John Ashcroft's sale of his luxury flat to the Coloroll directors' pension scheme, subsequently resold at a pounds 117,000 loss, looked all wrong. So did a so-called salary cap that 'restricted' Mr Ashcroft's pensionable salary to pounds 375,000 - pounds 68,333 more than was otherwise his due.
After a two-year investigation, the Pension Ombudsman has decided that they were wrong.
The impact of these questionable transactions was to reduce substantially the money available to pay pension benefits to the other nine members of the scheme. The redress that the Pension Ombudsman has ordered could mean reducing the entitlements of Mr Ashcroft together with Philip Green and Eric Kilby, Coloroll's former managing director and finance director, by pounds 300,000- pounds 400,000.
Mr Ashcroft says the trustees took advice on the flat purchase (the ombudsman saw no evidence of it) and he was not involved in the peculiar salary cap affair, a change made after he left Coloroll. Even taking Mr Ashcroft at his word, the flat purchase was always an unsuitable investment for a small pension scheme. It is not just a case, as he suggests, of being wise after the event.
The role played by McKenna & Co, the scheme's lawyers, and by the corporate trustee that replaced Mr Ashcroft and his former colleagues is also worrying. Some of the answers they gave the ombudsman were misleading and, in one instance, bordered on the preposterous. They suggested that the pension scheme was ultimately better off through its ownership of the flat because Coloroll would not otherwise have been able to make a pension contribution. The fact that FJ 'Barney' Wilson, of the corporate trustee, was president of the Association of Pension Lawyers hardly gives grounds for confidence.
The Government's 5 per cent limit on self-investment ought to prevent a recurrence of the problems faced by the Coloroll scheme. Large pension schemes are predominantly well-run. But cases like this make one wonder just how much abuse was suffered by smaller schemes during the recession.