So GP Noble (GPN), the ”independent” trustee firm at the centre of a £52m pension fund fraud investigation is set to be wound up and struck off the official companies register” (“Professional Pensions – GP Noble to be liquidated”).

Good news that this particular ‘rotten apple’ has been plucked from the barrel before too much damage was done and, ultimately, I hope the perpetrators are brought to book (the investigation is continuing and a hearing is expected early next year).

In all walks of life, there are individuals who are charged and trusted to act in the best interests of others – the majority perform such a role with honesty, integrity and to the best of their ability. Occasionally, a few let the side down massively – Robert Maxwell, Bernie Madoff, Steve McLaren. You can no doubt think of others.

In some respects, the case of GPN demonstrates that the regulatory framework in place actually works. It was the PPF who tipped off the Regulator about suspect activity and the Regulator acted swiftly to remove GPN as trustee to some 29 schemes.

However, with hindsight (and, yes, it’s a wonderful thing) I wonder how the hell GPN got to be trustee to 29 schemes in the first place and, indeed, on the Regulator’s panel of trustees, when you look at its origins.

Until May 2005, GPN was called Berry Birch & Noble Trustees and was part of the Berkeley Berry Birch group of companies that went into administration in early 2006.

Graham Pitcher (one of the former Directors of GPN at the centre of the fraud allegations) acquired the company’s share capital through Mentor Trustees, a holding company in which he (Pitcher) was the only shareholder.

GPN then became a wholly owned subsidiary of The Money Portal (TMP), which acquired the trustee company in November 2006. TMP was founded by Tony Morris who had been forced to resign in 2005 having being barred from being a director.

£45m of the £52m at issue was transferred to a company called Multiple and Unilateral Financial Futures (or MUFF and, no, I’m not making this up), a company set up by Morris.

In a separate Ruling made earlier this year, relating to an application made by Morris to get access to frozen funds it was revealed that:

• GPN were alleged to have “paid away money” outside the trustees’ investment powers
• It was alleged that two of the directors, Pitcher and Gary Cordell, were dishonest and, also, that Morris was “a dishonest accomplice”
• Justice Lewison said: “There can, in my judgment, be little doubt that these transfers exceeded the trustees’ powers” adding “where a pension fund invests tens of millions of pounds in a newly incorporated company with no security and only an obscure promise to repay, it would not have taken much thought to have seen that this was an unsuitable investment for the pension fund trustees.”

The role of an independent trustee is massively important in the current climate and we have posted a number blogs on the subject previously (see our blog “The value of a professional pension trustee”).

Through our sister company (Dalriada Trustees) we bring skills and experience and provide a thoroughly professional service. I would like to think the same would apply to all similar companies but the case of GPN highlights once again the need for vigilance on behalf of everyone involved in the running of pension schemes – regulators, advisers, members and sponsoring employers. If you suspect something is not right – ask questions. If you are not happy – seek an independent view. If you suspect fraud – blow the whistle.

In difficult economic conditions, the temptation to bend the rules increases at a time, paradoxically, when the need to secure as best you can some future financial stability is greatest.

Posted in: Blog
Tags: Pension Protection Fund, Pensions Regulator, Professional Trustees