UK’s toughest bankruptcy penalties ignored as former millionaires keep assets and maintain lavish lifestyles

A BBC Panorama investigation, which aired last night and is now available on the BBC iPlayer, found former millionaires seemingly untouched by insolvency as criminals and dishonest debtors exploited weaknesses in the bankruptcy system to keep hold of their assets and wealth.

In one case, BBC Scotland Investigates: Millionaire Bankrupts Exposed showed convicted fraudster Barry Hughes, who declared himself bankrupt in 2014 owing £10m and claiming he had no assets, driving a line of luxury cars worth half a million pounds.

Also exposed was former millionaire mining tycoon Graham Gillespie who failed to disclose multiple assets to creditors during his £12.8m bankruptcy. At the time, one asset being sought by his trustee to pay debts was an exclusive private registration plate – GG1 – worth £180,000, which Gillespie told authorities he’d sold to pay off a gambling debt.

But a few months ago, the BBC filmed Mr Gillespie at the plush Gleneagles Hotel in Perthshire driving a new Bentley with the GG1 licence plate.

When contacted by the broadcaster, both Mr Hughes and Mr Gillespie refused to provide a comment.

The BBC team also found serious weaknesses in the system designed to punish bankrupts who try to hide their assets or the extent of their wealth.

Any bankrupt found to have been dishonest or reckless during the process can be given a Bankruptcy Restriction Order (BRO), with a breach potentially leading to up to two years in prison.

Malcolm Scott, a former treasurer of the Conservative Party in Scotland, was given a BRO in 2015 after he was found to have lied to his trustee. He is under the restrictions until 2021.

The former multi-millionaire was found to have transferred shares, secretly sold a luxury car without declaring the proceeds, and failed to declare a speedboat and other assets in the Bahamas.

The BBC team had heard that Mr Scott was running a property company, with interests across the UK, in breach of his BRO.

It sent in an undercover reporter to pose as a businessman interested in investing in his developments. One was run by a company called Sandnewco One Ltd, whose registered director was a man called Alexander Duncan.

Despite the restrictions, Mr Scott told the BBC’s undercover investor that the company was run by himself and Mr Duncan, who was a “silent partner”.

When asked by the BBC’s undercover investor about the corporate structure of the company, he claimed to be at the top, agreeing that he was the “head shed”.

The broadcaster also found that Mr Scott had formed a property company called Northside Residential Ltd, another breach of his BRO.

The BBC showed its footage to insolvency expert Maureen Leslie.

She said: “He’s holding himself out as the decision maker in the company… He’s not a named director, but he’s acting as if he were a director, or he is allowing someone to form the perception that he is a director.”

Shown the incorporation documents for Northside Residential Ltd, she said: “He’s just formed a limited company. The Bankruptcy Restriction Order does not allow you to form a limited company. That is a breach of the terms of the Bankruptcy Restriction Order.”

Richard Dennis, chief executive of Scotland’s Accountant in Bankruptcy, the agency which gives out BROs, admitted no one “proactively” monitored those given the orders.

He said: “As with all BROs, there is no active monitoring of the BRO system.”

Mr Dennis refused to discuss individual cases, but added it was “serious” if people were breaching their BROs, adding: “I’ll take away the evidence that you’re prepared to provide us and we’ll have a look at the case, and I can’t say anything further than that.”

Through his solicitor, Mr Scott denied acting as a director of any company. Alexander Duncan, the director of Sandnewco One Ltd, told the BBC that Mr Scott was an “employee” of the property company, with “no executive decision-making authority”.