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Integrity Register will crack down on rogue directors

Companies House is planning a "register of integrity" to help tackle the problem of directors setting up serially insolvent companies and walking away from creditors.

The proposed register or "white list" of directors who can authenticate their identities is under development following growing disquiet in Vince Cable's business department over how pop-up companies selling unregulated investments such as carbon credits can disappear and reappear in another guise.

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The Herald reported last month how the liquidated Abacus Advisory, involved in the sale to private investors of overpriced carbon credits and diamonds, is to be reported to the Insolvency Service for posing as a reputable UK business whilst operating offshore from the Marshall Islands.

Abacus had claimed to be located in the City of London, with "senior executives who have many years of successful experience performing a variety of roles within various financial companies" and a "research team comprising many experts with local-based knowledge on an international scale". It had one director, £1 of share capital, a forwarding address not an office in London, and a shelf life of 18 months.

Now it has emerged a liquidator has been appointed at SJL Risk, a "trade execution" company which worked with Abacus and to whom Scottish investor Craig Jamieson paid over part of a £20,000 deposit for carbon credits, sold by a broker linked to Abacus.

According to the Insolvency Service SJL has reported liabilities of £329,455, largely to carbon broking companies in the UK and overseas, and holds assets worth £4,378, leaving it with a deficit of over £325,000.

When The Herald contacted SJL Risk in March, spokesman Harvey Bennett said: "We work with a number of introducers, our clients are the brokers, we would perform the trade and execute the service and provide them with the holdings that the broker has recommended to buy, we are not giving advice to clients." He said all client assets were held safely in separate registry accounts.

SJL Risk entered insolvency proceedings six weeks later.

Mr Jamieson had been unable to contact Abacus in order to sell his investments.

Liquidator Myles Jacobson of London-based SPW said this week he had been told that client assets were in registry accounts, but had yet to investigate. Companies House records show Mr Bennett was briefly a director of SJL Risk from June to July 2013. He is currently a director of four live trading companies: Evolution Trade Services, ETS Trading, RC Exchange Services, and HS Universal, where a fellow director was Simon Lear, who was also the founder of SJL Risk in 2010.

SJL's sole remaining director at insolvency was Russell Enright, a director of three previously dissolved companies. But Abacus Advisory's sole director Philip Clarke, and Sean Madden the sole director of Eco Business Management, the liquidated broker Mr Jamieson originally dealt with, have no other directorship history at Companies House.

Further, those directors' home addresses are not listed at Companies House, because when registering they took advantage of a "privacy" option whereby only their agent's address is listed.

Mr Clarke, for instance, was registered as Abacus's sole director when the company was set up in September 2012 through Companies Made Simple. By opting for their £49.99 Privacy Package, a director can set up a company with £1 of share capital and provide only the agent's London EC1 address for the Companies House listing.

Companies Made Simple said it required "a scan of passport or ID" to verify a director's identity.

An e-mail to the liquidators in June purporting to be from Philip Clarke claimed Mr Jamieson "had quite simply bought investment products that do exist through a perfectly legal route and, now that the market has moved against him, is screaming fraud". But Mr Clarke could only be reached with difficulty via e-mail.

Companies House says it has no investigatory power, and accepts all registrations in good faith without verification as long as they are completed correctly.

A spokesman commented this week: "We are starting to develop a register of integrity to make more of the information that goes on the public record."

Mr Jacobson commented that although it was possible for directors to submit a fake identity, a more common trick was to put up a "stooge" director, with no private address details. "If a director has been through an insolvency and doesn't want to be in the public eye, the stooge director can be listed at Companies House while he pulls the strings."

A spokesman for the Department of Business Innovation and Skills said: "The UK already has a stringent system in place which means that it is against the law to file incorrect information at Companies House. Those who ignore this can face prosecution and fines if they deliberately mislead the authorities, while we are also introducing a publicly available beneficial ownership register. Everyone will be able to see who is truly pulling the strings behind the scenes of a particular company.

"We disqualify around 1,200 directors a year, we recognise that more can always be done. That is why earlier this year we announced measures which will mean courts can take into account past business failures when striking off directors."

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