TWO of the bosses behind the collapsed Christmas savings club, Farepak, have been banned from holding posts as company directors, the Sunday Herald can reveal.
Joanne Ponting and Stephen Hicks agreed to disqualifications of between two and three years after they were accused of being "unfit" to run a firm. Seven other directors are due before the courts in the spring.
Farepak was a popular scheme which allowed low-income families to save for Christmas hampers. However, disaster struck in 2006 when it went into administration after its parent company, European Home Retail (EHR), was unable to secure a loan from its creditors.
The collapse meant that about 120,000 customers lost an average of £400 each, ruining Christmas for thousands of families on modest earnings.
In Scotland, it is believed that about 25,000 people lost money as a result of the saving scheme's demise.
It was later revealed that EHR had been using income from Farepak customers to pay off debts.
A public campaign to highlight the plight of the Farepak savers led to the Insolvency Service (IS), a Government agency, launching a investigation.
Following a lengthy probe, the IS last year applied to the High Court of Justice for disqualification orders to be made against nine directors of either EHR or Farepak Food & Gifts Limited. The application was made on behalf of ministers.
The IS statement read: "The application was made in the public interest on the grounds that the conduct of each director in relation to the relevant company or companies makes him or her unfit to be concerned in the management of a company."
At the time, business minister Ed Davey said: "Cases like Farepak are often very complex and complicated so take time – but we can confirm that High Court proceedings seeking disqualification orders have now started."
It can now be revealed that two of the nine directors have accepted their disqualification. According to Companies House, Ponting and Hicks were banned under section 7 of the Company Directors' Disqualification Act 1986, which directly relates to "unfitness" to act as a director.
They were disqualified after Business Secretary Vice Cable accepted an "undertaking" that they would not become directors for a set period. Providing an undertaking avoids the need for court proceedings.
Ponting, 40, has been banned until February 2014. while Hicks, 57, was disqualified for three years starting from November last year.
During their term of disqualification, Ponting and Hicks must not become a director or "act like one". They are also banned from involvement in the formation of a new company, or promoting a firm. Ignoring the terms of the undertaking is a criminal offence which carries a punishment of up to two years in prison.
In May, the other seven directors will be in court over the Government-backed move to disqualify them as directors. These include former Farepak chairman Sir Clive Thompson and one-time EHR chief executive William Rollason, who earned £290,000 a year.
Farepak's ex-finance director Stevan Fowler is another individual who is part of the government's court application.
The revelations come as campaigners continue to fight for the Farepak savers to receive a large chunk of the money they lost.
Liquidators appointed to oversee the case announced last year that families could expect to receive approximately 15p for every pound lost – about £5.5 million of the £37m claim.
In 2010, liquidators revealed they had secured £4m from some of the Farepak directors, although the names were not mentioned. The sum was also agreed "with no admission of liability".
Although about 200 savers have died since 2006, dividends will be paid to the next of kin or to their estate.
The bans are the most high-profile disqualifications since action was agreed last year in the case of car giant MG Rover.
The four businessmen who were in charge of the firm at the time of its collapse – Peter Beale, John Towers, Nick Stephenson and John Edwards –were disqualified for between three and six years, with each giving an undertaking not to act in the management of a company.
The IS also announced last month that Karl Dennis Zanft, a former director of Fineform Racing Ltd, had been disqualified as a director for nine years. He was banned after giving an undertaking which prevents him managing or controlling a company.
A spokesperson for the Insolvency Service said: "Disqualification proceedings against Farepak directors are now before the courts and a hearing date has been set for this spring. We have already accepted undertakings from two of the directors."
Angela Corner, a Farepak saver from Livingston, said; "I lost £400 and nearly £2500 as an agent, so I think this is a positive move and a good day for savers. This is part of us getting closure. That said, I don't think two or three years is long enough."
John Wilson, SNP MSP for Central Scotland, said: "The decision of the two individuals to accept disqualification for two or three years is little comfort to the 25,000 Farepak customers in Scotland who have still to receive a financial settlement.
"There has got to be a message sent to company directors that if they decide to act in any way unethically they should face the full consequences of their actions in the courts."
Margaret Curran, Labour's shadow secretary of state for Scotland, said: "Given the misery that the collapse of Farepak caused for Scottish families, it is welcome that these two directors have done the decent thing and disqualified themselves.
"This is another small step towards justice for the Farepak campaign and ensuring ordinary families are protected from the reckless behaviour of people running the organisations that they entrust with their money."
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