Polly Peck founder jailed for 10 years
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.
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