The disgraced bosses of Imperial Consolidated, the UK-based offshore financial group, paid themselves in excess of £6m in the group's short life before it collapsed in 2002 owing investors £220m.
UK administrator Mazars Neville Russell describes the payments as "excessive" in creditors' reports released last Friday. "No resolutions were passed at any annual general meeting or otherwise approving the accounts or the amounts of directors' remuneration," the report points out.
According to Mazars, Lincoln Fraser's and Jared Brook's salaries and remuneration meant they received £1,621,334 and £1,527,106 respectively for the 17.5 months ended 30 September 2000, and £1,445,870 and £1,379,270 respectively, for the 12 months ended 5 April 2001. Other payments, running into the hundreds of thousands, were paid into their holding account by other Imperial group companies, which have not been explained.
Mazars says it believes that some £220m was paid into the Imperial group by investors, £20m more than previously estimated. Unsecured creditors of one of the main companies within the Imperial group have been told to expect a dividend of approximately 11 pence in the pound. That is the "estimated outcome" for parties owed money by Imperial Consolidated Financiers as forecast by the firm's administrators, Philip Lyon and Steve Woods of Mazars.
The two major UK-based companies were recipients of approximately 55 per cent of the £220m raised from investors around the world. The remaining 45 per cent of investor funds did not pass through Imperial's UK companies and is being treated as "missing" by worldwide investigators.
In the creditors' reports, Mazars says that Imperial and its founders, Lincoln Fraser and Jared Brook, were involved in criminal activity. "In short, this case has all the appearances of large-scale international fraud," state the administrators.
The history of the group shows that its business was moved and reorganised between jurisdictions as things became difficult. "For example, the move from the Bahamas to Grenada at the end of February 2001 in the light of increased regulatory controls and the shift from the UK to the BVI (which the Defendants say was carried through to avoid the effects of Disqualification Orders)."
David Marchant, publisher of the Offshore Alert newsletter, which has closely monitored the Imperial debacle, said yesterday: "These reports will make for sobering reading for any Imperial Consolidated investor who is hoping for a significant recovery from the winding up of the group's affairs."
Mazars believes Imperial was insolvent from the beginning, when it began accepting investor funds by offering above- average returns, and was run for the self-interest of insiders.
After they were disqualified as directors in 2001, Mr Fraser and Mr Brook continued to beneficially own and control Imperial through the Fraser Brook Partnership and served as "shadow directors", alleges Mazars.
"In accordance with the provisions of the Company Directors Disqualification Act 1985, we have reported to the Department of Trade and Industry on the conduct of the directors and shadow directors, both prior and subsequent to our appointment," Mazars states.