Millionaire Bankrupts Exposed Panorama

A bankruptcy system in crisis,

being cheated by the unscrupulous.

This mining tycoon went bankrupt

owing almost 13 million.

Days later driving this

luxurious Bentley.

This sports promoter declared

himself bankrupt owing ten million.

We found him and his wife

still driving a line of luxury cars

and living it up in Perthshire.

And this banned company director,

once one of the biggest donors

to the Conservative Party,

and a £41 million bankrupt.

Here he is running multi-million

pound housing developments.

Tonight on Panorama,

we expose the millionaire

bankrupts playing the system.

When a business goes bankrupt, it's

usually a shattering experience.

This was once a thriving family

business in Staffordshire employing

more than 40 people.

A printing company,

the modern digital age has

now forced its closure.

Every asset: the chairs,

the filing cabinets, even the ink,

will now be auctioned off so that

creditors can be paid.

It's a painful process

for the former owner

and his business partner.

We walked out of there and locked

the door for what for me

was going to be the final time.

And I gave her a hug

and she sobbed, it was really

deep, heartfelt sobbing.

It was hideous.

This has been everything to you.

It has been everything to me.

It was only three months ago

but it was our life.

We put everything into it.

The pride that I felt suddenly

turned to quite the opposite.

To?

Embarrassment.

The embarrassment that everything

I had worked for had been a failure.

I had let everybody down,

let my staff down, let my suppliers

down, let my clients down.

How much do you owe?

Between me and my partner

about £140,000, something like that.

So, it is not millions,

but it may as well be.

Every week in the UK,

more than 300 businesses

are forced to close.

And the number of personal

insolvencies, including

bankruptcies, is on the rise -

up more than 10% in the last year

in England and Wales.

For most people, bankruptcy is a

shameful and a devastating process.

They can lose everything and face

starting again from scratch.

But I've discovered that's not

the case for everyone.

In fact some of Britain's Richest

Bankrupts are playing the system

and using weaknesses

in the bankruptcy process

itself to their advantage.

This is Graham Gillespie.

A mining and property magnate,

he went bankrupt in 2012

owing almost 13 million.

Just days after, he drove this

luxurious Bentley to the prestigious

Gleneagles Hotel in Perthshire.

Believing he was hiding assets,

the authorities twice went to court

to have Mr Gillespie's bankruptcy

extended whilst they tried

to track them down.

One asset they wanted was this

sought-after registration

plate worth £180,000.

Mr Gillespie claimed he'd sold it

to pay a gambling debt.

Yet I filmed him with it

just a few months ago,

on a brand new Bentley.

We contacted Mr Gillespie

but his lawyer said he didn't

want to give us a statement.

And here's another millionaire

who went bankrupt, yet

doesn't appear to be

struggling financially either.

This is Barry Hughes

and his wife Jacqueline.

He made his money through

boxing, private security

and sports promotions.

He declared himself bankrupt

in 2014 after being hit

with a £10 million tax bill.

Yet for Mr Hughes this appears

to have been nothing more

than a financial blip.

Despite claiming he has

absolutely zero assets and,

despite the fact his bankruptcy case

remains open, his lavish

lifestyle appears intact.

I film him and his wife driving

a line of luxury cars.

Here he is in an Audi Q7.

A Bentley Bentayga.

And a Rolls Royce Dawn convertible.

Total value of the family's cars

just under half a million pounds -

and that doesn't include the cost

of their very exclusive private

registration plates.

All of which I film being driven

towards their weekend abode of late,

in this exclusive gated

community in Perthshire.

We contacted Mr Hughes -

but his legal team also said

he didn't want to speak with us.

In 2016, the latest full

year figures available,

more than 20,000 people went

bankrupt across the UK, owing

hundreds of millions to creditors up

and down the country.

So who makes sure that assets

are declared honestly,

creditors get paid what they're owed

and that people involved

don't just do it again?

I went out on the road

with an insolvency investigator,

a man whose job it is to sort

the "simply failed"

from the "deliberately fraudulent."

It's not a crime to be bankrupt.

It's not a problem to have debt

but if you get to the stage where

you can't pay off your creditors

and your assets don't

cover your income, bankruptcy

appears to be the end of the line.

It's like dying and being

reborn again financially.

Yet debts only get paid

if and when assets are

tracked down and sold.

If they aren't declared and can't be

found, those owed money get nothing.

Bankruptcy and insolvency

is not a victimless crime.

There are people out

there who are either creditors,

it may be, a tradesman,

it may be a big company

but they can't afford to lose money

and very often when people go down

in bankruptcy, they take

other people with them.

Nick Barr and his wife Jill run

a successful sales business

which operates across the UK.

In 2013, he was introduced

to a man called Scott Kidd

who sold designer clocks

from his Leicestershire company.

Plausible, very plausible.

You would, you would - he was just

one of your kind of a naturally

decent guy on the phone.

If you asked him a question, he gave

you a straightforward answer.

He was very, very plausible.

Nick agreed to become

a sales agent for Mr Kidd,

selling his clocks to retailers

around the country.

But, within just a few months,

there were problems.

Customers started to

get short deliveries.

Then our payments started to dry up.

And then you get a little

kind of radar on your,

your kind of head says hold

on a minute, something's not right.

Nick was owed £4,000 and customers

began to question his integrity.

A phone call from another business

owed money by Mr Kidd,

led Nick to discover a string

of others who hadn't

been paid either.

Ian Cover, and his wife

Annemarie run an electrical

business in Leicester.

Two years ago, Ian rewired Mr Kidd's

warehouse but was never fully paid.

It's not uncommon

to be chasing money.

For any business it's

the bane of the daily

or weekly exercise you know.

But after months of being fobbed

off, Ian and Annemarie decided

to turn detective and

investigate Mr Kidd's past.

What they discovered

about him shocked them.

Well, he was a bankrupt,

he was a disqualified

director and he was actually

on license from prison.

Yet he was signing

company's cheques.

He'd been sentenced in 2011 to six

and a half years for doing

exactly the same thing,

and he was allowed to just

come out and just carry

on doing what he was doing.

Mr Kidd had been jailed

after trading fraudulently whilst

bankrupt, running a string

of companies leaving creditors more

than a million out of pocket.

Yet he was able to set up another

company from his prison cell

and when he was released on licence

halfway through his sentence,

he went to work for himself.

Ian and Annemarie eventually got

what was owed to them.

But Nick remains upaid,

still owed thousands.

Well, I care because I lost money

and I want other people to not be

put in that position.

That's unfair.

You know I'm a genuine

business person.

I work hard, I pay my

taxes, I pay my VAT.

It's unfair that these people

should get away with it.

Mr Kidd - bankrupt and in prison

- had simply created

his list of companies

through Companies House, the

Government's registration service.

All he'd needed was

a working email address.

Those that help legitimate

businesses get started,

are critical of the Government's

lack of scrutiny.

Companies House don't do any checks

at all on the identity

of individuals setting up companies.

All you need to do is provide

an application online.

There are no checks carried out

to verify the identity or even

whether those individuals

are genuine individuals,

and they can come from

anywhere in the world.

And Companies House

deal with how many?

42% is the latest figure

of incorporations passing through

the Government's own service.

That amounts to how many a year?

230,000 approximately,

slightly more in fact.

How many of them would

have undergone checks?

Absolutely none.

None.

None at all.

The Companies House registration

process relies on honesty.

And it's the same if

your business fails.

The bankruptcy process depends

on people coming clean

about what they can pay

and what assets they have.

The onus is on the bankrupt to tell

the truth and they must tell

the truth, that's the law.

Whatever assets that you have

are sold off by what's called

the Trustee in Bankruptcy

and your creditors are paid off.

And that's why it's important that

when people go before

the Trustee in Bankruptcy,

they have to tell the truth.

They have to say where their assets

are so that the trustee

can realise them.

But as Glenn knows all too well,

that's not always the case.

Meet Alan Yeomans.

A Derbyshire businessman

who made his money in property

before going bankrupt.

During the process,

he was asked what assets he had.

Furniture valued

at £300, he replied.

A watch he valued at £30.

Oh, and he lived in a green shed.

The Trustee in charge

of his case believed him.

It was only when police began

to investigate Mr Yeomans

for money laundering,

that Glenn Wicks and his team were

called in to re-examine the case.

You will remember that Alan Yeomans

told the official receiver

that he lived in a shed,

in his mum's back garden.

Right, OK.

What I am going to show

you is what he actually lives in.

Oh, my gosh.

And that's the shed.

It is probably one of the biggest

sheds I've ever seen.

Inside this "shed", a six-bedroom

mansion where investigators found

a treasure trove of fine art

and antique furniture.

It's complete with its

own disco and a gym.

And behind a 6 foot oil painting,

a secret door leading

to another money maker.

A cannabis farm.

All of which he was jailed for.

Well, to be fair to Mr

Yeomans, he wasn't lying,

he was living in a shed.

It's misleading the official

receiver at the very least to say

he lived in a shed when in fact

he called his property

Shedley Manor.

I can't quite believe the scale

of it, and the audacity of it.

He was sticking two

fingers up to you guys

and the system at every turn.

This was ruthless fraud.

This was a man who deliberately set

out to defraud his creditors and did

it until he got caught.

nobody says, "Let me go and see it.

let me check."

Not on this occasion, no.

Trustees always used to do that,

or very often had the ability to do

that, but now there's just so many

bankruptcies and so much debt

that they don't have the ability

to every time go out and check

what people are telling them.

So, the process relies

upon the honesty of the person

being investigated.

Making it a challenge for those

whose job it is to get money

back for the creditors.

What are some of the

tricks of the trade?

People will give assets away,

transferring property

into relatives' names

or into company names.

Creditors will be falsified

and they will be paid so it looks

as if legitimate debts

are being paid.

Income will be hidden,

bank accounts will be hidden,

jewellery will be hidden.

You can often see a white

line around the wrist

where the watch has disappeared.

So people hiding things.

You get paid out of the pot.

Is there a time when you have

to call it a day because actually

you're not convinced you're

going to get that asset

or realise the money?

Yes.

Of course there's a balance.

There's always

a cost-benefit analysis.

Perhaps the funds are in

an incredibly difficult regime

for example and you just are not

going to be able to get them.

Well, then you just have

to draw a line on it,

write off the money that you've

spent and move on to the next case.

The incentive is therefore

on the dishonest debtor to make it

as complex as possible?

Yes, but I mean they're fraudsters.

That's what they want to do.

They want to keep the money

for themselves and not

pay their creditors and not

pay the government.

For those who do get caught,

they face the severest sanction

possible - a Bankruptcy Restriction

Order.

For up to 15 years, you're banned

from being a director,

you can't form or manage a company,

or get credit over £500.

More than 1,200 BROs have been

imposed across the UK.

Effectively forcing those

who receive them to take a backseat

in the business world.

But what about those for

whom the backseat simply won't do?

The seaside town of

Dunoon, in Argyllshire.

Home to ferries, fish

suppers and the finest

radio show this side

of, well, Dunoon.

Live and local.

Come on in, pull up a chair.

It's just me - Malcolm,

on DCR 97.4 FM and Tune-In Radio.

These are the dulcet tones

of DJ Malcolm Scott.

Swearing gives you a sense of calm,

control and well-being.

Every week, he entertains his loyal

listeners with his modern classics.

Let's have a bit of Corner Shop...

Hellloooo...

This is Malcolm here, hello...

He may sound like Dunoon's

answer to Alan Partridge -

but he's actually

kind of a big deal.

Malcolm Scott was a

multi-millionaire grain merchant.

One of the biggest donors

to the Conservative Party,

he lent his private jet to some

of its biggest figures.

Former Prime Minister David Cameron

used it to fly from Glasgow

to Gatwick and Dundee to Oxford.

And Mr Scott's close friend

William Hague also benefited.

He used the plane a number

of times, including to fly

to the Ulster Unionist Party

Conference in Belfast.

This journey valued

at almost £4,000.

He was even the party's

Treasurer in Scotland.

In 2012, his business empire came

crashing down and he was declared

bankrupt with debts of more

than £41 million.

I think we'll finish at that.

During the bankruptcy investigation,

Mr Scott led the trustees on a very

deceitful dance indeed.

He hid a speedboat, wine collection,

fishing rights, assets

in the Bahamas and even claimed

a break-in at his house,

some items later found

being sold at auction.

He failed to account

for the proceeds.

And all the while he

was trustee director

of the Crimestoppers charity.

By 2015, the authorities had had

enough and Malcolm Scott

was hit with a lengthy

Bankruptcy Restriction Order.

Until 2021, he's banned

from being a company director.

From even forming a company.

The thing is, I've been keeping

a very close eye on Mr Scott

and whatever he's doing,

he's not taking

a backseat in business.

Every few weeks he travels

from his home in the west coast

of Scotland to Northern Ireland.

I watch as he visits development

site after development site.

All bought at auction and Malcolm

Scott with the keys to them.

Everywhere he goes, I follow,

including to a solicitors'

office in Coleraine.

What is he doing in there?

I then watch as he heads

to this large development

in Dervock, in County Antrim.

He greets the builder,

surveys the site.

He looks like he's the boss.

Now, the paperwork for this housing

company shows it's owned by a man

called Alexander Duncan.

It's a company called Sandnewco Ltd

- he's listed as the director.

When you look at the other

companies that he's got,

he makes board games.

This is a housing development,

and it's a big one at that.

I wonder whether Malcolm Scott's

really the director of this company.

Maybe not on paper, but I wonder

whether he's a shadow director.

Is he breaching his

Bankruptcy Restriction Order?

To try and find out,

I arrange for a member

of our production team to meet

with Malcolm Scott.

He'll go undercover,

posing as a potential investor,

to hear what Mr Scott says

about the business.

The important thing is you need to

ask what the company structure is.

After weeks of negotiations,

Mr Scott finally agrees

to a meeting in Northern Ireland

at the Dervock site.

Hi.

Hello.

Malcolm - nice to meet you.

Not bad at all.

Nice to meet you,

you're looking well.

He starts by explaining

the structure of the company.

It's Sandy and myself.

He's a silent partner.

He's got another business

making board games.

Oh, I see, right.

He's not even into property at all?

Eh, no.

No, he does board games.

Brilliant.

Will he be somebody

who I need to meet as well?

No.

It's me and him, we're 50/50.

Excellent.

Excellent.

I'm just wondering like, if this

all comes good - No, no, no, no.

I can make the decision

with you now.

Oh, right.

Excellent.

Well, that's good to know.

Under Malcom Scott's BRO he's banned

from managing a company or even

giving the impression

he is managing a company.

Yet here he is stating

he's the decision-maker.

So where does he rank

in the company hierarchy?

On the more corporate side

of things, you've got BLEEP

and then next one up...

Me.

You.

Me, yes.

And that's it,

you are the Head Shed.

Yes.

Yes, that's it.

Exactly.

So a disgraced, dishonest and banned

director appears to be running this

housing development,

acting as a shadow director

and using a clean frontman

for the paperwork.

A direct breach of his BRO.

And, apparently, it doesn't

just stop at Dervock.

And we have got a massive

site in Glasgow.

Right.

So, we're going in for planning

on that next year for 300 houses.

Wow!

So, I can let you see that.

An offer too good to pass up.

And this is the site,

in Netherburn in central Scotland.

It's a big piece of land - 32 acres,

16 of which already have planning

permission for housing.

Malcolm Scott arrives for a second

meeting with our investor.

How are you?

Not bad, yourself?

He outlines his plans

for hundreds of homes.

You've got another 100

to 150 units in there.

I see, right ok.

And then another 100 there.

Right, got you.

Interestingly, the drawing Mr Scott

shows us has the name

of a different company on it.

Instead of Sandnewco One Ltd,

as at Dervock, this time

it's Loch Leven Two.

So is there a Loch

Leven One as well?

There's a Loch Leven

One at Galashiels.

Right, and is that yours as well?

Yes, yes.

Yeah.

How many have you got?

That's, well we've got

four at the moment.

If this is true, it would appear

Malcolm Scott is a serial

breacher of his BRO.

And why not?

From what he says,

the rewards are worth it.

How much are you looking

to take on each?

We are looking at, if we have

developed it out ourselves,

£15 million.

£15 million?

Off this site.

Yeah.

Right, got you.

Worth waiting for, isn't it.

Yes, exactly.

And so, with sales pitch complete

and a firm handshake goodbye,

Malcolm Scott drives off.

Just a few days after our

meeting and Mr Scott's

visit to the solicitors

in Northern Ireland

begins to make sense.

I find a new business

on Companies House.

Its registered address,

the solicitor's office.

It's called Northside Residential.

It's another property business.

Now, this time, he's

gone one step further.

He lists himself as a person

with significant control

in the company, giving himself 50%

of the shares.

Now that's perfectly legal.

But, he also registers

himself as the person

who formed the company.

And that isn't legal.

Looking at all of our evidence

is insolvency expert Maureen Leslie.

She's acted as a Trustee in some

of the country's biggest

bankruptcy investigations.

He's holding himself out as

the decision-maker in the company.

I mean he says there

is no one above him.

You're not allowed to be a director.

He's not a named director, but he's

acting as if he were a director,

or he is allowing someone to form

the perception that

he is a director.

Let me show you this.

We saw him go into a solicitor's

office and a few weeks

later this company was formed.

Any red flags there for you?

He's just formed a limited company.

And he's a person with

significant control.

The Bankruptcy Restriction Order

does not allow you to

form a limited company.

That's what he's gone and done?

Yeah.

That is a breach of the terms

of the Bankruptcy Restriction Order.

Breaching a BRO can lead to a jail

sentence of up to two years.

This is the head of the government

agency in Scotland which gave

Malcolm Scott and others

like him their Bankruptcy

Restriction Orders.

For the rest of the UK,

it's the Insolvency Service

which issues them.

Who monitors BROs?

There is no positive

monitoring of BROs.

We rely on creditors to take account

of the fact that there is that

public record of the red flag

against these debtors and we would,

of course, follow up any information

about debtors breaching the terms

of their BRO directly.

Nobody is monitoring them?

Not proactively, no.

Not actively?

Yeah.

Do you see the kind of weaknesses

that I'm highlighting here?

It's like tagging somebody

with an electronic tag for bad

behaviour but actually it's not

linked to anything,

so what's the point?

Well, I would disagree.

The record is there,

it is publicly available,

it's easily searchable

and when the particular debtor tries

to apply for credit that

flag will clearly show.

I ask him about Malcolm Scott

and our evidence of him

appearing to breach his BRO.

Leaving aside the particular case,

if people are breaching their BROs,

yes, that is serious.

I'll take away the evidence that

you're prepared to provide us

and we'll have a look at,

look at the case and I can't say

anything further than that.

There is no suggestion of any

wrongdoing on the part

of the solicitor's firm in Northern

Ireland.

Alexander Duncan, the registered

director of Sandnewco One Ltd,

told us that Malcolm Scott

was an employee of the business,

with no executive

decision-making authority.

We asked Malcolm Scott

for a statement and through his

solicitor he denied acting

as a director of any company.

How effective do you think

the system is currently?

I think it could be

a lot more effective.

An independent trustee will have not

only the specialism and the resource

to be able to conduct complex

investigations but also

they are more flexible in terms

of resourcing and the skills

that they can bring to a case.

The insolvency service,

in your opinion, doesn't have that?

I don't think any government

organisation will be able to do that

so flexibly and so quickly.

So the unscrupulous

become the untouchable?

Sometimes that's true.

There are serial fraudsters out

there who, who are the clever ones

and I'm convinced we don't know

who they are.

It's only the ones who make

a mistake and leave a paper trail

that allows us to investigate them

and to bring them to justice.

My investigation has

revealed a bankruptcy system

fraught with problems.

A lack of resourcing, regulation,

a lack of monitoring

and robust punitive measures.

The government is quick to say

that business is key

to a healthy economy.

But allowing the unscrupulous

to flourish puts that at risk.