Asil Nadir personally transferred nearly £200m out of Polly Peck International, the British public company he controlled, into secret accounts in Northern Cyprus, claimed ownership over more than £25m of the company's properties and gave cash to Cypriot businessmen to covertly buy shares in Polly Peck.
These activities of the fugitive businessman, who has said he is prepared to come back to Britain to face fraud and theft charges, are detailed in an accounting regulator's report obtained by The Independent on Sunday.
Mr Nadir fled the UK in 1993, leaving on a light aircraft to France, where he flew on to the Turkish Republic of Northern Cyprus, reportedly breaking out the champagne as he passed out of British air space. He was facing 66 charges relating to the collapse of Polly Peck in 1990 and allegations of an illegal share support operation to keep the stock market value up in the months before the group went into administration.
The Turkish-born businessman has always denied all charges, saying they were the product of a conspiracy against him by the Serious Fraud Office, which in October 1990 raided Polly Peck's Georgian townhouse offices in Berkeley Square, London, where the walls were hung with Turner watercolours and an antique globe was stuck with flags marking the spread of the Nadir empire.
But an independent investigation by the Accountants' Joint Disciplinary Scheme details how the company was bled dry by Mr Nadir in scores of transactions in the two years before Polly Peck failed. The accounting regulator found that during 1988 Polly Peck made 24 separate payments to its subsidiaries in Turkey and Northern Cyprus, totalling some £58m. The following year Polly Peck paid out £141m in 64 different deals. The report said that "Mr Nadir was able to initiate transfers of funds out of [Polly Peck's] London bank accounts without question or challenge. Further ... he was able to conceal his actions until such time as the cumulative cash outflow became so great that the group was unable to meet its obligations to its bankers."
In 1990, Polly Peck's board became so worried about the money transferred into Northern Cyprus that is confronted Mr Nadir and asked him to return it. He refused.
The accounting regulators found that the Inland Revenue had been investigating transactions by a Swiss nominee company, Fax Investments, in shares in Polly Peck and another company run by Mr Nadir's son, Birol. It found a trail of transactions which indicated that money had come from Polly Peck businesses in Northern Cyprus to Fax.
When confronted about these deals, Mr Nadir told Polly Peck's auditors, Stoy Hayward, that one of the group's Northern Cyprus businesses "provided what were in effect personal banking services for certain Turkish and [Northern Cypriot] residents". The auditors described this arrangement as "extremely unwise transactions". On top of these massive money transfers and "unwise transactions", the regulators found that some of Polly Peck's assets had been secretly registered in Mr Nadir's name. These were all in Northern Cyprus and had a net book value of £25.5m in 1989. In addition the Didima Hotel development in Northern Cyprus, valued at £15.5m, and £6.7m worth of other buildings, had no registered owner. Nadir said he was holding the assets "on trust" for Polly Peck businesses.
However PricewaterhouseCooopers, the accountants appointed as administrators to Polly Peck, had terrible trouble getting control of many of the group's Turkish and Northern Cyprus assets after the collapse. Indeed one PwC manager was beaten up in Istanbul while making enquiries about Polly Peck businesses.
Mr Nadir's solicitor, Peter Krivinskas, is now in talks with the SFO about terms for his client's return. Mr Nadir, meanwhile, now 58, cuts an increasingly isolated figure in exile in Northern Cyprus, which has no extradition agreement with Britain and is a refuge for several dozen British fugitives including, at one time, Kenneth Noye, the gangster now in a UK jail for the M25 road-rage killing, John Docherty, a fraudster, who escaped after serving a year of his sentence, and Dogan Arif, godfather of the Arif gangland family who ran much of the London drugs trade in the 1980s.
A mile from Arif's property, in the village of Lapta in the mountains overlooking Kyrenia, is Mr Nadir's villa: a two-storey house made from stone, set in a lush garden and surrounded by a wall that, two years ago, was raised to 2.5 metres high and fortified. Behind the bougainvillaea-covered wooden gates, Mr Nadir is looked after by several maids, and watched over by 8-10 bodygards who work round the clock. They are with him when he sits on Alagadi beach under a white canopy tent, covered on three sides, looking out to the sea, and when he takes occasional strolls along the waterfront or dines at a local fish restaurant.
They are with him, too, when, at 8.30 each morning, he leaves in an armoured car for his office in central Nicosia. Over the years his business interests have shrunk. His hotels were sold to pay off tax debts in 1994, his bank Endustri was taken over by the Turkish Cypriot central bank last year, and Kibris newspaper, a TV and radio station are all that remains of his known empire.
As his businesses shrank, and the years with him virtually trapped on an island half the size of Wales lengthened, his state of mind gave cause for concern. Three years ago, as part of an attempt to have the charges thrown out, three psychiatrists went to Cyprus to assess Mr Nadir's fitness for trial. Dr Gerald Libby, a Harley Street psychiatrist retained by his legal team, found him "chronically depressed" and "expressing paranoid ideas". But his solicitor Peter Krivinskas says he now "feels mentally fit and physically fit".
If he does come back, the SFO's record on the case does not invite over-confidence. In 1999, Peter Dimond, the pilot who flew Mr Nadir out of Britain and was later convicted of perverting the course of justice, was freed by the Court of Appeal. In 1996, Mr Nadir's aide Elizabeth Forsyth was convicted of laundering £400,000 stolen from Polly Peck and sentenced to five years. Ten months later, she too was freed by the Appeal Court. The SFO has since seen a number of other big cases collapse.Reuse content