Boardroom cowboys to be targeted

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The Independent Online
Cowboy directors whose companies fail through dishonesty or negligence - leaving customers financially devastated - are to be targeted in a new crackdown, Nigel Griffiths, the consumer affairs minister, announced yesterday .

Mr Griffiths was presenting the annual report of the Department of Trade and Industry's Insolvency Service, which shows that 1,040 directors were disqualified by the courts in the last financial year, a rise of 43 per cent on the 727 directors banned in the previous year.

Mr Griffiths said there would be no respite under the new government for unscrupulous business people.

"I want to spell out to the cowboys that Labour is going to be even tougher on them in future," he said.

"My message to people who are ripping off consumers is that there is no place for you in British business."

He added that he planned to "name and shame" rogue directors who had been disqualified, in the hope that publicity about their actions would deter other fly-by-nights.

DTI officials say that areas of business in which companies most frequently collapse include the building trade, plumbers, double-glazing salesmen, car mechanics and clothing companies. Among examples given by the department yesterday was that of Sharman Communications, a travel agency and tour operator that went into voluntary liquidation in July 1994, after only four months of trading.

The company, which ran up debts of pounds 409,000, had advertised cheap summer flights in newspaper travel sections.

Most of its 700 customers had yet to take the holidays and lost their deposits. The two directors were disqualified in the High Court from holding other directorships for 12 years.

The Insolvency Service, which investigates failed companies with a view to bringing disqualification proceedings in the courts, took action against 1,430 directors last year, compared to 1,395 the previous year.

Directors can be banned for between 2 and 15 years for unfit conduct.

Mr Griffiths said consumers were particularly vulnerable when directors of an insolvent company continued trading or when a "phoenix" company rose from the ashes of a failed one, using its assets.

"We want the Insolvency Service to be very much focused on protecting consumers and other creditors, and not in any way to be defending the rights of unscrupulous traders and business people," he said.