Arrows head gets nine years for fraud

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The Independent Online
Muhammed Naviede, the former head of the collapsed trade finance company Arrows, was yesterday sentenced to nine years in prison after being convicted of seven charges of fraudulent trading, obtaining property and services by deception and making false statements to obtain bank facilities.

After a six-month trial at the Old Bailey, the jury yesterday decided unanimously that Mr Naviede was guilty of seven of the eight charges put before them. Judge Richard Hawkins QC, who described Mr Naviede as a highly intelligent man who had been "very crafty" in the way he had carried out his offences, discharged the jury from returning a verdict on an eighth charge, that of deceiving the company's auditors.

The sentence is one of the longest ever awarded after a prosecution brought by the Serious Fraud Office, which began its investigations into the affair in July 1990, in conjunction with the City of London Police. The Arrows case has been one of the biggest on the SFO's books recently in terms of time and resources.

The judge commended the prosecution's presentation of its case. He said: "The strict control that the prosecution has exercised in the number of witnesses that were called and the limiting of the written material that has been presented in front of the jury has, in my view, been of the greatest importance to the clear presentation of this case."

When Arrows collapsed in July 1991, more than pounds 100m was left owing to more than 20 mostly overseas banks and other creditors. Richard Latham QC, prosecuting for the Serious Fraud Office, said: "He was mixing with the rich and famous, convincing them that he was not just one of them but among the most successful . . . he was a man who lived an opulent lifestyle - grand house, he piloted his own jet . . . as it turned out financed using other people's money."

Mr Naviede, 42, who lives in Hale, Cheshire, set up Arrows in June 1982. He chose to appear in the trial as a litigant in person, something that appears to have made SFO prosecution teams uneasy in the past. They fear that judges and juries may be more sympathetic to such defendants.

The prosecution maintained that from January 1989 onwards money obtained by Arrows from its bankers was being used not to fund insured trade finance business, as claimed, but to pay off other banks that were withdrawing or not renewing loans, or to finance Arrows' new property-buying subsidiary.

The investment in commercial property involved using borrowed money to buy buildings from household names, who would then remain as tenants.

Mr Naviede is said to have raised further money by re-mortgaging properties at grossly overvalued prices.

The defendant had argued that his previously vibrant company was brought down through a combination of Sedgewick, the insurance company, talking to the Bank of England about spurious rumours and then the Bank of England talking to the group's main bankers at a time when the City of London Police were investigating allegations of fraud. He argued that this set of circumstances led to a lack of confidence from which the company was never able to recover.

Two of the eight charges brought against Mr Naviede related to pounds 4m he obtained from NMB Postbank by deception. NMB called in the receivers following the withdrawal of an audit report for the company in the summer of 1991. Mr Naviede was arrested in August 1991.

He was also charged with obtaining credit facilities for pounds 41m by deception from NMB and Girozentrale und Bank der Osterreichischen Sparkassen, an Austrian bank The other charges included one of fraudulent trading and three of making false statements to Arrows' creditors and its auditors.