Not so white knights strip companies bare. By Dawn Smith

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Fraudsters disguised as white knights are preying on companies in financial trouble, warns Grant Thornton.

The firm's Recovery & Reorganisation department has noted an increasing trend for fraudsters to buy controlling stakes in companies, then strip them of their most valuable assets or run up a mountain of credit, then disappear with a tidy profit.

"The scam, which is growing in popularity, is a fraudsters' dream, as it rarely gets adequately pursued", says Nick Wood, a Recovery & Reorganisation partner at Grant Thornton.

"Once a company is stripped bare of its assets there are no assets remaining to allow an insolvency practitioner to investigate and pursue the fraudsters. In essence, creditors are usually reluctant to fund insolvency practitioners in an investigation to avoid throwing goo...

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16th Feb 2006 14:36

Offshore
No doubt Grant Thornton seek to avoid this type of person, but they are big players in the offshore market.

Will they withdraw from it, knowing it is so often used for the purposes of abuse, as is the case here? If they did their comments would have bite. If not, it's hard to see them as credible comment.

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By admin
17th Feb 2006 12:03

There are other risks ... ...
The perpetrators of this type of thing may use the firms' bank accounts for Money Laundering and similar purposes.

While great attention has been given during the last few years to establishing the bona fides of those establishing bank accounts there is a loophole in some banks' systems on change of ownership.

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