What have Connaught and Tiuta Directors left to hide?

Posted on October 4, 2012

Here in the States, we never cease to be amazed at what you Brits have to put up with. Houses without air conditioning, tiny little cars with diesel engines, restaurant waiting staff who forget to smile and say ‘have a nice day!’… We’re astonished that you just soak it all up.

 But what has really shocked us since the Connaught fund went belly up is how tolerant you are of closed-shop professions that are allowed to act as judge and jury over their peers when customers have well-founded complaints. First we learned that there was nothing Danny Dartnaill’s and Malcolm Cohen’s professional body, the ICAEW, could do to remove them as administrators of Tiuta International, despite the fact that their appointment clearly breached the code of ethics for insolvency practitioners due to their previous professional relationship with the group and the risk that it could result in a damages claim. And now we understand that Peter Hollis, the notorious administrator brought in by Connaught’s directors in preference to a reputable independent practitioner recommended by investors, who was accused by a High Court judge of a prima facie case of professional misconduct in July 2010 for having allegedly misled creditors in a case he handled in 2008 could still be practising well into 2013, if not beyond.

 Yup, Hollis’ regulator, the ACCA, has told an investor that the evidence that the High Court judge directed be forwarded to it in July 2010, after Hollis failed to turn up to a hearing convened to investigate his conduct, is still being considered by an external, independent assessor. It’s likely to remain so for another three months. If wrongdoing is confirmed, the file will then pass to the association’s Disciplinary Committee. How long will it take to reach a decision? And how often are IPs actually removed from the register? Turns out to be hard to get a firm answer…

 Investors have already had to watch the BDO pair extract around a quarter of a million pounds of their money from Tiuta plc and have incurred further costs removing the conflicted insolvency ‘experts’. They now face further costs and delays as a notorious IP, carefully chosen by Connaught’s directors, sucks as much money as he can from the firm before being unceremoniously ditched. Neither move would have been necessary had their profession been supervised by effective regulators, feared and respected by practitioners, whose first interest was protection of the public rather than preservation of members’ livelihoods. Equally, we think the problem could be avoided by ending the bizarre practice of allowing directors of failing firms to appoint the insolvency practitioners who ought to be investigating the conduct of the directors…

 We’re not saying that all insolvency practitioners are crooks. On the contrary, we hear good things about Duff and Phelps. But of course, it’s an American firm. We’re just saying we don’t like how lax the rules seem to be your side of the pond.

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