Imperial's UK arm collapses

The British end of the troubled offshore financial group Imperial Consolidated has been put into administration, leaving many people anxious to discover what will become of up to £200m of investments.

For over a year The Independent on Sunday has followed the accident-prone and often bizarre antics of Imperial, which has fallen out with a Syrian arms dealer, had directors struck off and seen offshore regulators move against its offshore bank. There has also been a string of successful court actions against the group in Britain and New Zealand. But Britain's regulator, the Financial Services Authority (FSA), has taken no action.

On Thursday, the group's directors announced that holding company Imperial Consolidated Ltd, British Imperial Consolidated Financiers Ltd, and Imperial Phoenix Finance Ltd had gone into voluntary administration.

A spokesman for Imperial said it had presented its case for administration before Leeds High Court to protect the interests of its clients, creditors and share- holders. The order was made and the court appointed Mazar Neville Russell as administrator.

The spokesman said: "The interests of our clients are paramount. Following the judge's decision, an orderly winding down of Imperial Consolidated's assets and business activities can now take place. This will allow us to discharge the company's obligations and to distribute any surplus amongst shareholders."

David Marchant of the Miami-based Offshore Alert magazine, which has been tracking the financial group closely, said: "This action by Imperial Consolidated, and its timing, comes as no surprise, particularly since Imperial Consolidated Ltd was due to file its annual audit with Companies House by 31 July 2002. I never expected that the firm would file one."

Two months ago, administrators in the offshore tax haven of Grenada took over Imperial's subsidiary, Imperium Bank. The Grenadian authorities appointed PricewaterhouseCoopers to conduct a review of the bank's finances within 15 days but the deadline has been extended several times.

Worries about Imperial's abilities to pay out on its investment products had mounted recently. A month ago Allied Dunbar International went to the FSA with concerns about the operations of the company. This coincided with a meeting of offshore life firms to share information about the investment products of Imperial, which is based in Lincolnshire.

One offshore broker, Britex, estimated to have placed $50m (£34m) of clients' money in these schemes, said Imperial had defaulted on payments of $0.5m to its clients since January.

Those problems came a few weeks after Syrian arms dealer Monzer al Kassar obtained an $8.5m asset-freeze order in Spain on Imperium Bank and two other related firms. This followed a legal dispute between Imperial and the notorious arms dealer over a failed mining deal.

Imperial was formed in 1994 by Lincoln Fraser and Jared Brook, who was forced to hand over control of the company in 2001 after being disqualified from holding directorships. It started as a debt-collecting agency and was employing 340 people in Britain, but laid most off last year after a series of legal cases hit the loan side of the business. It says it has 28,000 UK clients for its various investment schemes and up to £200m invested.