Two carbon copy companies that raked in nearly £2m are shut down after Insolvency Service investigation
London based alternative investment companies, Pinecom Services Limited (trading as Pine Commodities) and Pine Commodities Ltd, that took in nearly £2m from the public, have been ordered into liquidation by the High Court on 2 July on grounds of public interest.
The companies were wound up following an investigation by Company Investigations, part of the Insolvency Service.
Both companies were found to have continued a business previously shut down in the public interest due to the objectionable trading practices used to ‘sell’ carbon credits to the public for investment. The companies’ methods included making false and misleading statements to persuade people to invest.
The earlier companies forced to close were Tullett Brown Limited, Foxstone Carr Limited and Carvier Limited (see notes 10-12)
The investigation into these successor companies showed that over £1.8 million was raised from the public including sales of precious metals, storage units and diamonds for investment using cold calling techniques.
Welcoming the Court’s winding up decision Chris Mayhew, Company Investigations Supervisor at the Insolvency Service, said:
“Contrary to the companies’ claims, their services, in plain English, were designed to rip-off investors”
“I would urge anyone cold-called and invited to invest, in particular those who have already invested with these companies and who may be approached by companies purporting to have been appointed by the Court to deal with their investment, to simply end the call”.
“Nobody should be left in any doubt that the Insolvency Service will continue to take robust action whenever serious failings are discovered and in particular against contemptible companies as here preying on vulnerable investors”.
The investigation found that carbon credits were sold by the two companies in 11 projects around the world and the business involved a bank account in the Seychelles and a UK account operated by a company described as the companies’ accountant as well as the services of a former FCA authorised company SJL Risk Limited now in voluntary liquidation (see note 14).
A website www.pinecommodities.co.uk claimed to provide a fresh approach to investing in the commodities market stating: “We don’t believe in making our clients’ life difficult by providing information filled with incomprehensible terms or language. Our messages are always given in plain simple English”
Notes to Editors
Pinecom Services Limited (08139601) was incorporated on 11 July 2012. The registered office from incorporation to 07 May 2013 was 3rd Floor, 207 Regents Street, London, W1B 3HH and from 07 May 2013 to present date 60 Cannon Street, London, EC4N 6NP. The recorded directors of the company are shown to have been Ms Ayan Essa from incorporation to 09 November 2012 and Mr Lawrence David Graham from 09 November 2012 to present date. No company secretary is shown to have been appointed. The company’s share capital is shown to be £1 comprising 1 ordinary share of £1 shown to be held by Mr Graham. No accounts have been filed.
Pine Commodities Ltd (08048979) was incorporated on 27 April 2012. The registered office throughout was 3rd Floor, 207 Regent Street, London, W1B 3HH. The recorded directors of the company are shown to have been Mr Lee Welham from incorporation to 01 February 2013 and Mr Jason Pugh from 01 February 2013 to present date. No secretary is shown to have been appointed. The company’s share capital is shown to be £1,000 comprising 1,000 ordinary shares of £1 each and all shown to be held by Mr Welham. No accounts have been filed.
The business was conducted from Suite 4.02, New Loom House, 101 Church End Road, London, E1 1LU and previously from 9 Devonshire Square, London, EC4M 6NP.
The petitions to wind up the companies were presented in the High Court on 27 March 2014 under the provisions of section 124A of the Insolvency Act 1986 following confidential enquiries carried out by Company Investigations under section 447 of the Companies Act 1985, as amended.
The grounds for winding up the companies were that they carried on an objectionable business practice, failed to co-operate with the investigation or deliver up records, lacked transparency as to their management and defaulted on their filing obligations with Companies House.
In ordering the companies into liquidation on grounds of public interest on 02 July 2014 Ms Registrar Derrett commented that the Secretary of State’s investigator Mr Joe Peacock who was appointed to investigate the affairs of these companies has as always done a very thorough job. Ms Registrar Derrett went on to say:
“There has been no response to the petitions and they therefore come before me today undefended. Pine Commodities was incorporated on 27 April 2012. From its statutory records its sole shareholder appears to be Mr Lee Welham, the owner of 1,000 ordinary £1 shares. Mr Welham was the sole director on incorporation. Mr Jason Pugh has been the sole director since 01 February 2013 and there is no Company Secretary. In relation to Pinecom Services, it was incorporated on 11 July 2012. Its sole shareholder appears to be Mr Lawrence Graham, the owner of 1 ordinary £1 share. Mr Graham has been the sole director since 09 November 2012 and there is no Company Secretary. The grounds for winding up the companies arises from the connections to companies that this Court has previously wound up, namely Tullett Brown Limited, Foxstone Carr Limited and Carvier Limited all of which were engaged in the trade of selling carbon credits to members of the public. The respondent companies appear to have been incorporated to take over the trade of those other companies once they had been wound up. The two companies are, to use the colloquial term, ‘phoenix’ companies. The grounds on which it is sought to wind up Pine Commodities are as follows. Firstly it has carried on an objectionable business practice, namely the sale of carbon credits to the public for investment. Secondly it has failed to co-operate with the investigation or to deliver up company records. Thirdly it has been abandoned and there is a lack of transparency as to its management; and finally it has now defaulted on its filing obligations with Companies House. The grounds on which it is sought to wind up Pinecom Services are firstly it has carried on an objectionable business practice, namely the sale of carbon credits to the public in the same misleading way; secondly it has been abandoned and there is a lack of transparency as to its management; and finally since the date of the presentation of the petition it is late in filing its accounts. Mr Peacock has summarised his findings at paragraphs 9 to 39 of his witness statement which I have read and which runs to some 96 pages and, as previously mentioned, is unchallenged. As appears from paragraph 23 of each petition and the supporting evidence, all of which is unchallenged, both companies have substantial connections with those companies previously wound up by this Court. Firstly both companies were introduced to Evolution Trade Services Limited, which provided deal execution services, by the Nwikpo brothers who controlled the companies previously wound up; secondly key cards to Pine Commodities’ premises were issued to former staff of Tullett Brown Limited and Foxstone Carr Limited; thirdly the director of Pinecom was a former employee of Foxtone Carr Limited and Carvier Limited; fourthly 9 of the 54 people who worked for Pinecom had previously worked for at least one of Tullett Brown Limited, Foxtone Carr Limited or Carvier Limited; fifthly two members of the public who invested in carbon credits sold by Pinecom and Pine Commodities were former clients of Tullett Brown Limited and were introduced to the respondent companies by their former broker at Tullett Brown Limited; sixthly Pinecom paid £78,000 to Carvier Limited; seventhly Pinecom received £30,000 by way of “director’s loan” from Catherine Lyall who was a former director of Tullett Brown Limited; and finally one aspect of Pinecom’s website is identical to that of Carvier Limtied. I am satisfied that the evidence establishes sufficient connection with the previous companies. As to Pine Commodities, since there has been no response from the directors of the company I accept that it has not been possible to assess the true extent of its trading in carbon credits. There has been co-operation from a director Mr Graham of Pinecom and one has to infer that Pine Commodities engaged in the same business and I would accept the inference that deals made in May 2012, which is before Pinecom was incorporated, were deals made by Pine Commodities. Those deals related to the sale of 78,995 carbon credits each earning a commission for Pine Commodities from Evolution Trade Services Limited totaling £287,575 of which £121,105 was paid directly to Mr D Nwikpo. As I have also said two investors purchased carbon credits from Pine Commodities on the promise of wholly unrealistic returns. It seems that 67% of the sums paid by investors were retained by Pine Commodities as commissions. I agree with the Secretary of State this strongly suggests that the investors will never recover the principal sums invested, let alone realize any return. I am aware from my previous cases that in any event there is no secondary market into which investors might sell on their carbon credits. As I have said, neither the company nor its director have co-operated with the investigation. It is right to say that the company appears to have been abandoned. In particular it has no physical presence at its registered office. It has granted a charge by way of security for the rent due on the premises in London E1 in fact occupied by Pinecom which I accept tends to obscure which company is truly in occupation of those premises and trading from there. The investigation was unable to make contact with any person responsible for managing the company. Finally, the company has failed to file accounts with Companies House when they fell due on 27 January 2014. It has since also failed to file its annual return falling due on 25 May 2014. In respect of Pinecom Services the unopposed evidence before me shows that its business appears to have worked as follows: Sales staff contacted members of the public identified from a ‘data’ list. That two investors mentioned purchased carbon credits from Pinecom on the basis of wholly unrealistic returns. That the mark-up on the cost price paid by Pinecom is substantial. It seems that it is at least 41% and this renders the carbon credits inherently inappropriate as an investment in view of the substantial increase in value required even to re-coup the element of sales commission built in to the price paid by investors. That the brochures and website do not explain how investors can sell their carbon credits. In fact, as I have stated, there is no secondary market in which investors can sell their carbon credits. Again we find that the company appears to have been abandoned. The evidence for this is that the company has no physical presence at its registered office. Its rent is secured by a charge granted by Pine Commodities which, as mentioned already, tends to obscure which company is truly in occupation of Pinecom’s premises and trading from there. The sole de jure director gave conflicting explanations as to when the company began to trade and gave accounts of its trade which were contradicted by accounts provided by its principal supplier, Evolution Trade Services Limited which has paid £173,869 at the company’s request to an account in the Seychelles. All of this I accept suggests that the de jure director is not really the company’s controlling mind. Finally, an investor has said that his repeated attempts to contact Pinecom recently have failed and since the presentation of the petition, the company has failed to file accounts with Companies House when they fell due on 11 April 2014. The Secretary of State submits that the conduct of each company falls below the generally accepted minimum standards of commercial behaviour and that it is expedient in the public interest that the companies be wound up. I am satisfied on the evidence before me that this submission is well established and I therefore make a winding up order in respect of each company”.
A carbon credit is a certificate or permit which represents the right to emit one tonne of carbon dioxide (CO2) and can be traded for money. The Financial Conduct Authority’s consumer information on carbon credit trading and what to consider before investing can be found at: http://www.fca.org.uk/consumers/scams/investment-scams/carbon-credit-trading
The Financial Conduct Authority has published the conclusions of a survey to find out whether anyone has profited by buying carbon credits as investments: http://www.fca.org.uk/consumers/scams/investment-scams/carbon-credit-trading
The concerns of the FCA regarding the lack of a secondary market are also reflected in guidance issued by HM Revenue and Customs in relation to carbon credits: http://www.hmrc.gov.uk/briefs/vat/brief2810.htm
On 27 June 2012 Tullett Brown Limited was ordered into liquidation by High Court Registrar Derrett: http://news-insolvency.bis.gov.uk/Press-Releases/Carbon-credit-company-Tullett-Brown-Limited-and-related-companies-ordered-into-liquidation-67c18.aspx
On 14 November 2012 Foxstone Carr Limited was ordered into liquidation by High Court Chief Registrar Baister: http://insolvency.presscentre.com/Press-Releases/Phoenix-carbon-credit-company-wound-up-for-using-same-old-tricks-6836c.aspx
On 22 May 2013 Carvier Limited was ordered into liquidation by High Court Registrar Jones: http://insolvency.presscentre.com/Press-Releases/Dodgy-carbon-credit-company-terminated-by-the-Insolvency-Service-68d70.aspx
In November 2013 the Insolvency Service highlighted action taken by the Secretary of State against 19 companies involved in the marketing of carbon credits to the public for investment: http://insolvency.presscentre.com/Press-Releases/Carbon-credit-scams-targeted-as-19-companies-shut-down-69586.aspx
SJL Risk Limited (07386653) was incorporated on 24 September 2010. On 23 April 2014 the company resolved to place itself into voluntary liquidation with assets reported by its sole remaining director Mr James Russell Enright of £43,885 (primarily comprising carbon credits) estimated to realise £4,378 and reported liabilities of £329,455 (primarily due to carbon broking companies in the UK and overseas). The liquidator is Mr Myles Jacobson, Gable House, 239 Regents Park Road, London, N3 3LF.
Company Investigations, part of the Insolvency Service, carries out confidential enquiries on behalf of the Secretary of State for Business, Innovation & Skills (“BIS”).
The Insolvency Service administers the insolvency regime, investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. It may also use powers under the Companies Act 1985 to conduct confidential fact-finding investigations into the activities of live limited companies in the UK. In addition, the agency authorises and regulates the insolvency profession, deals with disqualification of directors in corporate failures, assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees, provides banking and investment services for bankruptcy and liquidation estate funds and advises ministers and other government departments on insolvency law and practice.
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By virtue of the winding up orders all public enquiries concerning the affairs of the companies should be made to: The Official Receiver, Public Interest Unit , 4 Abbey Orchard Street, London, SW1P 2HT. Telephone: 0207 637 1110 Email: firstname.lastname@example.org
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Published: 11 July 2014
From: The Insolvency Service