£245 loan scam ‘funded holidays and prostitutes for Halifax bankers’

Michael Bancroft is charged with conspiracy to corrupt, fraudulent trading and conspiracy to conceal criminal property in connection with a �245 million loan scam.
Michael Bancroft is charged with conspiracy to corrupt, fraudulent trading and conspiracy to conceal criminal property in connection with a �245 million loan scam.

A GROUP of bankers and consultants from the Halifax took part in a £245 million loan scam which saw funds splashed on high-end prostitutes and luxury holidays, a court has heard.

Up until 2007 Lynden Scourfield, 54, was lead director of impaired assets for Halifax Bank of Scotland (HBOS) in the south of England and South Wales, which provided advice to corporate customers experiencing financial difficulties, jurors at Southwark Crown Court were told.

Jonathan Cohen outside Southwark Crown Court

Jonathan Cohen outside Southwark Crown Court

David Mills, a former banker-turned-venture capitalist, was engaged frequently by Scourfield, who is not on trial, as a “turnaround consultant” to help improve these customers’ businesses.

During 2003-2007 a corrupt relationship between Scourfield and Mills, 59, developed which was “at the heart of this case”, Judge Martin Beddoe told the jury.

Scourfield advanced huge sums to the businesses from HBOS, “well past the point when it would have been obvious to any honest banker that the bank debt could and would never be repaid”, prosecutor Brian O’Neill said as he opened the case.

This enabled Mills and some of the others to charge high consultancy fees which they profited from, and in some cases run the businesses for their own gain, he alleged.

Mills and his wife Alison Mills, 51; Michael Bancroft, 73; Mark Dobson, 55; Jonathan Cohen, 57; and John Cartwright, 71, appeared in the dock at Southwark Crown Court on Monday.

The list of charges includes conspiracy to corrupt, fraudulent trading and conspiracy to conceal criminal property.

All wore dark suits, while Mrs Mills wore a black and white patterned dress.

Money and large rewards are alleged to have been given to Scourfield from Mills, which took the form of use of an American Express card, luxurious holidays and sex with high-class escorts, the court heard.

Watched by a packed public gallery, Mr O’Neill said: “The motivation was greed. The police investigation uncovered evidence of huge rewards provided by Mills to Scourfield to effect his corruption.

“This took the form of money transfers, cash, expensive gifts, use of an American Express card for personal spending, unauthorised and inappropriately lavish hospitality, luxurious foreign travel and sexual encounters with high-class escorts.”

More than £28 million passed though the personal accounts of Mr and Mrs Mills or the accounts of various of Mills’ corporate entities, Mr O’Neill said.

One company, Clode, was operating within its £2.9 million overdraft in 2002 when a meeting was held to discuss its financial position, the court heard.

But its total indebtedness to the bank in 2007 when Scourfield resigned was £20.558 million - with Mr O’Neill claiming it was “a cash cow - the bank within the bank”.

Bancroft, who is charged with one count of conspiracy to corrupt, three counts of fraudulent trading and one count of conspiracy to conceal criminal property, is said to have received £1 million in direct, traceable payments from Mills’ company and the high-risk companies being helped by HBOS.

He was Mills’ “man on the ground”, engaged as a consultant to some of the businesses, “overseeing their demise and enriching himself in the process,” Mr O’Neill said.

He continued: “This included spending more than £100,000 on the credit cards on one of the financially distressed companies he was supposed to be turning around, much of which was clearly personal expenditure despite the company’s financial difficulties.”

The trial is expected to last up to six months.