A former pension scheme director has been disqualified for 12 years for losing the scheme more than £26m.
Richard Martin Williams was employed by Carrington Wire Limited and in charge of its CWL Defined Benefit Pension Scheme.
Following an investigation by the Insolvency Service, he was charged with failing to make sure it met obligations to members, by letting dormant company Gillico Limited facilitate a series of transactions which enabled a Russian company to avoid its liabilities to the 500 member pension scheme.
Carrington Wire traded from 1924 as a manufacturer of wire products in Yorkshire.
In 2006, OAO Severstal, a Russian company, purchased the entire shareholding of CWL.
Under the terms of the share sale agreement, OAO Severstal guaranteed the Carrington Wire DB scheme for as long as it remained associated with CWL, but CWL was loss making under Severstal’s ownership and in late 2008 the Russian company sought an exit.
Initially, the scheme and its trustees were kept up to date of OAO Severstal’s attempts to exit CWL, but when it was unable to find a third party that would purchase CWL and provide a guarantee for the scheme, OAO Severstal continued to seek an exit without the trustees’ knowledge.
On 16 June 2010, the entire share capital of CWL was purchased by Gillico, a company of which Mr Williams was the sole shareholder and director.
On the same date, and at a time when he knew that CWL would not be able to settle the multi-million pound scheme deficit, Mr Williams was appointed a director of CWL.
Under the terms of the share sale agreement between OAO Severstal and Gillico, a ‘working capital adjustment’ of £400,000 was to be provided by OAO Severstal to Gillico as purchaser of CWL.
Post completion, on 21 June 2010 Gillico’s solicitors received the sum of £400,000 and the following day these monies, net of the legal costs of the share sale/purchase, were transferred to Mr Williams.
These monies - totalling £382,136 - were not paid into CWL and instead, according to Mr Williams, were used by him to repay personal debts and make payment to his wife, from whom he was then separated.
The Pensions Regulator issued a £382,000 contribution notice against Mr Williams at the end of May, having previously announced that an £8.5m settlement had been reached with PAO Severstal and OAO Severstal-Metiz to secure the pension scheme’s future.
At liquidation, CWL had estimated liabilities totalling £26.5m and total deficit of £44.9m, including £17.4m due to shareholders.
In summary, Mr Williams misused his position as a director to: withhold information from relevant parties; provide untruthful promises and statements that assuaged and coerced others; knowingly ignored The Pension Regulator’s advice in relation to security of pension funds on sale/transfer; and corruptly accepted or diverted payment for his part in the scheme.
Cheryl Lambert, chief investigator at the Insolvency Service, said Mr Williams consciously and deliberately ignored the interests and enquiries of others, withholding information and also doing the opposite of what was advised and required by the regulator.
“He ultimately personally benefited through the payment of moneys by the Russian company to Gillico which he then diverted to his own pocket rather than ensuring it reached its supposed ultimate destination.
“This was a disgraceful conspiracy to abandon a pension scheme and this disqualification shows that misuse of the privileges of limited liability trading are not tolerated and the secretary of state will seek out miscreants to send a message to those tempted to use companies as a vehicle for evading debt, especially the pensions of hard working citizens.”
peter.walker@ft.com
