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Serious Fraud Office: Bryan Evans

Volume 605: debated on Wednesday 3 February 2016

I beg to move,

That this House has considered Bryan Evans and the Serious Fraud Office.

It is a pleasure to serve under your stewardship, Sir Roger. I bring this matter to the House so that Mr Bryan Evans, my constituent, may have his account of events put on the parliamentary record. It is a complex matter that involves many actors, which I hope to make clear. I know that this matter has affected other people, which is made evident by the number of colleagues here today and those who have co-signed a letter to the Select Committee on Business, Innovation and Skills that asked it to examine the ongoing allegations of fraudulent misrepresentation and collusion involving banks and the receivers used by those banks.

I pay tribute to the hon. Members for Cardiff Central (Jo Stevens) and for Ogmore (Huw Irranca-Davies), who have previously brought forward cases from their constituencies for debate and worked hard and with great diligence on the issue. I hope we will continue to make progress on a cross-party basis.

I have known Mr Evans for several years—I first met him when I was his Welsh Assembly Member—so I am well aware of his case. I have been directly involved for some time, so I am aware of the devastating effect that it has had on him and members of his family. Mr Evans is firmly of the belief that he is the victim of fraud, and that he has evidence to substantiate that. Indeed, before he took his evidence to the South Wales police economic crime unit some four years ago, it had been reviewed by two retired senior fraud officers who both confirmed that, in their opinion, a fraud investigation was warranted. However, to this day Mr Evans is adamant that his case has not received the attention it warrants. An investigation into the conduct of Mr Evans’s case by the aforementioned crime unit is currently being undertaken by the professional standards department of South Wales police, which endorses Mr Evans’s beliefs.

Mr Evans tells me that he, along with his former MP, Martin Caton, and I, as his Assembly Member, had been misled from the highest level. Furthermore, he forwarded his evidence to the Serious Fraud Office two years ago, and here again he says that no proper action was taken.

Mr Evans was the managing director and 50% shareholder in EP Leisure, with the other 50% being owned by Mr Robert Sullivan. The company was a vehicle to develop a prestigious piece of land that it owned on the seafront in Mumbles. The site was, and still is, being run as a car park, grossing approximately £180,000 a year. The land was adjoined by council-owned land and it had been agreed to unify the sites for a comprehensive development.

In 2003 EP Leisure engaged Poolman and Harlow, a firm of valuers. The firm was owned by Roger Poolman and Bob Harlow and the latter worked closely with Mr Evans on all aspects of the proposed development. EP Leisure was funded by Barclays bank. In April 2006 Poolman and Harlow were bought out by a national firm, Lambert Smith Hampton. It is believed that Messrs Poolman and Harlow received a substantial amount of money for their property portfolio, part of which was EP Leisure’s land. Mr Harlow continued to work with Mr Evans under the Lambert Smith Hampton banner.

In 2007 Mr Harlow placed a valuation on EP Leisure’s land of between £4 million and £6 million, and that value would increase if certain criteria were achieved. The valuation was so buoyant that Barclays was happy to return equity to Mr Sullivan that had been supporting a loan, so the loan of some £2.2 million became free-standing. In 2008 Barclays introduced a manager, Mr David Little, into the frame. It was at that time that Mr Evans tells me Mr Harlow started liaising more frequently with Mr Little, which led to Mr Evans asking Mr Harlow if he was now in a conflict-of-interest situation. Mr Harlow assured Mr Evans that he was not.

In November 2008 Mr Evans was informed by Mr Little that Bob Harlow had now devalued EP Leisure’s land to £1 million, leaving Barclays “significantly under water”. Oddly enough, 18 months later, Mr Evans attended a meeting with his solicitor and his accountant where he met Mr Jonathan Hoey of TLT Solicitors and Mr Sainsbury, the head of recovery for Barclays bank. Mr Sainsbury told him that that valuation did not exist, and it is that valuation report that is at the heart of the case.

Mr Evans told me that Mr Little’s attitude became extremely aggressive. He tried to pressurise Mr Evans into acquiring the adjacent council land and putting it under EP Leisure’s ownership. Mr Evans refused to do that and wrote the first of many letters to the then chief executive of Barclays, Mr John Varley. Mr Evans later wrote to two subsequent chief executives and the chairman of Barclays. Subsequently, Mr Little was removed from EP Leisure’s account.

In July 2009, at the behest of Mr Varley’s office, Mr Evans, along with his co-director, Mr Derek Morgan, met Mr Steve Thomas and Mr Wynne Walters of Barclays to resolve all issues. However, at that meeting Mr Evans was told that his file had already been sent to London by Mr Little for recovery. Mr Evans said that that was later proven to be untrue in writing from Martin Sainsbury. In September 2009 Mr Evans was written to by Martin Sainsbury, asking him either to sell the land or to refinance the debt. Mr Evans agreed to the latter. Mr Sainsbury also requested that Lambert Smith Hampton take the lead in all future negotiations. Mr Evans explained that that was not possible and Mr Sainsbury accepted that.

Mr Evans had become extremely suspicious of Mr Harlow’s actions. He believes his suspicions were borne out when, out of the blue, he received a letter from Mr Sainsbury that stated that he was disappointed that he was not co-operating with Mr Harlow, and that he was placing Lambert Smith Hampton as Law of Property Act receivers over his land. Mr Evans contacted Mr Sainsbury to explain that Mr Harlow was at all times fully informed of all matters and the threat of receivership was withdrawn.

In November 2009, after receiving another report from Mr Bob Harlow, which was to be later referred to as a pre-receivership report, Mr Sainsbury placed Mr Andrew Hughes and Roger Poolman of Lambert Smith Hampton as LPA receivers over EP Leisure’s land. That report is at the heart of Mr Evans’s allegation of fraud and of Mr Evans losing his land and Lambert Smith Hampton’s gain.

In a similar case, a constituent of mine has alleged that NatWest committed a fraud by persuading him to surrender a 25-year buy-to-let mortgage in exchange for a 12-month loan in anticipation that he would subsequently receive a 25-year mortgage, but that was not forthcoming. Written agreements are missing and my constituent has suffered material disadvantage. The ombudsman has ruled against my constituent, so I want to ask the Minister what is to be done in such cases.

I am grateful for that intervention, which goes to prove that there are many ongoing cases.

Mr Evans believes that Mr Harlow was determined to prevent him from refinancing with another bank as Lambert Smith Hampton would lose the contract for the development, which could in turn lead to Poolman and Harlow having to reimburse Lambert Smith Hampton for that loss, which is commonly referred to as a clawback.

Mr Evans engaged Geldards solicitors in Cardiff. Over a period of time, Mr Karl Baranski of Geldards discovered that Barclays had no legal charge over EPL’s land and therefore its actions to date could be challenged. Mr Baranksi also pointed out to Barclays that Lambert Smith Hampton was in a conflict-of-interest situation.

I congratulate the hon. Gentleman on securing this important debate. As I listen to him laying out the particulars, it seems to me that we are hearing the same plot, although with different characters, as in our recent debate with the Minister and in the point made by the hon. Member for Wycombe (Mr Baker). When I asked the Minister, who is a good friend, about when the Serious Fraud Office gets involved, he helpfully laid out its statement of principle. It considers

“whether there is new species of fraud…whether actual or potential economic harm is significant…whether the actual or potential financial loss involved is high”

and so on. I suggest that that threshold has been passed.

I thank the hon. Gentleman for his intervention.

Mr Baranski also pointed out to Barclays that Lambert Smith Hampton was in a conflict-of-interest situation. In a shocking twist, Lambert Smith Hampton assured Barclays that it had never represented EP Leisure or Mr Evans. Mr Evans says his solicitor then presented Barclays with irrefutable evidence to the contrary, which it subsequently ignored.

At that time, Mr Evans took his case to the police. Detective Inspector Runnells and Sergeant Owen of South Wales police interviewed Mr Evans with regard to his allegations. The two detectives then interviewed Karl Baranski and Jonathan Griffiths of Geldards. As a result of those interviews, Mr Sainsbury of Barclays bank was informed by Sergeant Owen that they would be travelling to London to see a report written by Bob Harlow in October 2009.

On arrival in London, Mr Sainsbury was represented by Mr Jonathan Hoey of TLT Solicitors. Mr Hoey was told that if he sat in on the interview, he could no longer represent Lambert Smith Hampton. He assured the police that he was now “100% the bank’s man”. As will be shown later, that was not to be the case. At the meeting, the bank refused to show the police the report, and this is where Mr Evans’s story takes a rather unwelcome turn: the police returned to Swansea and decided to take no further action, with DI Runnells stating that he did not think fraud had been committed.

Mr Evans says he has asked the police on numerous occasions how they can conclude there is no case to answer if the evidence at the centre of the fraud has been withheld. He believes that the police have more than enough evidence to seek a production order for that report, but to this day they have shown a great reluctance to do so.

Mr Evans is of the opinion that the police have spent an inordinate amount of time and public funds to avoid seeking a production order, which would have had no financial cost. He has dealt with several senior officers of South Wales police—in fact, they are too numerous to mention. At present, Mr Evans is dealing with a new inspector, Detective Inspector Hough. Mr Evans states that the situation has got to the point where Barclays bank now says it cannot release the report as it belongs to Lambert Smith Hampton, which in turn says that it cannot release the report as it belongs to Barclays—a farcical situation, to say the least. One may ask why, if this report is so innocuous and could vindicate the actions of both Lambert Smith Hampton and Barclays, they will not release it.

Returning to the situation with Barclays, in May 2012, after a lengthy period of negotiations, Barclays, in order to “reflect what had transpired”, offered to reduce EP Leisure’s debt by £1 million, lift the receivership and refinance the outstanding balance of around £1.25 million for 12 months. During that period, EP Leisure would seek to refinance with another bank, give Barclays legal charges over the property and make monthly payments of £3,600. The deal was to run until June 2013. Mr Evans also had to sign a confidentiality agreement.

At this point, it should be noted that Mr Jonathan Hoey of TLT Solicitors, despite the assurance he gave to the police in London, was now representing Barclays bank, the two named receivers and Lambert Smith Hampton. Mr Evans tells me that during the negotiations, Mr Hoey tried to force Mr Evans into dropping his allegations against Lambert Smith Hampton as a condition of the deal with Barclays. Mr Evans refused to do so and reported Mr Hoey to the Solicitors Regulation Authority for abuse of power and conflict of interest, but it was unwilling to take any action, saying, “I know you think it’s blackmail Mr Evans, but it’s just business.” Mr Evans has stated unequivocally that the SRA introduced the word “blackmail” and he did not.

During the following 12 months, Mr Evans discovered that the receivers had acted illegally by signing contracts in the name of EP Leisure and registering for VAT in the name of EP Leisure. That registration has now been voided, but those actions made it impossible for Mr Evans to refinance. He kept Barclays fully informed of the situation and carried on making the agreed monthly repayments after the June 2013 expiry date. Indeed, payments were made in July, August and September and were accepted.

In October 2013, Mr Evans received a letter from Barclays asking for full repayment, otherwise action might be taken to recover the debt. Just two days later, EP Leisure, without any warning, was placed into administration by Barclays, with TLT once again acting for both the bank and the administrators. EP Leisure’s land was sold within days and it has now been wound up, despite Mr Evans telling the administrator that the company could well be owed substantive damages. Mr Evans believes that that is just a sinister ploy to silence him and prevent the truth from being exposed. He intends to reinstate the company and pursue all claims. Furthermore, Mr Evans has reported the circumstances of the sale to the police, who say they intend to investigate, but I am sure Members will appreciate that Mr Evans has dwindling faith in their intentions.

The domino effect of the aforementioned action has resulted in Mr Evans and his family losing absolutely everything, including his house. He poses the following questions, which need to be answered. Why have the police prevaricated and refused to properly investigate serious allegations of fraud? Why have the police refused to seek a production order? Why has the SFO also refused to take any action? How can a solicitor—in this case, Jonathan Hoey of TLT—represent Barclays bank, Lambert Smith Hampton, the two named receivers, Andrew Hughes and Roger Poolman, and the administrators without a conflict of interest?

How can a firm of valuers that had been representing EP Leisure for many years devalue EP Leisure’s assets significantly then become receivers and take control of EP Leisure’s land and income? How can Jonathan Hoey of TLT, as an officer of the court, negotiate a settlement with EP Leisure on behalf of Barclays bank with the knowledge that the settlement could not be honoured? For instance, he would have known that the receivers had possibly acted illegally, hence his insistence that as a condition of the settlement, Mr Evans would take no action against them.

This case and others give rise to wider questions surrounding the motives and actions of the banks and receivers involved in such cases, and whether there has been collusion and fraudulent representation. What we are dealing with here has had a devastating effect on the victims and their families, with a trail of devastation and ruined lives. These cases must be answered, and it must be ensured that the law on such matters is upheld by the Government.

In conclusion, Mr Evans believes there has been a conspiracy to defraud, but to date, no one has been held accountable. He continues to seek justice for himself and to reinstate his business. The whole episode remains, frankly, a mess that could easily have been resolved by the relevant actors performing their roles with transparency and diligence throughout the whole sorry affair. It is not too late, and I have secured this debate in the hope that we will receive positive action for Mr Evans.

It is a great pleasure to serve under your chairmanship, Sir Roger. I pay warm tribute to my hon. Friend the Member for Gower (Byron Davies), who brings his case to the House with passion as not only a constituency Member of Parliament but a former senior police officer, with a degree of insight into the matters we are discussing. I think he would agree that the thrust of his speech, which I listened to carefully, dealt with issues relating to the police, their involvement in this case and—I will put this neutrally—the lack of positive progress made for his constituent, Mr Evans.

My hon. Friend asked some specific questions, in particular why the police refused to seek a production order from the bank. Of course, I am aware that Mr Evans complained to South Wales police about the outcome of the original investigation, and that its professional standards department is currently investigating that complaint, which I very much hope will be concluded. It would be inappropriate for me to comment on the merits of that, or indeed the merits or otherwise of the case. From what I have heard, however, it must be a deeply troubling and huge problem for Mr Evans. Stepping into his shoes for a moment, I can understand why he feels as he does.

As one of the Ministers with a superintendary role over the independent Serious Fraud Office, it is important, in the context of the debate, that I outline as succinctly as I can the principles and guidelines that the SFO applies in determining whether to embark upon an investigation and a prosecution. As I said, having an independent agency is vital, bearing in mind the constitutional importance of having an independent prosecutorial authority, but I remind hon. Members that the SFO was created under an Act of Parliament—the Criminal Justice Act 1987—to deal with the top tier of serious and complex fraud cases. We know the sort of cases that the director, David Green, has taken on—cases such as Rolls-Royce, GlaxoSmithKline and Tesco, to name but a few. They are high-profile and high-risk, involving huge sums of money, great numbers of victims or species of fraud. That is not to understate the seriousness of the loss that my hon. Friend’s constituent has suffered.

Is it not the case that there might be in aggregate a very large sum of money involved in similar cases?

I am grateful to my hon. Friend for that intervention, and I listened with interest to his earlier intervention and that of the hon. Member for Ogmore (Huw Irranca-Davies). I know the point he is making, and the straight answer is that the SFO keeps the matter very much under review. If there is indeed a cumulative effect and a clear modus operandi that suggests widespread and similar frauds of this nature, the circumstances will clearly change.

To answer directly the question that the hon. Member for Ogmore asked, I do not quite think we are there yet, but let me explain further—I know he is very familiar with this issue, because he has asked written questions, to which he will get very swift answers, I promise. However, he gives me the opportunity to outline the statement of principle.

The decision by the director of the SFO on whether to launch an investigation has to be made on the facts and circumstances of each case. Being overly prescriptive would not be appropriate, bearing in mind the unique circumstances of every case. Many factors are taken into account, but for guidance, the statement of principle sets out that when considering cases for investigation, the director will consider the following: first, whether the apparent criminality undermines UK plc commercial or financial interests in general and in the City of London in particular, causing reputational damage to the country; secondly, whether the actual or potential financial loss involved is high; thirdly, whether actual or potential economic harm is significant; fourthly, whether there is a significant public interest element; and finally, whether there is a new species of fraud.

“That is not a tick-box exercise where, if every one of a set of measures is met then the SFO will open an investigation. That would inevitably lead to cases being taken on by the SFO which did not require its unique model of investigators, prosecutors and other professionals working together in one organisation or its set of powers.”

I will quote from the “Protocol between the Attorney General and the Prosecuting Departments”, which sets out that the decision for the SFO to investigate and prosecute is

“a quasi-judicial function which requires the evaluation of the strength of the evidence and also a judgment about whether an investigation and/or prosecution is needed in the public interest.”

That will not always be an easy decision, but for the vast majority of financial crimes, the traditional model of a police investigation and a Crown Prosecution Service prosecution is the best model. That is because the police, as my hon. Friend the Member for Gower knows, rightly have primary responsibility for investigating crime in this country, and Action Fraud has been established as the national reporting centre to which reports of alleged fraud should be referred in the first instance.

I repeat that the SFO’s role is limited to investigating and prosecuting cases of serious or complex fraud, so it cannot and should not take on every case referred to it. To give that some context, the SFO takes on between 10 and 20 cases each year. It receives nearly 3,000 reports of fraud directly from the public each and every year, so the vast majority of referrals are not about matters that it can properly investigate. Complainants are then advised that the complaints will be referred on to Action Fraud for dissemination to the relevant police force where appropriate.

The SFO retains the material and uses it for intelligence purposes, and that is the point that hon. Members have made. That intelligence material is part of the SFO’s work in building an intelligence picture, and through that information and material it can properly identify the top-tier cases that are appropriate for it to investigate. In other words, debates such as this are invaluable in bringing into the public arena information that can then be collated and properly reviewed. I said that to the hon. Member for Ogmore in September and I repeat that assurance today.

My constituent, Michael Fields, who has suffered, is part of a large network of people—I know he has been touch with the Minister personally. The Minister talks about not being quite there yet. Do we know how far off we are? Are we halfway up the hill? Have we much further to go? That network is working hard to identify other people who are similarly affected, to try to build the critical mass that may well lead to consideration of the matter by the SFO.

I know that the hon. Gentleman raised that point in an intervention in the September debate, so he has consistently advocated on behalf of his constituent. It would be wrong of me to start prejudging or second-guessing what the independent prosecutorial authority should do—that would be inappropriate—but I can tell him that the co-ordinated work that he, his constituent and other similarly affected people do, of course, improves the intelligence picture. It cannot do anything but assist the authorities in understanding the true extent of frauds of this nature, so I am grateful to him.

The Solicitor-General is giving a very helpful answer. Is he struck, as I am, by the incredible system similarities between the case outlined today by the hon. Member for Gower (Byron Davies) and the case that my hon. Friend the Member for Cardiff Central (Jo Stevens) and I outlined? The parallels between the two cases are incredible, and I know of at least half a dozen more out there that other Members of Parliament have raised.

I have heard the hon. Gentleman and my hon. Friend the Member for Gower. Although I do not want to start making evidential judgments about similar fact evidence, I take the point.

In the brief moments I have left, I turn to the specific allegations that my hon. Friend has made today. It is, of course, unusual to comment in detail on specific allegations, but I want to say a few brief words about the case.

As has been explained, Mr Evans had obtained a secured loan from the bank in relation to a land development in 2007 on the basis that the land would be turned into a mixed leisure development. It was valued accordingly at between £4 million and £6 million. However, by 2009, due in part to some planning permission issues, the development had not been carried out. The bank appointed a receiver and the value of the land, which was security for the loan, was reassessed and subsequently put at the dramatically different figure of £1 million. The allegation is that this was an orchestrated devaluation by the bank and the receiver.

The reason why the SFO has not opened a formal investigation relating to Mr Evans’s allegations is that they do not, of themselves, amount to the type of matter that the SFO is there to investigate. That is not to minimise the seriousness of the allegations. The situation would have a significant impact on most of us if it happened to us, but in the context of the SFO criterion, the potential scale of the loss is somewhat limited and the allegations are not complex. They relate to one surveyor falsifying a valuation on behalf of a bank, and therefore I have to be honest and frank and say that the issue of the wider public interest does not actually apply, so the situation would not call for an SFO investigation.

However, as I have said, the SFO will keep the allegations and the information that it has received on file, and will consider the matter again if further information comes to light. In particular, given the points that hon. Members have made today, if there is evidence to suggest that the allegation is part of a more widespread issue, the matter will be revisited.

I hope that what I have said gives my hon. Friend the Member for Gower some assurance that the Serious Fraud Office has fully considered the allegations referred to it and will consider any further evidence, but, for perfectly proper reasons, at this stage has decided not to investigate the allegation.

Question put and agreed to.

Sitting suspended.