South Yorkshire Police launches investigation into multiple financing scam
Asset finance fraud has hit British shores once more. For months, police forces and lawyers have been investigating the Gwent Finance, Thorneycroft and Global EPP leasing frauds, in which assets were sold in breach of contract and the same pieces of kit financed multiple times by large numbers of leasing companies.
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Leasing Life, which has provided regular updates on developments on these scams, learned last month that yet another fraud, similar to these earlier cases, has taken place.
In this latest case, lessors based in England are about to sue, in London, several Irish lessors, claiming they committed the tort of wrongful interference by purporting to purchase construction equipment that was owned by the English lessors.
The English lessors also have claims against Euro UK Hire Limited, the equipment rental company with which they signed the original lease agreements for the
equipment.
Euro Hire allegedly either sold the equipment to countries around the world – including Turkey, Burma, Poland and the United States – or sold the kit and then re-financed them with the Irish lessors, which include Allied Irish Bank and Irish Life & Permanent Plc. The amount being chased by the English lessors is estimated to total around £10 million (€11.4 million).
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By GlobalDataEuro UK Hire Limited, which is headquartered in London, signed most of the hire and lease purchase agreements over 2006 and 2007 with around 20 English leasing
companies, including Liberty Leasing, Lombard, Hitachi Capital, Siemens Financial Services and Barclays Asset & Sales Finance.
About four weeks later, in breach of contract, it then sold most of the equipment.
Also, over the next two years, Euro Hire signed some of the equipment up to fresh leases with the Irish lessors. It conned the Irish banks into believing they were signing
the leases for the first time, it is claimed.
‘Fresh air financing’
Irish businessman Simon Mangan, the director of Euro Hire, who is believed to have gone on the run following the launch of an investigation into the scam by South
Yorkshire Police, also received finance from the English lessors for assets that did not exist.
This activity, which is common in these sorts of scams, is known as ‘fresh air financing’.
A small number of England-based lessors, including Liberty Leasing and Hermes Leasing, are about to commence court proceedings against the Irish banks and Euro UK Hire at the High Court in London.
More companies are expected to follow.
Small amounts of the equipment, which include wheeled loaded excavators, impact and tracked jaw crushers, dump trucks and rubbish compactors – which range in value between £33,000 and £232,000 – have been recovered in Ireland. One item was retrieved from a P&O ferry docked in Dublin.
Elsewhere, Bedford-based John Hanlon & Co Ltd, which provides self-drive and loading shovels and equipment on short and long-term hire, last month was granted by
the High Court in London a freezing injunction on the assets belonging to Mangan and Euro Hire up to the value of £675,000.
Kevin Heath, head of asset finance litigation at international law firm Salans, which is acting for the claimants, said: “The Irish leasing companies have been ignoring these claims and do not appear to appreciate that they can be sued in England. Litigation appears to be unavoidable to bring them to the negotiating table.
“My firm is offering to act for all of the English lessors to make this litigation as cost-effective as possible. I am confident of recovering compensation from the Irish
lessors.”
Dave Standish, who leads KPMG’s leasing creditor practice, has been brought in to broker a deal with the Irish leasing companies.
Brendan Malkin
