The fallen tycoon, his penniless ex-wife, and the latest twist in the multi-million pound divorce battle from hell
Scot Young claimed he lost his £400m telecoms empire just months before separating from his wife. So how is he funding the UK’s most high-profile divorce hearing?
It is among the most acrimonious divorce battles that Britain has ever seen. In one corner is Scot Young, a 51-year-old former tycoon who made and then lost – he says – a sprawling property and telecoms empire worth £400m. In the other is his estranged wife, Michelle, whom Mr Young left in 2006. The 48-year-old former fashion tycoon, who now lives on housing benefit and shares a bed with her youngest daughter, has been pursuing her ex-husband through the courts claiming that he squirrelled away his vast wealth offshore with the help of several high-profile business associates.
Earlier this year, the tycoon was jailed for a “flagrant and deliberate” contempt of court after repeatedly failing to disclose what happened to his assets. Despite repeated court orders, Mr Young still owes his wife almost £1m in maintenance, as well as £1.28m in unpaid tax. He is now free again, and within days of his release was seen partying in Soho with his girlfriend, Noelle Reno – the ex-fiancée of banking heir Matthew Mellon.
Now an investigation by The Independent has revealed more peculiarities about the case:
* The existence of a bank account held by HBOS following the voluntary liquidation of a company linked to the businessman.
* That £1.1m generated from the liquidation of the firm appears to be unaccounted for.
* That £300,000 that emerged during the wind-up of the company was held by the bank for five years.
* And that £100,000 was sent to a law firm that had represented Mr Young – 18 months after he was officially declared bankrupt (although the bank says the transfer was not related to him).
The jewel in the crown of Mr Young’s business empire and “principal focus”, according to High Court documents, was Dione, a chip-and-pin technology company based near High Wycombe in Buckinghamshire.
The company was based half an hour’s drive from the businessman’s Oxfordshire country estate, Wootton Place, which boasts gardens designed by the iconic 18th-century landscape architect Capability Brown.
Both the headquarters of Dione and Wootton Place, where Mr Young once lived with Michelle and their two young daughters, were purchased with mortgages provided by the Bank of Scotland (now part of HBOS).
The tycoon and the bank, which received a £20bn taxpayer-funded bailout at the height of the financial crisis, have a close working relationship stretching back many years.
The marriage imploded in spectacular fashion. Mr Young left his wife just after he claimed to have lost all his money in a disastrous Russian property deal called “Project Moscow”. HBOS was officially listed as one of his major creditors.
In a sworn affidavit that was supposed to outline his true financial position, Mr Young claims the bank provided him with mortgages totalling £29m between 2001 and 2005 to buy six luxury properties in London, Oxfordshire and Miami.
But in the High Court statement, he claims the properties – including Wootton Place – were later repossessed by the bank and sold for a profit of more than £17m. It is unclear how £3m he owed to the bank was not fully repaid and this has never been explained by Mr Young.
The mysterious and complex nature of his finances is well-illustrated by an examination of Dione, Mr Young’s former chip-and-pin company. The High Wycombe headquarters of the firm – known as “Dione House” – were purchased by Condor Corporate Services Ltd, a company beneficially owned by Mr Young, in February 2003 – one week before he bought Wootton Place.
Gwilym Davies, a business associate who has worked with Mr Young on many ventures, was a director of the company when it went into voluntary liquidation in late 2006 – six months after the tycoon claims to have lost everything.
Following the sale of Dione House for £6.25m in December 2006, more than £300,000 generated from the winding-up of Condor was transferred into an “internal” HBOS account “under the control of the bank”.
But the money does not appear to have been listed during the liquidation.
Various administrative fees are included in the chairman’s statement, lodged at Companies House, including an “early redemption fee” on the HBOS mortgage of £80,000. However, an analysis of the company’s statements reveals a surplus amount of £1.1m apparently unaccounted for.
Leaked bank statements seen by The Independent reveal HBOS opened the “internal” bank account labelled “re Condor Corporate Services” in December 2006. Senior HBOS sources confirmed the money related to the “sale of a property”.
A total of £324,550 marked “redemption fees” and “XS redemption funds” on the bank statements was placed into the account, where it lay untouched for five years.
When asked about the disparity between the £80,000 redemption charge officially declared to Companies House and the £325,000 redemption fees logged in the internal HBOS bank account, a spokesman said: “We do not intend to comment on confidential matters.”
The money lay dormant until September 2011 – 18 months after Mr Young was declared bankrupt – when a £100,000 payment was made to a law firm that has represented the businessman during his divorce proceedings.
Senior bank sources stressed the payment was made on behalf of a former director of Condor who was not Mr Young, and who had remained in dispute with the liquidator for five years.
The tycoon told the High Court in June that the bank account related to a disagreement between the liquidator and Mr Davies, a former director of Condor, but said he could not elaborate as the eventual resolution was covered by a confidentiality agreement.
HBOS said it could not comment due to client confidentiality – but was unable to explain how there was a “client” when the account was “internal” and “under the bank’s control”.
The remaining £225,000 was later paid back to HBOS in “exit fees”.
When asked who controlled the bank account and who authorised the payment to Mr Young’s law firm 18 months after he went bankrupt, a Bank of Scotland spokesperson said: “This was an internal account opened by the Bank, to which the customer had no access. Due to issues of customer confidentiality, we are unable to provide you with any further information on this account.”
Mr Young’s disputed financial demise has been probed for more than two years by accountant David Ingram, a court-appointed trustee-in-bankruptcy with wide-ranging powers to recover assets and monies for the tycoon’s creditors.
The senior partner at Grant Thornton told The Independent his team had investigated the finances of Condor Corporate Services Ltd but had found nothing improper.
Mr Ingram said: “I’ve had discussions with those people and what I have undertaken has left me with the impression that there is no smoking gun.
“I’m aware that there are some confidentialities and I am not going to upset that confidentiality agreement.”
The accountant, who works regularly with HMRC and the Serious Fraud Office, was asked about the difficulties he had faced during attempts to track down Mr Young’s assets, and suggested he was hampered in his task as the tycoon had been ill.
Mr Young became poorly in 2009 – just as the judge in his divorce proceedings was about to jail him for failing to explain the mysterious disappearance of his extraordinary wealth.
He was initially handed a suspended six-month sentence in June 2009 and given three months to come clean. According to High Court papers, Mr Young became ill a few days before the answers were due and recovered just after the deadline to submit his court-mandated answers to the judge.
During that time, lawyers for Mrs Young claim to have uncovered emails that show her ex-husband “clearly continuing in business” and conducting offshore deals, particularly in the Isle of Man.
Mrs Young told the High Court that her husband had faked illness in order to “manipulate the court system”.
Grant Thornton is also involved in a difficult case regarding the complex estate of the late Russian oligarch Boris Berezovsky, a business associate of Mr Young.
The international accountancy firm told the High Court last month that Vladimir Putin’s arch-nemesis did not leave behind enough assets to pay off debts that include a huge potential liability of £100m to HM Revenue and Customs.
But lawyers for Mr Berezovsky’s family attacked the conclusion that his estate is insolvent and said that Grant Thornton had failed to identify numerous assets. “The work simply hasn’t been done,” Henry Legge, QC, a barrister for Mr Berezovsky’s former partner, Helena Gorbunova, told the court.
However Stephen Atherton QC, who represented Grant Thornton, insisted that the estate was insolvent.
Mr Young has so far represented himself as the bitter divorce proceedings have inched their way through the British legal system. The final, four-week hearing is due in October and is set to feature an array of high-profile witnesses, including Mr Young’s friends Sir Philip Green, Richard Caring, Harold Tillman and Sir Tom Hunter.
Ahead of the explosive showdown, it can also be disclosed that Mr Young has managed to engage the services of Raymond Tooth, one of Britain’s most expensive divorce lawyers who has represented Sadie Frost in her battle with Jude Law, and Irina Abramovich, the ex-wife of the Chelsea owner.
When asked how he was able to represent a bankrupt, a spokesperson for Mr Tooth replied: “We do not discuss any matters regarding the affairs of clients with investigating reporters. Furthermore, you should not assume that we act for Mr Young. You must be aware of the duty of confidentiality.”
Mr Young did not respond to requests for a comment.
Contempt of court: The judge’s ruling
In January this year, Scot Young was sentenced to six months in prison for “flagrant and deliberate” contempt of court after repeatedly failing to disclose the whereabouts of his missing fortune.
Jailing the former tycoon at the High Court in London, Mr Justice Moor told him: “You have brought this entirely upon yourself.”
He described one explanation that Mr Young had given for not complying with court orders as “absurd” and said another response was “next to useless”.
He added that the businessman would serve at least three months in jail, but could be freed at any time if he revealed the whereabouts of the missing money and explained how his life was being funded by “friends”.
In his judgment, he said: “It is absurd to say that these friends are prepared to support him financially to such a huge extent but that not one of them is prepared to produce any documentary evidence that the money came from them. There is no evidence he has tried to obtain such information from them.”
Mr Young was released from Pentonville Prison in April.
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