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SFO decides not to pursue Tory party for £365,000 donated by Asil Nadir
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The Serious Fraud Office has decided against pursuing the Conservative party for the return of cheques totalling £365,000 allegedly stolen from the company Polly Peck by fraudster Asil Nadir and paid into party coffers more than 22 years ago.
This article has been temporarily removed pending further investigation.
In court filings, obtained by the Guardian, investigators said "careful consideration" had been given to whether to attempt to trace the £146m Nadir is calculated to have stolen in the late 1980s from the FTSE 100 company he ran, but the SFO has concluded that the cost to the taxpayer would be too high.
Polly Peck administrators and Nadir's trustee in bankruptcy have long held that donations to the Conservative party— equivalent to about £700,000 today — amounted to illegal transfers from a NatWest bank account in Jersey held in the name of a Polly Peck subsidiary. The same account was repeatedly used by Nadir to plunder the firm's funds for his own ends in the late 1980s.
The stubs of six cheques totalling £365,000 made out to the Conservative Industrial Fund, had been discovered during SFO raids on Nadir's Mayfair address in 1993. The payments had not been authorised by Polly Peck's board, according to administrators.
In August this year the SFO finally secured convictions against Nadir on 10 "sample" counts of theft, relating to £29m embezzled from Polly Peck in the late 1980s. He was sentenced to 10 years in prison. Nadir's trial had been delayed almost 20 years after he fled Britain in 1993, living for many years as a fugitive in Turkish-occupied northern Cyprus. He returned to Britain to face justice in 2010.
The Conservative party has faced repeated calls over the years to return tainted donations, but has resisted. "Donations were received from Polly Peck companies more than 22 years ago," a spokesman said after Nadir's conviction in August. "These were accepted in good faith from what was then considered to be a leading British company."
Later that week, however, Lord McAlpine, who had been party treasurer at the time the funds were given, broke ranks saying the funds were "tainted money" and it "shames the Conservatives if they hang on to it".
SFO investigators have told the court the millions stolen from Polly Peck helped to fund Nadir's extravagant Mayfair lifestyle as well as allowing him to lavish generous gifts on friends and relatives.
Among the funds transferred, without the knowledge of others at Polly Peck, were cheques written to the Conservative party between 1985 and 1990.
In 1997 the late Lord Harris of Greenwich called for the funds to be returned in the House of Lords. The Labour peer said that the stubs of six cheques totalling £365,000 had been discovered during SFO raids on Nadir in 1993.
The cheques were from the NatWest Jersey account of Unipac, Polly Peck's Cypriot subsidiary. These facts were set out in the late 1990s in a letter to Conservative Central Office from administrators from Touche Ross, now part of Deloitte.
The letter said: "The investigations confirm that the monies donated by PPI [Polly Peck International] were paid on the instructions of Mr Nadir acting without the authority of the board of PPI. It is the contention of the administrator that Mr Nadir is liable to repay the sums concerned as a result of his fraud and/or breach of fiduciary duty and/or malfeasance as a director."
A confiscation order can require not just the return of assets held by a convicted thief, but also to the return of tainted gifts. Failure to satisfy a confiscation order can result in a defendant receiving an additional jail sentence.
Kevin Hellard, Nadir's trustee in bankruptcy has written to the Conservative party following the former Polly Peck boss's conviction, reminding officials of his view that the money must be returned.
Hellard has not received a response and is believed to be considering bringing a civil lawsuit. Even though Nadir was discharged from bankruptcy in June, Hellard can still pursue assets held before that date.
The SFO is chasing Nadir for limited assets relating to funds he was convicted at trial of stealing. But Nadir has told the court he is penniless and that the luxury lifestyle he had enjoyed up to his conviction had been at the generosity of friends.
Before he fled the UK, Nadir, who had been declared insolvent, had become notorious for frustrating the efforts of his bankruptcy trustees. On one occasion some months before he fled, relations had reached such a low point that those conducting a raid on his then home in Eaton Square, Belgravia, removed an expensive watch from his wrist.
Shortly afterwards, as a birthday present, the then Conservative Northern Ireland minister Michael Mates gave him a replacement watch bearing the inscription: "Don't let the buggers get you down". Nadir is due to hear on Wednesday whether Mr Justice Holroyde orders he repay limited funds stolen from Polly Peck or whether he accepts the former Polly Peck boss's claims that he is broke.
