Director disqualified for 12 years for £26m pension fraud

A former owner of Carrington Wire Limited (CWL) has been banned from acting as a company director after helping the firm’s parent company dump its defined benefit (DB) scheme.

The government’s Insolvency Service disqualified Richard Williams, who bought the Yorkshire-based firm from Russian steel conglomerate OAO Severstal for £1, for 12 years.

It found he had failed to “make sure CWL met its obligations to the CWL Defined Benefit Pension Scheme” caused a dormant company to “facilitate a series of transactions which enabled [OAO Severstal] to avoid its liabilities” to the scheme.

It said the 500-member scheme had lost £26m as a result of Williams’ actions.

Steel cable manufacturing company CWL was bought by Russian company OAO Severstal in 2006. Severstal guaranteed Carrington’s defined benefit (DB) scheme for as long as it was associated with the company.

However, in 2008 CWL was making a loss, so Severstal tried to exit the company. At first the scheme and trustees were kept up-to-date with Severstal’s exit, but it proved difficult to find a buyer for CWL.

The Russian company then pursued an exit from CWL without the trustee’s knowledge.

On 16 June 2010, the entire share capital of CWL was purchased by Williams’ company, Gillico, for £1. Gillico, which was a dormant company with assets of £100, did not guarantee the DB scheme for CWL. Williams was also appointed director of CWL.

In May 2015, The Pensions Regulator (TPR) pursued a £382,136 claim against Williams after it attempted to recover nearly £18m from the former sponsors of the CWL pension scheme to prevent it from falling into the Pension Protection Fund.

Williams had used the £382,136, which Gillico’s solicitors had received from Severstal as a “working capital adjustment” to repay personal debts and make payments to his former wife.

At liquidation, CWL had estimated liabilities of £26,554,460 and a total deficiency of £44,903,162, including £17,499 due to shareholders.

Williams was found to have “consciously and deliberately ignored the interests and enquiries of others, withholding information and doing the opposite of what was required by TPR”.

The Insolvency Service chief investigator Cheryl Lambert said: “This was a disgraceful conspiracy to abandon a pension scheme and this disqualification shows that misuse of the privileges of limited liability trading are not tolerated and the secretary of state will seek out miscreants to send a message to those tempted to use companies as a vehicle for evading debt, especially the pensions of hard working citizens.”