0:00:07 > 0:00:12A bankruptcy system in crisis, being cheated by the unscrupulous.
0:00:12 > 0:00:16This mining tycoon went bankrupt owing almost 13 million.
0:00:16 > 0:00:22Days later driving this luxurious Bentley.
0:00:22 > 0:00:25This sports promoter declared himself bankrupt owing ten million.
0:00:25 > 0:00:28We found him and his wife still driving a line of luxury cars
0:00:28 > 0:00:32and living it up in Perthshire.
0:00:32 > 0:00:38And this banned company director, once one of the biggest donors
0:00:38 > 0:00:42to the Conservative Party, and a £41 million bankrupt.
0:00:42 > 0:00:45Here he is running multi-million pound housing developments.
0:00:45 > 0:00:47Tonight on Panorama, we expose the millionaire
0:00:47 > 0:00:57bankrupts playing the system.
0:01:04 > 0:01:09When a business goes bankrupt, it's usually a shattering experience.
0:01:09 > 0:01:12This was once a thriving family business in Staffordshire employing
0:01:12 > 0:01:15more than 40 people.
0:01:15 > 0:01:17A printing company, the modern digital age has
0:01:17 > 0:01:22now forced its closure.
0:01:22 > 0:01:26Every asset: the chairs, the filing cabinets, even the ink,
0:01:26 > 0:01:32will now be auctioned off so that creditors can be paid.
0:01:32 > 0:01:34It's a painful process for the former owner
0:01:34 > 0:01:40and his business partner.
0:01:40 > 0:01:43We walked out of there and locked the door for what for me
0:01:43 > 0:01:50was going to be the final time.
0:01:50 > 0:01:59And I gave her a hug and she sobbed, it was really
0:01:59 > 0:02:02deep, heartfelt sobbing.
0:02:02 > 0:02:06It was hideous.
0:02:06 > 0:02:08This has been everything to you.
0:02:08 > 0:02:10It has been everything to me.
0:02:10 > 0:02:12It was only three months ago but it was our life.
0:02:12 > 0:02:15We put everything into it.
0:02:15 > 0:02:18The pride that I felt suddenly turned to quite the opposite.
0:02:18 > 0:02:21To?
0:02:21 > 0:02:26Embarrassment.
0:02:26 > 0:02:29The embarrassment that everything I had worked for had been a failure.
0:02:29 > 0:02:31I had let everybody down, let my staff down, let my suppliers
0:02:31 > 0:02:34down, let my clients down.
0:02:34 > 0:02:40How much do you owe?
0:02:40 > 0:02:43Between me and my partner about £140,000, something like that.
0:02:43 > 0:02:49So, it is not millions, but it may as well be.
0:02:49 > 0:02:51Every week in the UK, more than 300 businesses
0:02:51 > 0:02:53are forced to close.
0:02:53 > 0:02:57And the number of personal insolvencies, including
0:02:57 > 0:03:00bankruptcies, is on the rise - up more than 10% in the last year
0:03:00 > 0:03:03in England and Wales.
0:03:03 > 0:03:08For most people, bankruptcy is a shameful and a devastating process.
0:03:08 > 0:03:12They can lose everything and face starting again from scratch.
0:03:12 > 0:03:15But I've discovered that's not the case for everyone.
0:03:15 > 0:03:18In fact some of Britain's Richest Bankrupts are playing the system
0:03:18 > 0:03:21and using weaknesses in the bankruptcy process
0:03:21 > 0:03:26itself to their advantage.
0:03:26 > 0:03:28This is Graham Gillespie.
0:03:28 > 0:03:32A mining and property magnate, he went bankrupt in 2012
0:03:32 > 0:03:37owing almost 13 million.
0:03:37 > 0:03:41Just days after, he drove this luxurious Bentley to the prestigious
0:03:41 > 0:03:44Gleneagles Hotel in Perthshire.
0:03:44 > 0:03:48Believing he was hiding assets, the authorities twice went to court
0:03:48 > 0:03:52to have Mr Gillespie's bankruptcy extended whilst they tried
0:03:52 > 0:03:55to track them down.
0:03:55 > 0:03:58One asset they wanted was this sought-after registration
0:03:58 > 0:04:02plate worth £180,000.
0:04:02 > 0:04:05Mr Gillespie claimed he'd sold it to pay a gambling debt.
0:04:05 > 0:04:08Yet I filmed him with it just a few months ago,
0:04:08 > 0:04:11on a brand new Bentley.
0:04:11 > 0:04:14We contacted Mr Gillespie but his lawyer said he didn't
0:04:14 > 0:04:18want to give us a statement.
0:04:18 > 0:04:20And here's another millionaire who went bankrupt, yet
0:04:20 > 0:04:23doesn't appear to be struggling financially either.
0:04:23 > 0:04:26This is Barry Hughes and his wife Jacqueline.
0:04:26 > 0:04:28He made his money through boxing, private security
0:04:28 > 0:04:32and sports promotions.
0:04:32 > 0:04:34He declared himself bankrupt in 2014 after being hit
0:04:34 > 0:04:38with a £10 million tax bill.
0:04:38 > 0:04:40Yet for Mr Hughes this appears to have been nothing more
0:04:40 > 0:04:43than a financial blip.
0:04:43 > 0:04:45Despite claiming he has absolutely zero assets and,
0:04:45 > 0:04:48despite the fact his bankruptcy case remains open, his lavish
0:04:48 > 0:04:54lifestyle appears intact.
0:04:54 > 0:04:58I film him and his wife driving a line of luxury cars.
0:04:58 > 0:05:01Here he is in an Audi Q7.
0:05:01 > 0:05:04A Bentley Bentayga.
0:05:04 > 0:05:07And a Rolls Royce Dawn convertible.
0:05:07 > 0:05:12Total value of the family's cars just under half a million pounds -
0:05:12 > 0:05:15and that doesn't include the cost of their very exclusive private
0:05:15 > 0:05:19registration plates.
0:05:19 > 0:05:22All of which I film being driven towards their weekend abode of late,
0:05:22 > 0:05:28in this exclusive gated community in Perthshire.
0:05:28 > 0:05:30We contacted Mr Hughes - but his legal team also said
0:05:30 > 0:05:35he didn't want to speak with us.
0:05:35 > 0:05:39In 2016, the latest full year figures available,
0:05:39 > 0:05:43more than 20,000 people went bankrupt across the UK, owing
0:05:43 > 0:05:49hundreds of millions to creditors up and down the country.
0:05:49 > 0:05:53So who makes sure that assets are declared honestly,
0:05:53 > 0:05:55creditors get paid what they're owed and that people involved
0:05:55 > 0:05:58don't just do it again?
0:05:58 > 0:06:08I went out on the road with an insolvency investigator,
0:06:10 > 0:06:15a man whose job it is to sort the "simply failed"
0:06:15 > 0:06:16from the "deliberately fraudulent."
0:06:16 > 0:06:18It's not a crime to be bankrupt.
0:06:18 > 0:06:21It's not a problem to have debt but if you get to the stage where
0:06:21 > 0:06:24you can't pay off your creditors and your assets don't
0:06:24 > 0:06:26cover your income, bankruptcy appears to be the end of the line.
0:06:26 > 0:06:28It's like dying and being reborn again financially.
0:06:28 > 0:06:31Yet debts only get paid if and when assets are
0:06:31 > 0:06:32tracked down and sold.
0:06:32 > 0:06:35If they aren't declared and can't be found, those owed money get nothing.
0:06:35 > 0:06:37Bankruptcy and insolvency is not a victimless crime.
0:06:37 > 0:06:39There are people out there who are either creditors,
0:06:39 > 0:06:45it may be, a tradesman, it may be a big company
0:06:45 > 0:06:48but they can't afford to lose money and very often when people go down
0:06:48 > 0:06:50in bankruptcy, they take other people with them.
0:06:50 > 0:06:52Nick Barr and his wife Jill run a successful sales business
0:06:52 > 0:06:56which operates across the UK.
0:06:56 > 0:06:59In 2013, he was introduced to a man called Scott Kidd
0:06:59 > 0:07:03who sold designer clocks from his Leicestershire company.
0:07:03 > 0:07:09Plausible, very plausible.
0:07:09 > 0:07:12You would, you would - he was just one of your kind of a naturally
0:07:12 > 0:07:14decent guy on the phone.
0:07:14 > 0:07:16If you asked him a question, he gave you a straightforward answer.
0:07:16 > 0:07:18He was very, very plausible.
0:07:18 > 0:07:20Nick agreed to become a sales agent for Mr Kidd,
0:07:20 > 0:07:23selling his clocks to retailers around the country.
0:07:23 > 0:07:27But, within just a few months, there were problems.
0:07:27 > 0:07:30Customers started to get short deliveries.
0:07:30 > 0:07:36Then our payments started to dry up.
0:07:36 > 0:07:38And then you get a little kind of radar on your,
0:07:38 > 0:07:41your kind of head says hold on a minute, something's not right.
0:07:41 > 0:07:46Nick was owed £4,000 and customers began to question his integrity.
0:07:46 > 0:07:49A phone call from another business owed money by Mr Kidd,
0:07:49 > 0:07:52led Nick to discover a string of others who hadn't
0:07:52 > 0:07:55been paid either.
0:07:55 > 0:07:57Ian Cover, and his wife Annemarie run an electrical
0:07:57 > 0:08:00business in Leicester.
0:08:00 > 0:08:04Two years ago, Ian rewired Mr Kidd's warehouse but was never fully paid.
0:08:04 > 0:08:07It's not uncommon to be chasing money.
0:08:07 > 0:08:10For any business it's the bane of the daily
0:08:10 > 0:08:13or weekly exercise you know.
0:08:13 > 0:08:16But after months of being fobbed off, Ian and Annemarie decided
0:08:16 > 0:08:21to turn detective and investigate Mr Kidd's past.
0:08:21 > 0:08:24What they discovered about him shocked them.
0:08:24 > 0:08:27Well, he was a bankrupt, he was a disqualified
0:08:27 > 0:08:30director and he was actually on license from prison.
0:08:30 > 0:08:33Yet he was signing company's cheques.
0:08:33 > 0:08:38He'd been sentenced in 2011 to six and a half years for doing
0:08:38 > 0:08:40exactly the same thing, and he was allowed to just
0:08:40 > 0:08:45come out and just carry on doing what he was doing.
0:08:45 > 0:08:48Mr Kidd had been jailed after trading fraudulently whilst
0:08:48 > 0:08:51bankrupt, running a string of companies leaving creditors more
0:08:51 > 0:08:54than a million out of pocket.
0:08:54 > 0:08:58Yet he was able to set up another company from his prison cell
0:08:58 > 0:09:01and when he was released on licence halfway through his sentence,
0:09:01 > 0:09:03he went to work for himself.
0:09:03 > 0:09:06Ian and Annemarie eventually got what was owed to them.
0:09:06 > 0:09:12But Nick remains upaid, still owed thousands.
0:09:12 > 0:09:16Well, I care because I lost money and I want other people to not be
0:09:16 > 0:09:17put in that position.
0:09:17 > 0:09:18That's unfair.
0:09:18 > 0:09:19You know I'm a genuine business person.
0:09:19 > 0:09:22I work hard, I pay my taxes, I pay my VAT.
0:09:22 > 0:09:26It's unfair that these people should get away with it.
0:09:26 > 0:09:28Mr Kidd - bankrupt and in prison - had simply created
0:09:28 > 0:09:31his list of companies through Companies House, the
0:09:31 > 0:09:34Government's registration service.
0:09:34 > 0:09:38All he'd needed was a working email address.
0:09:38 > 0:09:45Those that help legitimate businesses get started,
0:09:45 > 0:09:47are critical of the Government's lack of scrutiny.
0:09:47 > 0:09:50Companies House don't do any checks at all on the identity
0:09:50 > 0:09:51of individuals setting up companies.
0:09:51 > 0:09:54All you need to do is provide an application online.
0:09:54 > 0:09:57There are no checks carried out to verify the identity or even
0:09:57 > 0:10:00whether those individuals are genuine individuals,
0:10:00 > 0:10:03and they can come from anywhere in the world.
0:10:03 > 0:10:06And Companies House deal with how many?
0:10:06 > 0:10:1442% is the latest figure of incorporations passing through
0:10:14 > 0:10:15the Government's own service.
0:10:15 > 0:10:17That amounts to how many a year?
0:10:17 > 0:10:20230,000 approximately, slightly more in fact.
0:10:20 > 0:10:22How many of them would have undergone checks?
0:10:22 > 0:10:23Absolutely none.
0:10:23 > 0:10:24None.
0:10:24 > 0:10:30None at all.
0:10:30 > 0:10:32The Companies House registration process relies on honesty.
0:10:32 > 0:10:34And it's the same if your business fails.
0:10:34 > 0:10:37The bankruptcy process depends on people coming clean
0:10:37 > 0:10:44about what they can pay and what assets they have.
0:10:44 > 0:10:47The onus is on the bankrupt to tell the truth and they must tell
0:10:47 > 0:10:49the truth, that's the law.
0:10:49 > 0:10:51Whatever assets that you have are sold off by what's called
0:10:51 > 0:10:56the Trustee in Bankruptcy and your creditors are paid off.
0:10:56 > 0:10:58And that's why it's important that when people go before
0:10:58 > 0:11:00the Trustee in Bankruptcy, they have to tell the truth.
0:11:00 > 0:11:03They have to say where their assets are so that the trustee
0:11:03 > 0:11:05can realise them.
0:11:05 > 0:11:12But as Glenn knows all too well, that's not always the case.
0:11:12 > 0:11:15Meet Alan Yeomans.
0:11:15 > 0:11:17A Derbyshire businessman who made his money in property
0:11:17 > 0:11:19before going bankrupt.
0:11:19 > 0:11:23During the process, he was asked what assets he had.
0:11:23 > 0:11:27Furniture valued at £300, he replied.
0:11:27 > 0:11:30A watch he valued at £30.
0:11:30 > 0:11:33Oh, and he lived in a green shed.
0:11:33 > 0:11:36The Trustee in charge of his case believed him.
0:11:36 > 0:11:38It was only when police began to investigate Mr Yeomans
0:11:38 > 0:11:41for money laundering, that Glenn Wicks and his team were
0:11:41 > 0:11:43called in to re-examine the case.
0:11:43 > 0:11:46You will remember that Alan Yeomans told the official receiver
0:11:46 > 0:11:49that he lived in a shed, in his mum's back garden.
0:11:49 > 0:11:52Right, OK.
0:11:52 > 0:11:55What I am going to show you is what he actually lives in.
0:11:55 > 0:11:58Oh, my gosh.
0:11:58 > 0:12:01And that's the shed.
0:12:01 > 0:12:09It is probably one of the biggest sheds I've ever seen.
0:12:09 > 0:12:11Inside this "shed", a six-bedroom mansion where investigators found
0:12:11 > 0:12:15a treasure trove of fine art and antique furniture.
0:12:15 > 0:12:24It's complete with its own disco and a gym.
0:12:24 > 0:12:27And behind a 6 foot oil painting, a secret door leading
0:12:27 > 0:12:28to another money maker.
0:12:28 > 0:12:29A cannabis farm.
0:12:29 > 0:12:33All of which he was jailed for.
0:12:33 > 0:12:35Well, to be fair to Mr Yeomans, he wasn't lying,
0:12:35 > 0:12:38he was living in a shed.
0:12:38 > 0:12:40It's misleading the official receiver at the very least to say
0:12:40 > 0:12:43he lived in a shed when in fact he called his property
0:12:43 > 0:12:46Shedley Manor.
0:12:46 > 0:12:49I can't quite believe the scale of it, and the audacity of it.
0:12:49 > 0:12:51He was sticking two fingers up to you guys
0:12:51 > 0:12:53and the system at every turn.
0:12:53 > 0:12:54This was ruthless fraud.
0:12:54 > 0:12:57This was a man who deliberately set out to defraud his creditors and did
0:12:57 > 0:13:02it until he got caught.
0:13:02 > 0:13:03nobody says, "Let me go and see it.
0:13:03 > 0:13:06let me check."
0:13:06 > 0:13:10Not on this occasion, no.
0:13:10 > 0:13:17Trustees always used to do that, or very often had the ability to do
0:13:17 > 0:13:20that, but now there's just so many bankruptcies and so much debt
0:13:20 > 0:13:23that they don't have the ability to every time go out and check
0:13:23 > 0:13:24what people are telling them.
0:13:24 > 0:13:26So, the process relies upon the honesty of the person
0:13:26 > 0:13:27being investigated.
0:13:27 > 0:13:30Making it a challenge for those whose job it is to get money
0:13:30 > 0:13:34back for the creditors.
0:13:34 > 0:13:37What are some of the tricks of the trade?
0:13:37 > 0:13:40People will give assets away, transferring property
0:13:40 > 0:13:44into relatives' names or into company names.
0:13:44 > 0:13:47Creditors will be falsified and they will be paid so it looks
0:13:47 > 0:13:50as if legitimate debts are being paid.
0:13:50 > 0:13:52Income will be hidden, bank accounts will be hidden,
0:13:52 > 0:13:55jewellery will be hidden.
0:13:55 > 0:13:57You can often see a white line around the wrist
0:13:57 > 0:13:59where the watch has disappeared.
0:13:59 > 0:14:01So people hiding things.
0:14:01 > 0:14:04You get paid out of the pot.
0:14:04 > 0:14:09Is there a time when you have to call it a day because actually
0:14:09 > 0:14:11you're not convinced you're going to get that asset
0:14:11 > 0:14:12or realise the money?
0:14:12 > 0:14:13Yes.
0:14:13 > 0:14:15Of course there's a balance.
0:14:15 > 0:14:19There's always a cost-benefit analysis.
0:14:19 > 0:14:21Perhaps the funds are in an incredibly difficult regime
0:14:21 > 0:14:24for example and you just are not going to be able to get them.
0:14:24 > 0:14:27Well, then you just have to draw a line on it,
0:14:27 > 0:14:30write off the money that you've spent and move on to the next case.
0:14:30 > 0:14:33The incentive is therefore on the dishonest debtor to make it
0:14:33 > 0:14:35as complex as possible?
0:14:35 > 0:14:36Yes, but I mean they're fraudsters.
0:14:36 > 0:14:38That's what they want to do.
0:14:38 > 0:14:40They want to keep the money for themselves and not
0:14:40 > 0:14:43pay their creditors and not pay the government.
0:14:43 > 0:14:46For those who do get caught, they face the severest sanction
0:14:46 > 0:14:50possible - a Bankruptcy Restriction Order.
0:14:50 > 0:14:55For up to 15 years, you're banned from being a director,
0:14:55 > 0:14:58you can't form or manage a company, or get credit over £500.
0:14:58 > 0:15:02More than 1,200 BROs have been imposed across the UK.
0:15:02 > 0:15:05Effectively forcing those who receive them to take a backseat
0:15:05 > 0:15:09in the business world.
0:15:09 > 0:15:16But what about those for whom the backseat simply won't do?
0:15:24 > 0:15:30The seaside town of Dunoon, in Argyllshire.
0:15:30 > 0:15:32Home to ferries, fish suppers and the finest
0:15:32 > 0:15:36radio show this side of, well, Dunoon.
0:15:36 > 0:15:38Live and local.
0:15:38 > 0:15:41Come on in, pull up a chair.
0:15:41 > 0:15:47It's just me - Malcolm, on DCR 97.4 FM and Tune-In Radio.
0:15:47 > 0:15:52These are the dulcet tones of DJ Malcolm Scott.
0:15:52 > 0:15:57Swearing gives you a sense of calm, control and well-being.
0:15:57 > 0:15:59Every week, he entertains his loyal listeners with his modern classics.
0:15:59 > 0:16:02Let's have a bit of Corner Shop...
0:16:02 > 0:16:04Hellloooo...
0:16:04 > 0:16:09This is Malcolm here, hello...
0:16:09 > 0:16:13He may sound like Dunoon's answer to Alan Partridge -
0:16:13 > 0:16:17but he's actually kind of a big deal.
0:16:17 > 0:16:21Malcolm Scott was a multi-millionaire grain merchant.
0:16:21 > 0:16:23One of the biggest donors to the Conservative Party,
0:16:23 > 0:16:28he lent his private jet to some of its biggest figures.
0:16:28 > 0:16:30Former Prime Minister David Cameron used it to fly from Glasgow
0:16:30 > 0:16:34to Gatwick and Dundee to Oxford.
0:16:34 > 0:16:37And Mr Scott's close friend William Hague also benefited.
0:16:37 > 0:16:40He used the plane a number of times, including to fly
0:16:40 > 0:16:44to the Ulster Unionist Party Conference in Belfast.
0:16:44 > 0:16:47This journey valued at almost £4,000.
0:16:47 > 0:16:51He was even the party's Treasurer in Scotland.
0:16:51 > 0:16:56In 2012, his business empire came crashing down and he was declared
0:16:56 > 0:16:59bankrupt with debts of more than £41 million.
0:16:59 > 0:17:03I think we'll finish at that.
0:17:04 > 0:17:07During the bankruptcy investigation, Mr Scott led the trustees on a very
0:17:07 > 0:17:10deceitful dance indeed.
0:17:10 > 0:17:13He hid a speedboat, wine collection, fishing rights, assets
0:17:13 > 0:17:17in the Bahamas and even claimed a break-in at his house,
0:17:17 > 0:17:20some items later found being sold at auction.
0:17:20 > 0:17:23He failed to account for the proceeds.
0:17:23 > 0:17:25And all the while he was trustee director
0:17:25 > 0:17:29of the Crimestoppers charity.
0:17:29 > 0:17:32By 2015, the authorities had had enough and Malcolm Scott
0:17:32 > 0:17:36was hit with a lengthy Bankruptcy Restriction Order.
0:17:36 > 0:17:39Until 2021, he's banned from being a company director.
0:17:39 > 0:17:43From even forming a company.
0:17:43 > 0:17:46The thing is, I've been keeping a very close eye on Mr Scott
0:17:46 > 0:17:49and whatever he's doing, he's not taking
0:17:49 > 0:17:53a backseat in business.
0:17:53 > 0:17:56Every few weeks he travels from his home in the west coast
0:17:56 > 0:18:01of Scotland to Northern Ireland.
0:18:01 > 0:18:05I watch as he visits development site after development site.
0:18:05 > 0:18:09All bought at auction and Malcolm Scott with the keys to them.
0:18:09 > 0:18:12Everywhere he goes, I follow, including to a solicitors'
0:18:12 > 0:18:15office in Coleraine.
0:18:15 > 0:18:20What is he doing in there?
0:18:20 > 0:18:23I then watch as he heads to this large development
0:18:23 > 0:18:26in Dervock, in County Antrim.
0:18:26 > 0:18:28He greets the builder, surveys the site.
0:18:28 > 0:18:34He looks like he's the boss.
0:18:34 > 0:18:38Now, the paperwork for this housing company shows it's owned by a man
0:18:38 > 0:18:40called Alexander Duncan.
0:18:40 > 0:18:43It's a company called Sandnewco Ltd - he's listed as the director.
0:18:43 > 0:18:46When you look at the other companies that he's got,
0:18:46 > 0:18:46he makes board games.
0:18:46 > 0:18:52This is a housing development, and it's a big one at that.
0:18:52 > 0:18:58I wonder whether Malcolm Scott's really the director of this company.
0:18:58 > 0:19:02Maybe not on paper, but I wonder whether he's a shadow director.
0:19:02 > 0:19:06Is he breaching his Bankruptcy Restriction Order?
0:19:06 > 0:19:10To try and find out, I arrange for a member
0:19:10 > 0:19:14of our production team to meet with Malcolm Scott.
0:19:14 > 0:19:17He'll go undercover, posing as a potential investor,
0:19:17 > 0:19:21to hear what Mr Scott says about the business.
0:19:21 > 0:19:25The important thing is you need to ask what the company structure is.
0:19:25 > 0:19:28After weeks of negotiations, Mr Scott finally agrees
0:19:28 > 0:19:32to a meeting in Northern Ireland at the Dervock site.
0:19:32 > 0:19:33Hi.
0:19:33 > 0:19:36Hello.
0:19:36 > 0:19:37Malcolm - nice to meet you.
0:19:37 > 0:19:39Not bad at all.
0:19:39 > 0:19:40Nice to meet you, you're looking well.
0:19:40 > 0:19:42He starts by explaining the structure of the company.
0:19:42 > 0:19:43It's Sandy and myself.
0:19:43 > 0:19:46He's a silent partner.
0:19:46 > 0:19:48He's got another business making board games.
0:19:48 > 0:19:49Oh, I see, right.
0:19:49 > 0:19:51He's not even into property at all?
0:19:51 > 0:19:52Eh, no.
0:19:52 > 0:19:53No, he does board games.
0:19:53 > 0:19:54Brilliant.
0:19:54 > 0:19:57Will he be somebody who I need to meet as well?
0:19:57 > 0:19:58No.
0:19:58 > 0:19:59It's me and him, we're 50/50.
0:19:59 > 0:20:01Excellent.
0:20:01 > 0:20:02Excellent.
0:20:02 > 0:20:05I'm just wondering like, if this all comes good - No, no, no, no.
0:20:05 > 0:20:07I can make the decision with you now.
0:20:07 > 0:20:08Oh, right.
0:20:08 > 0:20:09Excellent.
0:20:09 > 0:20:10Well, that's good to know.
0:20:10 > 0:20:13Under Malcom Scott's BRO he's banned from managing a company or even
0:20:13 > 0:20:15giving the impression he is managing a company.
0:20:15 > 0:20:18Yet here he is stating he's the decision-maker.
0:20:18 > 0:20:26So where does he rank in the company hierarchy?
0:20:26 > 0:20:32On the more corporate side of things, you've got BLEEP
0:20:32 > 0:20:34and then next one up...
0:20:34 > 0:20:35Me.
0:20:35 > 0:20:36You.
0:20:36 > 0:20:40Me, yes.
0:20:40 > 0:20:42And that's it, you are the Head Shed.
0:20:42 > 0:20:44Yes.
0:20:44 > 0:20:45Yes, that's it.
0:20:45 > 0:20:47Exactly.
0:20:47 > 0:20:50So a disgraced, dishonest and banned director appears to be running this
0:20:50 > 0:20:52housing development, acting as a shadow director
0:20:52 > 0:20:53and using a clean frontman for the paperwork.
0:20:53 > 0:20:56A direct breach of his BRO.
0:20:56 > 0:20:59And, apparently, it doesn't just stop at Dervock.
0:20:59 > 0:21:01And we have got a massive site in Glasgow.
0:21:01 > 0:21:02Right.
0:21:02 > 0:21:06So, we're going in for planning on that next year for 300 houses.
0:21:06 > 0:21:07Wow!
0:21:07 > 0:21:09So, I can let you see that.
0:21:09 > 0:21:13An offer too good to pass up.
0:21:13 > 0:21:20And this is the site, in Netherburn in central Scotland.
0:21:20 > 0:21:23It's a big piece of land - 32 acres, 16 of which already have planning
0:21:23 > 0:21:26permission for housing.
0:21:26 > 0:21:32Malcolm Scott arrives for a second meeting with our investor.
0:21:32 > 0:21:33How are you?
0:21:33 > 0:21:34Not bad, yourself?
0:21:34 > 0:21:38He outlines his plans for hundreds of homes.
0:21:38 > 0:21:44You've got another 100 to 150 units in there.
0:21:44 > 0:21:46I see, right ok.
0:21:46 > 0:21:47And then another 100 there.
0:21:47 > 0:21:48Right, got you.
0:21:48 > 0:21:51Interestingly, the drawing Mr Scott shows us has the name
0:21:51 > 0:21:52of a different company on it.
0:21:52 > 0:21:59Instead of Sandnewco One Ltd, as at Dervock, this time
0:21:59 > 0:22:02it's Loch Leven Two.
0:22:02 > 0:22:04So is there a Loch Leven One as well?
0:22:04 > 0:22:06There's a Loch Leven One at Galashiels.
0:22:06 > 0:22:08Right, and is that yours as well?
0:22:08 > 0:22:09Yes, yes.
0:22:09 > 0:22:10Yeah.
0:22:10 > 0:22:13How many have you got?
0:22:13 > 0:22:18That's, well we've got four at the moment.
0:22:18 > 0:22:21If this is true, it would appear Malcolm Scott is a serial
0:22:21 > 0:22:22breacher of his BRO.
0:22:22 > 0:22:25And why not?
0:22:25 > 0:22:28From what he says, the rewards are worth it.
0:22:28 > 0:22:31How much are you looking to take on each?
0:22:31 > 0:22:34We are looking at, if we have developed it out ourselves,
0:22:34 > 0:22:35£15 million.
0:22:35 > 0:22:36£15 million?
0:22:36 > 0:22:37Off this site.
0:22:37 > 0:22:38Yeah.
0:22:38 > 0:22:39Right, got you.
0:22:39 > 0:22:40Worth waiting for, isn't it.
0:22:40 > 0:22:43Yes, exactly.
0:22:43 > 0:22:47And so, with sales pitch complete and a firm handshake goodbye,
0:22:47 > 0:22:51Malcolm Scott drives off.
0:22:51 > 0:22:55Just a few days after our meeting and Mr Scott's
0:22:55 > 0:22:57visit to the solicitors in Northern Ireland
0:22:57 > 0:22:59begins to make sense.
0:22:59 > 0:23:03I find a new business on Companies House.
0:23:03 > 0:23:05Its registered address, the solicitor's office.
0:23:05 > 0:23:07It's called Northside Residential.
0:23:07 > 0:23:09It's another property business.
0:23:09 > 0:23:12Now, this time, he's gone one step further.
0:23:12 > 0:23:16He lists himself as a person with significant control
0:23:16 > 0:23:19in the company, giving himself 50% of the shares.
0:23:19 > 0:23:22Now that's perfectly legal.
0:23:22 > 0:23:25But, he also registers himself as the person
0:23:25 > 0:23:27who formed the company.
0:23:27 > 0:23:33And that isn't legal.
0:23:33 > 0:23:37Looking at all of our evidence is insolvency expert Maureen Leslie.
0:23:37 > 0:23:39She's acted as a Trustee in some of the country's biggest
0:23:39 > 0:23:41bankruptcy investigations.
0:23:43 > 0:23:47He's holding himself out as the decision-maker in the company.
0:23:47 > 0:23:50I mean he says there is no one above him.
0:23:50 > 0:23:53You're not allowed to be a director.
0:23:53 > 0:23:57He's not a named director, but he's acting as if he were a director,
0:23:57 > 0:24:00or he is allowing someone to form the perception that
0:24:00 > 0:24:02he is a director.
0:24:02 > 0:24:05Let me show you this.
0:24:05 > 0:24:10We saw him go into a solicitor's office and a few weeks
0:24:10 > 0:24:12later this company was formed.
0:24:12 > 0:24:15Any red flags there for you?
0:24:15 > 0:24:22He's just formed a limited company.
0:24:22 > 0:24:27And he's a person with significant control.
0:24:27 > 0:24:32The Bankruptcy Restriction Order does not allow you to
0:24:32 > 0:24:34form a limited company.
0:24:34 > 0:24:35That's what he's gone and done?
0:24:35 > 0:24:39Yeah.
0:24:39 > 0:24:45That is a breach of the terms of the Bankruptcy Restriction Order.
0:24:45 > 0:24:52Breaching a BRO can lead to a jail sentence of up to two years.
0:24:52 > 0:24:55This is the head of the government agency in Scotland which gave
0:24:55 > 0:24:57Malcolm Scott and others like him their Bankruptcy
0:24:57 > 0:24:59Restriction Orders.
0:24:59 > 0:25:01For the rest of the UK, it's the Insolvency Service
0:25:01 > 0:25:02which issues them.
0:25:02 > 0:25:06Who monitors BROs?
0:25:06 > 0:25:11There is no positive monitoring of BROs.
0:25:11 > 0:25:14We rely on creditors to take account of the fact that there is that
0:25:14 > 0:25:18public record of the red flag against these debtors and we would,
0:25:18 > 0:25:21of course, follow up any information about debtors breaching the terms
0:25:21 > 0:25:23of their BRO directly.
0:25:23 > 0:25:26Nobody is monitoring them?
0:25:26 > 0:25:28Not proactively, no.
0:25:28 > 0:25:31Not actively?
0:25:31 > 0:25:35Yeah.
0:25:35 > 0:25:44Do you see the kind of weaknesses that I'm highlighting here?
0:25:44 > 0:25:48It's like tagging somebody with an electronic tag for bad
0:25:48 > 0:25:51behaviour but actually it's not linked to anything,
0:25:51 > 0:25:53so what's the point?
0:25:53 > 0:25:55Well, I would disagree.
0:25:55 > 0:25:58The record is there, it is publicly available,
0:25:58 > 0:26:00it's easily searchable and when the particular debtor tries
0:26:00 > 0:26:04to apply for credit that flag will clearly show.
0:26:04 > 0:26:07I ask him about Malcolm Scott and our evidence of him
0:26:07 > 0:26:11appearing to breach his BRO.
0:26:11 > 0:26:13Leaving aside the particular case, if people are breaching their BROs,
0:26:13 > 0:26:16yes, that is serious.
0:26:16 > 0:26:19I'll take away the evidence that you're prepared to provide us
0:26:19 > 0:26:23and we'll have a look at, look at the case and I can't say
0:26:23 > 0:26:24anything further than that.
0:26:24 > 0:26:27There is no suggestion of any wrongdoing on the part
0:26:27 > 0:26:31of the solicitor's firm in Northern Ireland.
0:26:31 > 0:26:35Alexander Duncan, the registered director of Sandnewco One Ltd,
0:26:35 > 0:26:40told us that Malcolm Scott was an employee of the business,
0:26:40 > 0:26:45with no executive decision-making authority.
0:26:45 > 0:26:49We asked Malcolm Scott for a statement and through his
0:26:49 > 0:26:54solicitor he denied acting as a director of any company.
0:26:54 > 0:26:57How effective do you think the system is currently?
0:26:57 > 0:27:01I think it could be a lot more effective.
0:27:01 > 0:27:06An independent trustee will have not only the specialism and the resource
0:27:06 > 0:27:09to be able to conduct complex investigations but also
0:27:09 > 0:27:12they are more flexible in terms of resourcing and the skills
0:27:12 > 0:27:14that they can bring to a case.
0:27:14 > 0:27:16The insolvency service, in your opinion, doesn't have that?
0:27:16 > 0:27:19I don't think any government organisation will be able to do that
0:27:19 > 0:27:22so flexibly and so quickly.
0:27:22 > 0:27:24So the unscrupulous become the untouchable?
0:27:24 > 0:27:29Sometimes that's true.
0:27:29 > 0:27:32There are serial fraudsters out there who, who are the clever ones
0:27:32 > 0:27:34and I'm convinced we don't know who they are.
0:27:34 > 0:27:39It's only the ones who make a mistake and leave a paper trail
0:27:39 > 0:27:45that allows us to investigate them and to bring them to justice.
0:27:45 > 0:27:48My investigation has revealed a bankruptcy system
0:27:48 > 0:27:52fraught with problems.
0:27:52 > 0:27:56A lack of resourcing, regulation, a lack of monitoring
0:27:56 > 0:28:01and robust punitive measures.
0:28:01 > 0:28:03The government is quick to say that business is key
0:28:03 > 0:28:12to a healthy economy.
0:28:12 > 0:28:22But allowing the unscrupulous to flourish puts that at risk.