Parkmead bank in false market claim
By Ian Fraser
Published: The Sunday Times
Date: July 19th, 2009
A company that numbers Tom Cross, chief executive of Dana Petroleum, and Brian Wilson, the former energy minister (pictured left), among its non-executive directors has come under fire for creating “false market” in its own shares after putting misleading information into the market.
Ken Olisa, a non-executive director of Thomson Reuters and founder of Restoration Partners, alleges that the Aim-listed boutique investment bank Parkmead Group, which specialises in the oil and gas sector, “has repeatedly failed to properly communicate with the market.”
Olisa, who stepped down as Parkmead’s chairman in February 2006, alleges that the company last year created a “false market” in its own shares.
He said this happened because Parkmead issued an RNS statement in November 2007, saying that its former non-executive director David Mills would be making deferred payment of £1.97m to Parkmead by November 8, 2008.
This related to Mills’s repurchase of one of Parkmead’s assets, Quayside Corporate Services, a provider of turnaround services, a transaction that was completed in November 2007.
However, a year after the original RNS statement was issued, Parkmead released another RNS stating that the £1.97m was not, in fact, due until November 2012.
“It doesn’t matter if that was an error or whether they deliberately set out to mislead. What matters is that the regulatory authorities failed to intervene,” said Olisa. “Parkmead’s shares fell by 20% as a result of the second announcement, so there had clearly been a false market for over a year.”
“There are very clear rules on Aim and in this case they were infringed. The trouble is the Aim regulator is not prepared to do anything about it – nor is the FSA.”
“Everyone who put money into Parkmead, including widows and the orphans, have lost money as a result of this and other corporate governance abuses by the company, but they don’t seem to have any recourse,” said Olisa.
Olisa said “The people whose job it is to enforce the regulations don’t see enforcement as particularly important. They are too preoccupied with systemic risk.”
Richard Thomson, head of corporate finance at Parkmead’s nominated adviser Charles Stanley Securities, claimed that the date in the initial RNS had been a “typographical error”.
“That was an unfortunate error by the board of Parkmead. There was nothing Machiavellian about it.”
In a letter to Olisa, he said: “The company accepts it was their error. A cock-up, yes, a conspiracy no.”
Thomson said that Parkmead’s decision to dispose of Quayside in November 2007 has turned out to be “a good call”, given the subsequent controversy over the company.
Quayside, which is still owned by Mills but now thought to be dormant, has recently come under scrutiny over alleged malpractice in its handling of “distressed” HBOS assets and its relationship with former director of high-risk at Bank of Scotland Corporate, Lynden Scourfield, who left the bank in April 2007 following “over-generous lending”. Quayside and Scourfield’s activities have been the subject of a File on 4 documentary on Radio 4, and were the subject of a debate in the House of Commons on June 2.
A spokesman for Parkmead said: “An error was made in the initial disposal announcement that was not picked up. As soon as it was identified an announcement about it was made and that all the relevant authorities were made aware.”
Thomson said that Olisa’s complaint had been investigated by the Aim regulator and that “the file is now closed”.
An edited version of this article was published in The Sunday Times on July 19th, 2009.
July 25th, 2009 at 10:36 am
A debate in Westminster which you have already covered in your ‘Examining HBOS’ piece Mr Fraser, has already begged the question of why the Bank of Scotland will take no action against David Mills, the man who appears to have been responsible for losing them over £500m. That he is also able to possibly abuse the AIM market and with no action from the FSA or the AIM Regulator, is very disturbing.
Surely, the shareholders in Parkmead should have been up in arms about the deal in the first instance – buy Quayside for £8M in 2006, sell it back in 2007 for £630k and a deferred payment of £1.97M – is a very odd deal in anyone’s language. But to then tell the shareholders that the payment is not due in 2008 as advised but in 2012, is more than adding insult to injury. And it’s a typo?
I found another interesting typo regarding another company belonging to Mr Mills (or rather belonging to the Sandstone Organisation) this week.
Smollensky’s Holdings Ltd. (now in liquidation and called SHL (Realisations) Ltd.) the Company formed to Hoover up the assets of the Mezzanine Group, lodged three x 363s documents with Companies House saying the ‘1′ share in the company belonged to Sandstone Ltd. a company based in Cheshire. But the company in fact belongs to The (infamous) Sandstone Organisation Ltd.
I phoned Sandstone Ltd. and a lady called Barbara told me that she didn’t know anything about Smollensky’s Holdings Ltd. I phoned Companies House and someone told me that they don’t check any of the information sent – nor do they amend it when they are informed it’s wrong. So, just another typo, times three and complete with the correct address for the wrong company? Or is this another way of keeping The Sandstone Organisation and Mr Mills at arms length from their own disasters? Mmmm.
I have passed the information to the Official Receiver who I believe is now having a good look at Smollensky’s Holdings Ltd.
I hope Mr Olisa and his MP Vince Cable get to the bottom of the possible irregularities in the QS/ Parkmead Deal. Most of all, I hope Hector Sants gets to the bottom of the whole snake pit that Mr Mills appears to have orchestrated at the HBOS Reading Branch – and which seems to have become even more tortuous after Lynden Scourfield was ‘retired’.
August 1st, 2009 at 12:19 am
[...] did the Aim-listed “investment bank” Interregnum / Parkmead, of which former energy minister Brian Wilson and Tory MP Ian Taylor are or were non-executive [...]