'Spivs' abuse gas sale
Sunday 06 March 1994
Housewives, students and David Thompson, the multi- millionaire founder of Hillsdown Holdings, were among those to profit from the scheme, which was supposed to inject competition into the gas supply industry two years ago.
'The Office of Fair Trading (which administered the scheme) has condoned spivvery on a heroic scale,' said Peter Spring, industry analyst at Henderson Crosthwaite.
In a survey of the 102 companies participating in the scheme, the IoS has established that many were set up by people who hoped to buy gas at just above cost and sell it on to independent gas distributors, after pocketing a guaranteed wholesale margin.
The directors of these companies have not broken the law. However, they have collectively destroyed the credibility of the gas release programme, and damaged efforts to promote competition, threatening long- term plans to open up the domestic market.
Under the terms of the scheme, British Gas is compelled to sell an agreed volume of gas at slightly over cost to independent gas suppliers approved by the OFT. Most of the 30 companies whose records we examined proved to be get-rich schemes rather than real competitors.
Eight were set up by Wildman & Battell and its sister company, Same-Day Company Services, a company formation business. John Wildman, director, said that none of the companies had been established specifically to buy gas. He added that he advertises in Exchange & Mart; how customers traded was their own business.
Seven companies were sold on to clients. However, both Mr Wildman and his wife also applied for gas as directors of Watchpower - one of the four 'power'companies set up by Wildman & Battell.
One of Mr Wildman's clients, Iain Alexander, a financial adviser, set up four companies to apply for gas. He and his wife, Glenys, are directors of Cobham Gas Industries and Galaxypower; he is also a director of two other companies with Ian and Stephen Dowle, both described as students and residing at the same address.
David Thompson and his son Richard also participated in the scheme via Thompson Trading, one of their many investment vehicles. They sold their gas on to Agas, an independent gas distributor.
However, some speculators did not realise the profits they expected to make, because the number of applicants diluted the gas available, and prices softened when speculators tried to offload their gas. Those who were most astute netted about 3/4 p a therm, bringing in a profit of about pounds 10,000.
Administration of the scheme has now been transferred to Ofgas. But some speculators are already eyeing up the electricity industry.
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