R v Forsyth
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE BELDAM |
| Judgment Date | 08 April 1997 |
| Judgment citation (vLex) | [1997] EWCA Crim J0317-2 |
| Docket Number | 9602860 X2 |
| Court | Court of Appeal (Criminal Division) |
| Date | 08 April 1997 |
[1997] EWCA Crim J0317-2
IN THE COURT OF APPEAL CRIMINAL DIVISION
Royal Courts of Justice
Strand
London WC2A 2LL
Lord Justice Beldam
Mrs Justice Bracewell
Mr Justice Mance
9602860 X2
MR G ROBERTSON QC with MR P BOGAN appeared on behalf of the Appellant
MR D CALVERT SMITH with MISS K McGAHEY [MISS Y COEN 17–3-97] appeared on behalf of the Crown
On 22nd March 1996, after a six week trial at the Central Criminal Court before Mr Justice Tucker and a jury, the appellant Mrs Elizabeth Forsyth was convicted of two offences of handling stolen goods. On 26th April Mr Justice Tucker sentenced her to five years imprisonment concurrent on each count. She now appeals against conviction and sentence. At the outset of the appeal the court, without hearing submissions on the length of the sentence, stated that in the circumstances it considered that the sentence imposed was excessive and disproportionate to the appellant's role in the offences. As she had already served a period of imprisonment equivalent to any sentence the court would have substituted, she was released on bail while the court considered her appeal against conviction. For the reasons given in this judgment we hold that her conviction is unsafe and that her appeal should be allowed.
In the 1980s Polly Peck International plc ("PPI") rose meteorically under the guiding hand of Mr Asil Nadir until it became one of the top 100 companies quoted on the London Stock Exchange. As it rose, so it fell, suddenly and spectacularly, leaving in its wake charges of fraud of enormous proportions involving Mr Nadir and some of his principal aides. It was alleged that Mr Nadir had misappropriated £150M. of the company's assets and that he had been helped to do so by the creation of false and misleading entries in accounting documents by the group chief accountant, Mr Turner.
Although Mr Nadir had created his wealth largely in this country, he was anxious to avoid contributing more than necessary to its fiscal resources. There is, of course, no shortage of shrewd professional advice to assist a taxpayer to minimise his liability to taxation of all kinds. The result was a complex web of companies and organisations incorporated "offshore" in Jersey and on the Continent. Mr Nadir had extensive interests in Turkey and northern Cyprus and the activities of PPI included widespread and varied business operations there. They included the exportation of produce, the manufacture of boxes, the ownership and management of hotels, other extensive leisure interests and secondary banking. One of PPI's subsidiaries, Unipac Packaging Industries Ltd. ("Unipac"), operated extensively in northern Cyprus largely financed from the United Kingdom by PPI. Unipac made cardboard boxes but, in addition, performed what has been described as a "secondary banking service" for business and other people in northern Cyprus by exchanging the currency of northern Cyprus which was "soft" for hard currency such as sterling, dollars or Swiss francs. There was nothing unlawful in these transactions which, we were told, produced a substantial profit for the PPI Group.
Mr Nadir was PPI's chairman and chief executive. From 1980 onwards he was also the principal shareholder, owning a 25% shareholding which in 1989 had a value of approx. £300M. The major part of this shareholding was held indirectly on his behalf by a company formed in Jersey called Restro Investments Ltd. ("Restro"). Restro held one of its accounts at the Zurich branch of Bank S.G. Warburg Soditic S.A.
Bank S.G. Warburg Soditic A.G. was a Swiss bank, with another branch in Geneva where it was known as Banque S.G. Warburg Soditic S.A. We will refer to it as Warburg Soditic, Zurich or Geneva, according to the branch concerned. The bank was a former subsidiary of S.G. Warburg & Co., the U.K. merchant bank, with which its Zurich branch had an account in London. Confusingly, there shared its Geneva branch offices a finance company called simply S.G. Warburg Soditic S.A., which we will call Soditic Finance.
About one-quarter of Restro's shareholding in PPI was pledged as collateral for a syndicated margin loan or loans apparently totalling £20M. from Warburg Soditic and other Swiss and U.K. banks. Warburg Soditic was entitled to require further "margin" or collateral, if the maximum liability outstanding exceeded at any time 50% of the collateral pledged to secure it, and, in the event of failure to provide such margin, was entitled to take steps to sell the shares.
In 1987 Mr Nadir created a Cayman Island settlement for himself and his family's interests known as the South Audley Settlement. It comprised several companies, including Vemak (Jersey) Ltd. ("Vemak") which owned a large estate in England, the Baggrave Estate, consisting of a manor house, Baggrave Hall, and a farm. Mr Nadir intended to live in Baggrave Hall and to establish a model farm. The estate was run by Baggrave Farms Ltd. A company was incorporated to manage the Nadir family's settlement and their personal affairs called South Audley Management Ltd.("SAM"). Both SAM and Baggrave Farms Ltd. were owned by a Jersey company, Corvo Ltd. ("Corvo") which was, in turn, part of the South Audley Settlement. SAM originally occupied premises in South Audley Street but later moved to Berkeley Square. In addition to Mr Nadir's interests, his mother, Mrs Saffiye Nadir, owned shares in PPI through many companies, including Forum Ltd., Tristan Ltd. (Tristan) and Hutchison Ltd. (Hutchison). These companies were managed by Steger Finanz in Zurich.
In 1988 Mr Nadir's son, Birol, introduced to SAM a close friend of his, Jason Davies. They had worked together as stockbrokers in the City of London. On 1st January 1989 Jason Davies was appointed a director and projects manager of SAM but he was also permitted to continue to act as stockbroker for his own clients and on behalf of Mrs Nadir's companies Tristan and Hutchison. This he did through his former employers, A.J. Bekhor & Co. He was what is known as "a half commission man". He also dealt extensively in PPI shares for other companies formed on the Continent whose controlling interests, probably connected with Mr Nadir and his family, were shrouded in corporate complexity. Jason Davies had bought 7.9M. shares in PPI for Tristan and Hutchison and these shares were eventually pledged with Citibank as security for a syndicated loan on margin. If the price of the shares fell below £2 per share, the bank became entitled to sell.
SAM was a non-profitmaking company. It was funded by money provided by other companies, including Corvo from Jersey. Its accounts were sent to Mr. Nadir and were audited every three months by the company's accountants, Rawlinson & Hunter. Most of the resources required by SAM were provided by Corvo from "loans" made by Mrs Saffiye Nadir.
In June/July 1989 Jason Davies left the U.K. to live in France and Switzerland and ceased to be a director and project manager of SAM. He was appointed by Mr Nadir who hoped to obtain Swiss nationality to handle investments for him, his companies and relatives through Nadir Investments S.A. ("NISA"). He was the company's administration manager reporting to its board of Swiss directors and to Mr. Nadir. He also dealt on behalf of a company called Gateway Investments S.A. ("Gateway") which was incorporated in June 1988 by Mr Leopard of Rhone Finance S.A. whose offices were near Geneva Airport. Although Gateway was not owned directly or indirectly by PPI, it was one of a number of companies, including Riverbridge Investments and Newbridge Investments, in which the Nadir family had extensive interests. The beneficial ownership of Gateway was, as no doubt it was intended to be, veiled from scrutiny but there was a great deal of evidence that it dealt in investments, including the purchase of shares in PPI, and that A.J. Bekhor & Co. were the brokers who dealt on its behalf. Substantial payments which could be traced to the South Audley Settlement were made on Gateway's behalf. Two payments of £46,000 and £100,000 were made to an account of Vemak, £100,000 was paid to Vemak and a similar sum to Alp Technology S.A., a Swiss company owned by Mr. Nadir. On 11th August 1989 £40,000 was paid to a bank in Zurich to the credit of Restro which owned Mr. Nadir's shareholding in PPI. Two payments of £70,000 were made on 14th September to Rawlinson & Hunter, the accountants advising Mr. Nadir, on the structure of the companies which were associated with or financed by SAM.
On 9th October Rhone Finance instructed Rea Brothers (Guernsey) Ltd. on receipt of sufficient funds to transfer £306,609.69 to the account of A.J. Bekhor & Co. at Midland Bank plc, 5 Threadneedle Street, debiting Gateway Investments S.A.'s account in pounds sterling; this instruction was, however, subsequently countermanded.
After the collapse of PPI in 1990, extensive investigations brought to light a complex series of transactions by which Mr Nadir and the group chief accountant, Mr. Turner, transferred funds from PPI to Mr Nadir's family and other interests in Turkey and northern Cyprus. These transactions were said to have involved the misappropriation of over £150M. and to have been supported by accounting documents which concealed the true nature of the transactions. Money was said to have been moved through the complex structure of companies in Switzerland, other European countries, northern Cyprus and Turkey. None of the directors or other senior officers of PPI had ever questioned the transactions which took a long time to unravel. Eventually the Serious Fraud Office brought sixteen charges of theft described as...
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