Court turns down Harlequin accountants’ appeal bid

Court turns down Harlequin accountants’ appeal bid

The former accountants of overseas property company Harlequin SVG have had their bid to appeal against an $11.6m (£9.15m) ruling for damages turned down.

Wilkins Kennedy was seeking to overturn a ruling handed down in December 2016.

In it Harlequin won part of its case against Wilkins Kennedy, in a dispute that the accountancy firm was involved in a conflict of interest with a property developer hired by Harlequin.

The High Court ruled Wilkins Kennedy was partly responsible for losses arising from overpayments to the builder, ICE, a company the accountancy firm was also acting for at the same time as acting for Harlequin.

Wilkins Kennedy was retained by Harlequin between 2006 and 2010 to provide financial and business advice focused on helping to build and create the investment scheme’s flagship Buccament Bay Resort in St Vincent and the Grenadines.

Six thousand mainly UK pension investors ploughed around £400m into the unregulated overseas property scheme via financial advisers, hoping for ‘guaranteed returns’ of 10 per cent a year which never materialised.

In a move to protect Harlequin investors, judge Mr Justice Coulson, in handing down the December ruling, proposed the damages should be paid into a ringfenced escrow account for investors, rather than go to Harlequin or its chairman David Ames, with the judge stating he hoped such ringfencing to protect investors' interests could be done by agreement.

“That seemed to me to be the fairest way of ensuring that those who have lost the most in this case, namely the investors, had at least some prospect of recovering some of their money from this Judgment,” Mr Justice Coulson said.

The High Court judge gave a damning description of the Harlequin investment scheme, comparing it to a Ponzi scheme aimed a gullible investors.

He said: "It is important not to pull any punches when describing the Harlequin business model. There were elements of it which were similar to what might be called a 'Ponzi' scheme, where the money paid in by gullible investors was not spent as they thought it would be, but the scheme grew by word of mouth and those responsible for it became rich, whilst the investors ended up with nothing.

"I note that...Harlequin's then solicitors, DLA Piper, expressed their concern that the Harlequin business model was indeed a 'Ponzi' scheme.

"Furthermore, at one point in his oral evidence, in connection with the Harlequin business model, Mr Ames made the revealing remark that "I was not going to build properties that I had not sold". It might be thought that a better long term business plan would have operated the other way round."

In October, David Ames, chairman of the Harlequin group, declared the company which owns the land associated with the scheme, Harlequin Property SVG, insolvent in Saint Vincent and the Grenadines, where the company is based.