HBOS fraud scandal linked to collapse of Euromanx

By Adrian Darbyshire in Crime

The HBOS fraud scandal may throw new light on the collapse of island airline EuroManx.

A corrupt senior bank official and a group of City financiers were last week jailed for a total of 47 years after being convicted of one of Britain’s biggest bank frauds.

Former HBOS executive Lynden Scourfield ’sold his soul’ for sex parties and luxury trips to crooked David Mills by forcing firms that needed to borrow cash to use his friend’s consultancy firm.

EuroManx, which operated services from Ronaldsway to Liverpool, Manchester, London City and Belfast, collapsed in 2008, owing the Manx government £1.16m in unpaid airport fees and taxes. It blamed rising fuel costs and falling passenger numbers.

The Manx government had extended credit facilities to the airline in the hope that a buyer could be found.

But on May 9, 2008, EuroManx folded. It avoided having its aircraft impounded by flying its last Dash8 off the island at 6.23am, informing airport authorities two minutes after take-off that it had ceased operations.

Until July 2007, one of EuroManx’s directors was David John Mills, 51, latterly of Moreton-in-Marsh, Gloucestershire, who was last week jailed for 15 years for conspiracy, fraudulent trading and money laundering in connection with the HBOS fraud.

Mills was also chairman and director of island-registered EuroManx’s UK parent company Corporate Jet Realisations Ltd, formerly known as Corporate Jet Services Ltd, which held 99.9 per cent of the airline’s shares but went into receivership in 2007 and was wound up two years later.

CJS’s collapse is now being investigated by the Thames Valley Police detectives who headed the six-year long Operation Hornet inquiry into the HBOS fraud.

Back in 2009, liquidator Elliot Green raised concerns about how the company had gone into receivership in September 2007 with debts of £111m but on the same day had been sold in a management buy-out to Quest Aviation Services, a company created by CJS’s directors which again held 99.9 per cent of EuroManx’s shares.

The result of the buy-out was that the lending bank HBOS was left with a £98.5m shortfall and there were no assets available to distribute to unsecured creditors.

Mr Green uncovered evidence that before it went into receivership CJS had used the services of, and made payments to, Mills’ turnaround company Quayside Corporate Services Ltd.

The four-month long HBOS fraud trial heard how Lynden Scourfield, 54, who looked after corporate customers at HBOS’s branch in Reading, exploited legitimate struggling businesses.

Scourfield was bribed with expensive watches, sex parties, exotic foreign holidays and cash in brown envelopes to direct clients to use Quayside in return for bank loans.

Quayside, which Mills ran with his wife Alison, charged sky-high consultancy fees.

Senior investigating officer, Detective Superintendent Nick John, said: ’Their victims were normal people running small to medium sized businesses who needed support and instead had their livelihoods destroyed by the greed of these parasites.

’These consultants including David Mills would take millions out of these companies to fund lavish lifestyles. They would also offer kickbacks and gifts to the bankers, including Lynden Scourfield, as a reward for recommending them.’

HBOS manager Scourfield was sentenced to 11 years and three months, having earlier pleaded guilty to six counts including corruption.

In the House of Keys in May last year, LibVan MHK for Onchan Peter Karran questioned the then Treasury Minister Eddie Teare over the decision to give EuroManx extended financial support.

Mr Teare insisted it had been the correct decision and if the government had not stepped in then operations would have ceased over the Christmas period, pulling the plug on the London City route which was vital for the island’s business sector.

He said the Manx government had received £285,111 following the liquidation of EuroManx.

And he rejected Mr Karran’s claim that EuroManx had a £20m overdraft and said annual returns for 2004, 2005 and 2006 showed the company had nil indebtedness.

But a check of Companies House records in the UK reveals that parent company CJS had failed to submit its annual returns for 2005 onwards. A statement of affairs once in receivership shows it had debts of more than £68m.

manx independent investigation

Add Comment
Add Comment


Comments are not moderated

Jolife · 194 days ago · Report

It strikes me that there are some searching questions for the CAA? Surely in order to get a licence there are various financial probes and a look at the parent structure of an airline, guarantees, follow up etc? If the parent is not submitting financial returns...surely upon surely someone is on top of that and chasing and asking questions?

ET · 194 days ago · Report

"Know your client". Whoops.

Conch · 195 days ago · Report

Absolute crooks the pair of them, greedy Psychopath Bankers no regard or care for anybody but themselves and money and a hedonistic lifestyle. Shocking really, so much for the banking system. What a mess.

Add Your Comment

You don't need an account to leave a comment

By posting your comment you agree to our T & C