Polly Peck Fraud and Asil Nadir Empire - Essay Example

 Polly Peck Fraud Fraud refers to the crime of obtaining or acquiring something like money by cheating or deceiving. Fraud is not less than stealing because its main objective is cheating people or involved parties. Fraud is illegal in all countries across the world due to its negative effects. Furthermore, fraud and corruption have been proved to be among the main factors that drag behind economic development in many countries especially third world countries. In most countries, laws have been implemented so as prevent cases of fraud, and ensure that in case it happens, victims are compensated accordingly while perpetrators are jailed in addition to refunding whatever they acquired through fraud. However, in spite of all these efforts, fraud still exists all over the world as seen in the case of Polly Peck Fraud. More than 20 years ago, city funds and small financiers were surprised as one of the safest bets on the London Stock Exchange imploded. The share price of an international trading corporation, Polly Peck International (PPI), collapsed following raiding of its premises by the Serious Fraud Office (SFO) at the center of the empire constructed by Asil Nadir, its apparently outstanding chief (Casciani, 2008). Asil was a 71-year-old British citizen of Turkish-Cypriot origin. When he was arraigned to court, he protested his innocence but then ran away from the country asserting that he will not get a fair hearing. In 2010, 17 years later, he came back stating that he wanted to clear his name. Instead, a jury confirmed that he was a thief following a mammoth and sometime bewilderingly complex trial. According to Casciani (2008), Asil was found guilty of ten thefts from Polly Peck amounting to £29 million, and he was cleared of an additional three lawsuits regarding approximately £5 million. PPI was built by Asil Nadir out of very little. Rise of Asil in the 1980s started with an amazingly shrewd investment in a small textile company which he simply referred to as Polly Peck. He used Polly Peck as a means to construct a trading empire throughout Europe hence adding International to the Polly Peck along the way. Nadir and PPI possessed at the company’s height what was once one of the largest electronics companies in Europe, Del Monte- the global fruit brand, and leisure complexes and hotels. According to The Guardian (2012), he posted stratospheric profits each quarter hence everyone wanted a piece of PPI in the get-rich-quick environment of late 1980s Britain. As a result, PPI was worth £2 billion by the end of the decade hence, making it a FTSE 100 player. Some shareholders had observed returns of over 1,000 times their original stake although very few of them got out prior to crash down of PPI. One of Nadir’s plush management companies in Mayfair was raided by the Serious Fraud Office on September 19, 1990. The following day, PPI’s share price trailed in the middle of rumors and speculation. Nadir started to be investigated by the Serious Fraud Office by looking at allegations of insider dealing- a line of investigation that was dropped later. Instead, Serious Fraud Office asserted that it had obtained evidence that Asil had stolen millions of pounds that belonged to investors of PPI. Asil had a very high degree of control over finances of PPI him (The Guardian, 2012). He had authority to withdrawing or depositing money without obtaining a counter-signature from another director. The Guardian (2012) asserts that the jury was told by prosecution that Asil, with support of close confidants, used over 50 transfers to steal about £151 million from PPI from August 1987 onward. While in the court, the businessmen agreed that the Asil instructed majority of transfers. Prosecutors stipulated that £34 million in cash in the 13 specimen lawsuits they placed before the jury had been withdrawn in London and transferred via other accounts in Switzerland, the Channel Islands, a PPI supplementary known as Unipac and also Kibris, a bank in Northern Cyprus under the control of Asil. It was also said in the court that in order to protect PPI’s stock-market valuation, Asil used some of the money to buy its own shares. However, the biggest single chunk of the missing £150 million was allocated to margin lenders, a complicated form of borrowing to purchase shares, tied to the stock value. But eventually, it went to Asil’s personal interests like companies or trusts which he controlled or his family or close associated controlled in accordance to the prosecution. According to The Telegraph (2012), Clare Whitaker of the Serious Fraud Office stated that prosecutors alleged that the money stolen assisted to fund pet projects that comprised of a newspaper group, racehorses, property and antiques. Asil had a stately home in Rutland, referred to as Burley to the Hill which he wanted to develop into a leisure complex and golf course. In addition to Burley to the Hill, Asil had Baggrave Hall in Leicestershire at another country mansion; he also had a farm, where he invested in prize cattle and sheep. Ms Clare told the court that Asil obviously had a very affluent lifestyle. These were the properties in the United Kingdom that were section of the Asil Nadir Empire. It was also claimed by the prosecution that Nadir stole money from PPI to help finance these properties. His objective was usually to withdraw the monies, to cover up the paths that nobody would ever discover, and he managed to that over a long period of years in accordance to Ms Clare. The jury was told by prosecution that the PPI boards were frustrated at every turn when they attempted to work out whatever Asil was doing. As the trial of Asil approached in 1993, he asked a pilot friend to assist him get out of UK. He tripped out of London, carrying a toupee and a false moustache as a safety measure. He boarded a plane at a Dorset and soon after, he was on his way to Turkish-controlled Northern Cyprus, from where he could not be extradited. According to The Telegraph (2012), it was large scale operation of the company that led it to lose a lot of money without noticing. Suppose PPI was operating on small scale, it would not have lost a lot of money. It is also evident that the court granted him a surety which he paid and then fled away from the country. This was wrong because anybody with this kind of offense is not supposed to be released even on bail from the prison. This is because there is high probability that he/she will flee away or even commit suicide so as to avoid charges placed against him/her. Another feature coming out of the fraud of Poly Peck is the attempt to escape from justice. Asil tried to appeal for the lawsuits against him to be dropped by the court. This has been the case in quite a number of cases where people found to be guilty try to escape from the rule of the law (The Telegraph, 2012). This phenomenon is dominant in the developing countries where powerful people break laws, and when taken to courts, bribe judges to obtain their freedom by being pronounced innocent. Asil went into exile in an attempt to escape from the rule of the law and justice at large. Going into exile after committing a crime is a common phenomenon in the contemporary world. People try to escape the justice using all means possible including exile. However, the rule of law finally stands to dominate in countries that have proper justice systems like Britain. It was because of this fact that Asil was finally arrested, charged, tried and imprisoned. Fraud slows down economic development in many countries. For instance, Polly Peck was a big company that employed many people and paid taxes that helped to develop UK’s economy. But due to its defrauding by Asil, it collapsed completely leaving many people jobless and the country without tax hence, dragging behind economic development. Asil also tried to commit suicide as a means of avoiding to be arraigned in court and also stop justice to prevail (The Telegraph, 2012). In addition to committing suicide, killing witnesses who have crucial evidence about certain charges, fraud for instance, has become a survival tactic for criminals. This is because offenders view that there is no case without evidence. Poor management is the main cause of fraud in both profit-seeking and non-profit seeking organization. People usually have a chance to fraud because they are not being monitored closely in the organization or simply because top management is not keen or can be manipulated easily. Hence, fraudsters struggle to meet their ambitions of being rich as they attempt to meet the targets of the company at the same time like in the case of PPI. A well established and organized company/organization usually have all its workers starting from lower to the upper monitored closely and are provided with strict working conditions which ought to be observed all times. Therefore, there is supposed to be some regulations that govern society and business organizations in regard to fraud. Any misappropriation of finances should be treated with serious considerations of the law because it has severe effects on the party concerned. For instance, it can lead to the collapse of a company or business organization just like in the case of Polly Peck (KPMG, 2012). It may also have severe effects on the state either directly or indirectly depending on whether it is governmental or non-organization that is being fraud. It is therefore, apparent that fraud is a serious problem that is supposed to be brought to an end very fast using all means possible. Bibliography Casciani, Dominic, 2012. How Asil Nadir stole Polly Peck's millions. Retrieved on April 8, 2013 from http://www.bbc.co.uk/news/uk-19161940 KPMG, 2012. Polly Peck: the nadir of management fraud. Retrieved on April 8, 2013 from http://www.kpmg.com/uk/en/issuesandinsights/articlespublications/newsreleases/pages/polly-peck-the-nadir-of-management-fraud.aspx The Guardian, 2012. Asil Nadir fraud: true scale could exceed £380m, says SFO, Prosecutors of Polly Peck tycoon brought just 13 sample theft charges to Old Bailey from mountain of evidence. Retrieved on April 8, 2013 from http://www.guardian.co.uk/business/2012/aug/22/asil-nadir-fraud-380m-sfo The Telegraph, 2010. Polly Peck tycoon Asil Nadir returns to Britain to face fraud charges. Retrieved on April 8, 2013 from http://www.telegraph.co.uk/news/uknews/7965040/Polly-Peck-tycoon-Asil-Nadir-returns-to-Britain-to-face-fraud-charges.htm Read More