BDO Sent Packing

At a meeting of investors on 12 September 2012, BDO’s duo, Danny Dartmail and Malcolm Cohen were given the firm message that they should resign as administrators of Tiuta International Limited. BDO had failed to win the trust of investors due to several factors.

Prior to their appointment as administrators, BDO had advised Tiuta plc on solvency issues and former CEO George Patellis made them aware of the misuse of monies borrowed from the Connaught Income Fund Series 1 in early 2011. Investors expressed outrage at the failure to take any steps to protect the interests of investors when Danny and Malcolm became aware of the widespread misuse by Tiuta plc of money from the Fund. Investors found it difficult to accept that BDO could not have made strong and repeated allegations of fraud to the FSA when retained to make monthly reports to the FSA. Investors lined up to condemn the administrators for their failure to obtain any bank statements of Tiuta plc despite the fact that most of the monies of Tiuta International were paid by the Fund into an account of Tiuta plc. There was condemnation of BDO as it knew Tiuta plc operated one bank account for itself and its subsidiaries and this has led to suspicion that BDO was aware of the high probability that monies from the Fund had been used to pay off a loan from the Bank of Scotland, running costs of Tiuta, a contribution to a director’s pension and other wholly inappropriate uses of cash obtained from the Fund by deception.

The vote of investors was decisive. Of the votes cast, only 3.69 per cent of investors voted for BDO to continue. Of the votes cast, only 13.26 per cent voted in favour of appointing another insolvency practitioner to work alongside BDO. In fact, 82 per cent of those investors who voted wanted to remove BDO.

We understand that after the vote, there was an unseemly wrangle by the duo from BDO over fees. This led to a delay in the proceedings. BDO has behaved poorly throughout having failed to turn up to the previous meeting of investors on 13 August. At the meeting on 12 September, it had misread the mood of investors and failed to convince the meeting that it had acted at all times in the best interests of investors in the Fund. Investors made it plain that the duo from BDO did not retain the confidence of investors and that they should go quickly and quietly.