 Feb 2015: Scot Behind Pounds £150k Tory Donation in Police Probe over Alleged Embezzlement

One of the Conservative Party’s biggest Scottish donors is being investigated over “alleged embezzlement” at a finance firm linked to a collapsed £400m hedge fund, it has emerged. Lawyer Andrew Sobolewski, 56, from Bridge of Weir in Renfrewshire, is the subject of a police report to the Procurator Fiscal. He and three other men have been reported in relation to Mathon Ltd, a former finance company that loaned millions to Scottish property developers – deals later described in court papers as “a fabrication and a sham”. Sobolewski was a director and chief executive of Mathon Ltd for part of the relevant period. It has now emerged that, through a connected company, Sobolewski gave the Tories Pounds £150k on the eve of the last general election. (highbeam.com)

 

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22 Feb 2015: Almost £3m of Investors’ Cash Disappeared When a Plan to Convert a House into a Care Home Turned to Dust. The Man with the Plan, Ex-Drugs Suspect Barry Cushley

A former drugs and money laundering suspect is the latest businessman linked to dubious loans made by a £400 million hedge fund before it collapsed. Bankrupt Barry Cushley applied for planning permission at one of the 11 sites across Scotland whose owners were lent millions by Heather Capital, led by Greg King. Like the others, the ambitious plans for the site did not materialise but most of the money was never recovered. A major police investigation has been launched into Heather Capital, the offshore financial empire run by King, from Glasgow. His fund lent millions of pounds to develop plots of wasteland and derelict buildings across central Scotland. (highbeam.com)

 

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29 Mar 2015: Blue-chip bankers lose £210m in hedge fund that collapsed after investing in derelict land in Scotland

The biggest names in world banking and finance lost tens of millions of pounds after the collapse of an investment firm connected to Greg King’s Heather Capital hedge fund. The extent to which major investors had backed Isle of Man-registered Aarkad Plc, who channelled money into Heather, are laid bare in documents seen by the Sunday Mail. Some of Aarkad’s global investors held stakes valued at up to £50million.

The scale of the stakes can be revealed as the police ­continue to probe the ­collapse of investment firms led by King. His Heather Capital fund lent millions of pounds to develop wasteland and ­derelict buildings in central Scotland. But the sites remain empty while ­investors search for their missing millions. Aarkad was set up to act as a “feeder fund” – used by hedge funds as a tax-efficient way to pool investors’ cash – for Heather. After Heather’s collapse, a ­liquidator was appointed to wind up Aarkad in 2010.

Aarkad’s assets had been valued at £210million in 2008 before Heather ran into difficulties. Heather was thought to be worth £500million when it went bust. It’s thought investors are unlikely to receive any of their cash back.

King was listed as a director of Aarkad at the Isle of Man’s Companies Registry. Records show his address was in ­Gibraltar. The list of investors on the official ­register of shareholders from December 2009 includes major financial groups or their subsidiaries, such as UBS Credit Suisse, HSBC Private Bank, Bank Julius Baer & Co and the private banking arm of the Edmond de Rothschild group.

Dutch-based Citco – a specialist ­custodian bank – held a stake worth around £50million for ­clients. The list also includes private Swiss banks. In some cases, financial institutions will have invested in their own right. But in others they will have been holding shares for clients. A spokesman for Julius Baer – who held around ­£4million of shares– said: “The shares were ­purchased by the bank on behalf of ­clients.”

Last month, HSBC Private Bank in Switzerland issued an apology after ­helping their rich ­British clients to avoid paying tax and launder cash. One financial expert said: “The share register shows how much money was pouring into Aarkad and subsequently Heather. It’s staggering to think that these investors have lost all their cash.”

A number of ­private investors, ­including two US doctors, are on the shareholder list. Dr Paul Laraia, from New Hampshire and Dr Robert Hillberg, from ­Boston, each invested around £150k.

King, of Newton Mearns, Glasgow, is also on the list, although his stake, which was worth around £80k in 2008, was modest compared to most investors. Ernst and Young are trying to recover Heather Capital’s cash

Peter Watson,(suspended from his job as a part-time sheriff), also had shares worth around £200k. Lawyer Watson was a ­director of Heather’s lending arm Mathon Ltd for less than a year. He’s been de-benched pending a court case into the fund’s ­collapse. His former firm, Levy & McRae, is one of several being sued by Heather’s ­liquidator, Ernst & Young, in a civil case to try to find the missing millions.

Ernst & Young have also launched an action against the fund’s auditor KPMG. Lawyer Andrew Sobolewski also had a stake in Aarkad worth around £200k. King, Sobolewski, accountant Andrew Miller, and ­property developer Scott Carmichael have all been reported to the procurator ­fiscal in connection with allegations of embezzlement concerning Mathon.  A Crown Office spokesman said: “The report remains under consideration.” (Daily Record)

 

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17 May 2015: Scots tycoon Greg King at the centre of £400m hedge fund collapse refuses to apologise to investors on flying visit home

The elusive tycoon at the centre of a criminal probe into a £400million hedge fund collapse has jetted back into Scotland. But Greg King refused to apologise to investors after returning to his native Glasgow on a flying visit.Outside his parents’ mansion on the city’s south side, the multi-millionaire, who denies any wrong-doing, referred all questions to blue-chip legal firm Carter Ruck.It is the first time he has been seen in Scotland since the crash of his hedge fund Heather Capital was revealed in December.

King, 46, lawyer Andrew Sobolewski, accountant Andrew Millar and property expert Scott Carmichael were named in a police report sent to the Crown Office. Investors put money into the fund and Heather gave subsidiary firm Mathon huge loans for developments in Scotland. It is claimed the plots were low value and developments never happened. Asked about the collapse, King replied: “I am only back in Scotland for one day but any comment should come from my lawyers Carter Ruck.”

King lives in the gated La Zagaleta complex in Marbella, Spain, where properties sell for up to £20million. He is rarely in Scotland. He set up Heather in 2004. They went into liquidation six years later. He paid himself about £34million between 2005 and 2008.

Liquidators Ernst & Young claim the fund’s auditors KPMG should have been aware it was being run fraudulently. They claimed in court papers that many of the loans were “a fabrication and a sham”. They say properties valued on the firm’s books at £161million had been sold for just £8million. Investors are unlikely to see any of their money.

Yesterday, the Crown Office said a report in relation to four men “remains under consideration”. Ernst & Young declined to comment.

Investors’ £400m disappeared on financial merry-go-round When Greg King launched his Heather Capital hedge fund in 2004, clients flocked to invest. The fund then handed huge loans to developers through subsidiary firm Mathon.

When Heather went out of business in 2010, accountants found the hedge fund’s cash had been paid in loans to firms with links to controversial businessmen Mario and Carlo Rea, Lawrence Gillick and Allan Stewart.

The loans were secured against derelict land and rundown properties. Liquidators for Mathon, renamed Harvest, claim their loan book was “a sham designed to conceal the fact earlier funds borrowed from Heather may have been embezzled by one or more of the directors”.

A multi-million-pound writ was served on law firm Levy & McRae by Ernst & Young over their role in the scandal. Their ex senior partner Peter Watson, (who was suspended as a sheriff), was briefly a Mathon director.

 

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References:

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8 Feb 2015: Whistle-blower – It Was a Cover-up not an Investigation

The whistle-blower who sparked a corruption probe into the planning decision says his allegations were covered up instead of being fully investigated. Paul Delaney, a former SNP councillor in North Lanarkshire, is not surprised to learn the parcel of land in Plains is now part of the huge fraud inquiry. But blowing the whistle cost Paul his political career and he’s been out in the cold since. He said: “I wasn’t aware of the latest development but it doesn’t surprise me. I really hope that people in government listen to this now. “There have been things going wrong for years in the council and no one has the guts to deal with it. Other people were suspected at the time but everything was covered up. “Of course I feel bitter. I lost everything for exposing something that the public should have known all about. I was hung out to dry.”

In 2010 Paul made public some information on a disciplinary case involving council planner Danny Welsh. Welsh had been lavished with gifts by Mario Rea while involved with his application to build a new housing development. He had holidayed in Rea’s plush Spanish villa and received free tickets for Celtic games as the businessman sought clearance to build 41 houses in Plains. Welsh was sacked when it emerged he had accepted the gifts. He took his bosses to an employment tribunal, claiming he had been unfairly dismissed. But a judge said Welsh lacked credibility and dismissed his claim. Judge Raymond Williamson added: “The inappropriateness of a planning official accepting gifts from property developers ought to be self-evident.”

Welsh and Rea were investigated for corruption by the Scottish Crime and Drug Enforcement Agency and were reported to the Crown Office but a prosecution was not pursued due to “insufficient evidence”. Meanwhile, Paul found himself suspended by the Standards Commission for leaking confidential documents and he was marginalised by his own party till he lost his council seat. Now a carer for his elderly mother, Paul said: “I was brought up to believe that when you were honest and tried to do something decent, people would get behind you and push you on. “Not in this case. It was a case of, ‘You’re on your own, mate.’ “The SNP basically told me that I’d done something wrong and I would have to pay for it. As far as they were concerned, the Standards Commission were correct and I had no right to release this information.” The land in question, which has never been developed, is one of 11 sites in Scotland at the centre of a large-scale investigation into the activities of collapsed hedge fund Heather Capital. (Sunday Mail)

 

 

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