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Polly Peck founder jailed for 10 years

22nd Aug 2012
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Nearly 20 years after he was first charged with 66 counts for theft, fraud and false accounting, Polly Peck founder Asil Nadir was sentenced to 10 years in jail after convictions on 10 counts of theft at the Old Bailey this week. 

Nadir fled the UK shortly before he was due to stand trial in 1993 for alleged thefts from the company. The prosecution claimed Nadir took as much as £150m from PPI between 1987 and 1990, but brought forward 13 specimen charges relating £34m after he returned to the UK in November 2010.

On Monday (20 August), after a trial lasting seven months, the jury found him guilty on three charges, but found him not guilty of stealing £2.5m in December 1989 to pay tax to the Inland Revenue, the BBC reported. But there were still more charges to decide; when they reconvened on Tuesday morning, Nadir was convicted on seven more charges.

On Thursday, Mr Justice Holroyde handed down five-year sentences for the convictions listed below, which the judge ruled should be served in two consecutive five-year stretches. Nadir will be eligible for release after serving half of his total sentance. But he will also have to face a hearing into his financial situation and legal costs next month, and may be foreced to pay compensation to Polly Peck's administrators, PwC.

"The company's success was in many ways your success," the judge told Nadir. "But the company's money was not your money. You knew that. You nonetheless helped yourself to it and committed theft on a grand scale."

The judge said Nadir was keen to blame everyone but himself for the Polly Peck collapse, and  failed to show any remorse when he returned to Britain, the BBC reported.

The thefts for which Nadir was found guilty were:

  • £1.3m from PPI to pay for company shares in June 1989
  • £1m from PPI to pay for antiques in December 1989
  • £3.25m from PPI in March 1990 and placing it in 19 different end destinations
  • £5.15m from PPI for the purchase of shares to prop up the company in August 1987
  • £5m from PPI to buy shares in the Gunaydin newspaper group in Turkey in July 1988
  • £1.3m from PPI to buy shares in November 1988
  • £2.6m from PPI to pay for shares in travel company Noble Raredon in March 1989
  • £4m from PPI to invest in his investment trust which held shares in PPI in June 1989
  • £5m from PPI for various personal uses in August 1990
  • $500,000 from PPI to buy shares in an educational video company.

For those who have little memory of the 1980 boom days, Nadir was the founder and mastermind behind the conglomerate Polly Peck International, which ultimately crashed in October 1990 with debts of more than half a billion pounds. The episode was one of several scandals that prompted corporate governance, reporting and accountancy regulation reforms in the 1990s. The scandal even has its own web archive on a page maintained by accounting professor Prem Sikka.

When administrators from Coopers & Lybrand arrived, they found few internal controls in place to prevent Nadir transferring sums from the company’s London bank accounts. While the company had reported to have had net group assets of more than £900m at the end of June 1990, £700m of it, including inter-company interest worth more than £200m, due from Cypriot and Turkish companies within the group were found to be irrecoverable.

The group’s auditor, BDO Stoy Hayward ultimately admitted in 2002 to 10 complaints arising from its audits of Polly Peck in 1988-9, and was fined £75,000 with £250,000 costs by the Joint Disciplinary Scheme. Audits of PPI subsidiaries in Northern Cyprus and Turkey were carried out by local firm Erdal & Co, three of whose partners were also ordered to pay £125,000 towards the cost of the JDS investigation.


Replies (13)

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By Steve-EBL
23rd Aug 2012 17:40

who else prosecuted?

Odd that he came back to attempt to clear his name.  Surely someone on the finance side was helping him, was any other staff ever prosecuted?

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By pembo
24th Aug 2012 10:32


similar to the Maxwell type scenario where unbelievably he was sole signatory. What was that they taught us on day 1 auditing at FT about division of duties and the risk of concentration of power in one person. What was that also about deemed knowledge and collective responsibility of a board of directors...what the hell were they doing while this was going on.If they didn't know they should have.

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By andrew.hyde
24th Aug 2012 10:45

Questioning success

It seems to me that there is an understandable reluctance to challenge behaviour that appears to be resulting in successful business.  We saw this very clearly in the Barings Bank/Nick Leeson episode (though of course that was a very different case).  So I agree with pembo that applying the very basic principles - day 1 auditing as he says - is something that has to be done even when the money is (apparently) rolling in faster than anyone can spend it.

Also agree with Steve that it was odd that he came back.  Should have tried for asylum in Ecuador I suppose.

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By AnnaKournikovasKnickers
24th Aug 2012 11:29

10 years

My favourite IFA went down for 8 years at Bristol Crown Court in 2010 for 'diverting' 800K from deceased's estates intended for charities to the local Porsche dealer; (I put it in his accounts as a 'porche'). A victimless crime one would have thought (given what charities do with legacies when they get them). What sort of 'tarrif' is 10 years for this amount of sponderooli? Hasn't the judge heard of the concept of parri passu?



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By carnmores
24th Aug 2012 11:41

yes there were earlier convictions
Unusual to have consecutive rather than concurrent terms maybe the judge had friends with PPI shares it was total wipe out

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By andrew.hyde
24th Aug 2012 11:49

In view of his age...

...perhaps Asil could get his sentence reduced on appeal to 'Life'

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By alun
24th Aug 2012 12:23

Corporate Governance

The Polly Peck case is often sited as one that has instigated "corporate governance" changes to the way businesses should conduct themselves at board level.


However 22 years later the laws we have are still not strong enough to deter the constant abuse of power in board-room.


No doubt there will be millions of pounds spent of tax-payers spent on further reviews and enquires and people like will still be stay the same thing in 20 years time.




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By Vinoo
24th Aug 2012 12:47

20 years of "freedom" was a

20 years of "freedom" was a long period for Asil Nadir- but cannot figure out why he came back to clear his name.He must have known that he cannot prove his innocence

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By mikewhit
24th Aug 2012 14:22


I do accord the guy a small amount of respect for having the guts to come back and face the music.

Obviously the original events are reprehensible and were far from 'victimless', but getting things sorted out officially must be satisfying for many parties.

He still does not appear to consider he did things that were wrong, though.

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By lawco
25th Aug 2012 09:35


I would be interested to know if the SFO thought about confronting Nadir and giving him an option to fix things in return for mitigating the charges against him?


It seems SFO and other forces like them are often more interested in scoring points for themselves than protecting the public.  I can't help feeling if such an approach was taken and kept confidential for as long as possible, rather than carrying out a hugely public dawn raid, the catastrophic collapse of the company might not have happened and the public's losses would have to some extent been mitigated.  Nadir would have got off lightly perhaps but the public would have been protected.

I have seen this before in far more minor instances admittedly, where some sensibly asked questions would have saved a lot of trouble and expense for the authorities potentially with a far better outcome possible for all.

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By AnnaKournikovasKnickers
25th Aug 2012 12:27

Guts to come back

Have any of you guys ever been to north Cyprus?  As Bette Davis said in the movie:"What a dump"

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Chris M
By mr. mischief
27th Aug 2012 12:14

agree lawco

When it comes to the shareholders, it is the SFO raid in this case which triggered the banks lack of support and hence the collapse of the price.

That's not to say this company's corporate gorvernance was anything other than rubbish.  But even if he siphoned off £300m - which is the top end of estimates - that is peanuts and not enough to bankrupt the place.

Plenty of companies today have equally poor governance and risk management, more or less every single major bank for example.  The real problem is that being a FTSE or S&P500 director is a one way bet. 

When earnings go up you get rewarded massively.  When they go down you get rewarded massively.  When the company fails you get rewarded massively.

What we need is pretty much strict liability.  For any major failure, all the directors' assets are immediately frozen other than for living expenses and legal costs.  They need funds for legal costs because they are going to jail unless they can show they took reasonable steps to run the company properly.

The intention is that no-one goes to prison or loses all their assets.  But that a big deterrent like this stops the daft decisions in the first place.  No more one way betting.

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Replying to DJKL:
By Steve-EBL
27th Aug 2012 15:31

This theft of hundreds of millions of pounds by the most senior director, couldn't be dealt with on the hush. Who would have signed the accounts of as true and fair for the amount of years required to replace the missing cash. Who would have tamed nadir? Imagine if investors got wind that the SFO had covered it up, and had therfore facilitated their continued lending to a company that might have failed regardless? It seems to me the reckless behaviour of nadir would have led to significant other problems down the line.

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