Expensive gifts, luxurious foreign travel and high-class escorts. That was all part of the package for ex-HBOS bankers to develop relationships which allowed co-conspirators to take control of troubled businesses in a fraud that cost the UK bank £245 million ($317 million), according to a Bloomberg report.
“Assisted” Ailing Businesses
Turnaround consultant David Mills is currently on trial, accused of establishing a “corrupt relationship” with Lyndon Scourfield, the lead director of HBOS’s tarnished assets division.
The pair reportedly used Mills’ firm between 2003 and 2007 to take over ailing businesses, increasing the companies’ debts to unsustainable levels, all while commanding substantial fees.
The prosecution said that the rewards provided by Mills to Scourfield “took the form of money transfers, cash, expensive gifts, use of an American Express card for personal spending, unauthorised and inappropriately lavish hospitality, luxurious foreign travel and sexual encounters with high-class escorts.”
HBOS was part of one of the most contentious episodes of Britain’s financial crisis that led to a state-brokered takeover from Lloyds Banking Group in 2009 and a £20.3 billion taxpayer bailout.
Scourfield informed his troubled clients that the bank would only continue to support their companies if they hired Mills. The debt at the ailing companies would go through the roof, with Mills taking large payments and splitting them with Scourfield using gifts.
At least 28 million pounds passed through accounts and businesses linked to him and his wife as a result of the fraud. Bancroft meanwhile was paid around £1 million in traceable payments from Mills’ company, according to the prosecution.
Charges
David Mills has been charged with six allegations of conspiracy to corrupt, fraudulent trading and conspiracy to conceal criminal property while his wife, Alison, faces two counts. Michael Bancroft and John Cartwright, both businessmen used by Mills’s turnaround consultancy, are accused of conspiracy to corrupt, fraudulent trading and conspiracy to conceal criminal property. Scourfield’s colleague Mark Dobson and accountant Jonathan Cohen face the same charges.
A pattern emerged of “already vulnerable businesses being further run down by incompetency or as a deliberate policy”, and increasing levels of bank funding “improperly diverted between companies”, according to the prosecution.
“The case is just as much about what happened to the businesses under the mismanagement of Mills as it is about the corrupt relationships which lay behind the fraudulent trading”.
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