Thompson and other Farepak directors may be hampered by ban

Nine former board members at Farepak, the defunct Christmas hamper business, may be disqualified from being directors - including Sir Clive Thompson.

by Dave Waller
Last Updated: 06 Nov 2012
That’s if Vince Cable has his way. The Business Secretary has taken time off from sounding off about bank bonuses to instruct the Insolvency Service to file a high-court application against the nine, following the debacle at the company five years ago that resulted in around 150,000 customers losing their savings. Good to see the legal system has wasted no time in springing into action.

Many of these savers were low-earners who thought they were acting prudently, putting their loot into a fund for Christmas gifts - only to find these funds hadn’t been protected. Customers who’d saved with Farepak for decades were given no warning their savings were at risk: while Farepak’s parent company European Home Retail was encouraging savers to stash more away, it was undergoing financial trouble that eventually sent it into administration with debts of £40m.

As a belated result, those who may now find themselves up corporate creek without a place in which to stick their paddle include Sir Clive Thompson, who was EHR chairman when the whole thing went down.

This would represent quite a fall from grace for Thompson, one of the UK's best-known businessmen. Prior to the scandal he was known as Mr 20%, the man who’d led Rentokil in to the FTSE-100 by boosting earnings by a fifth every year. He was a president of the CBI, a member of the Committee on Corporate Governance and deputy chairman of the Financial Reporting Council (FRC), and a former director at Sainsbury, Caradon and BAT Industries. These days, however, his only role is as deputy chairman of Strategic Equity Capital, a London-listed investment trust. So even if he is banned it may not make much difference in practical terms.

Another high-profile suit who may be joining Thompson in the thumb-twiddling ranks is the chief executive of Blacks Leisure, Neil Gillis (although he's just announced that he's planning to resign from the outdoor retailer). He was a non-exec at EHR at the time of the collapse.

In terms of worst case scenarios, the courts have the power to ban these nine directors from operating for up to 15 years apiece. But they're likely to put up a fierce defence; none of them will want this besmirching their reputations.

And it's important to stress that as yet, none of them have been found guilty of anything; indeed, the Insolvency Service hasn't even specified what exactly they're supposed to have done (or not done). Of course it's right to pursue this if it thinks there's a case to answer. But being a board director of a failing company and keeping up with your legal obligations is not a straightforward business. Proving these charges beyond doubt may be tricky, to say the least.

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