Former Farepak finance director Stevan Fowler may lose his right to be a director in a British business if an application filed by the Insolvency Service to the High Court of Justice to disqualify the board of the collapsed business is successful.
The filing, made in late January and publicly confirmed in mid-February, seeks the disqualification of all nine former executive and non-executive directors of the former Christmas hamper savings company and its parent European Home Retail (EHR) group, including its former FD Stevan Fowler, former chairman Sir Clive Thompson, former chief executive William Rollason, former directors Joanne Ponting and Stephen Hicks, and four former non-executives, Nicholas Gilodi-Johnson, Neil Gillis, Paul Munn and Michael Johns. In 2010, the administrators for Farepak brokered a £4m settlement with no admission of liability from the directors, though the specific directors involved in that settlement remain confidential.
Some observers find it strange that Fowler is at risk of being disqualified while his predecessor as EHR FD, Chris Hulland, was in post in 2005 when Farepak’s last accounts were signed off by its auditor Ernst & Young. Fowler joined on 1 January 2006. “I’m surprised that Stevan Fowler is named on this list. I worked for him at EHR and he was new to the company, only joining a few months before the collapse,” Angus Gow, who reported to Fowler when he was group head of IT at EHR, tells Financial Director. “He was conscientious and honourable, working tirelessly to resolve a situation created long before he came along. As far as I can see, he did his best in a very challenging situation.”
Hulland went on to join interim FD provider The FD Centre as managing principal for its West Midlands practice – The FD Centre is one of financialdirector.co.uk’s regular bloggers – but could not be reached for comment by the time the magazine went to press. There is no suggestion at this stage that Hulland is in any way implicated in the case.
Perhaps the most high-profile person in the case is Clive Thompson, currently deputy chairman of London-listed Strategic Equity Capital. He served as chairman of Rentokil Initial before joining Farepak and as a president of the Confederation for Business and Industry, a member of the Committee on Corporate Governance and deputy chairman of the Financial Reporting Council, appearing prior to this case to have impeccable governance credentials. It remains to be seen whether or not he will remain at Equity Capital while disqualification proceedings work their way through the Court.
Farepak ceased trading in October 2006 after a series of profit warnings and EHR went into administration the same day. The administrators said this was triggered by a £33m loan Farepak made to the parent company which was not paid back, leaving the business in debt to 116,00 customers and other creditors.
The disqualification application follows a four-year investigation into the Farepak collapse by the Insolvency Service, commissioned by the secretary of state for business. The application was made “in the public interest on the grounds that the conduct of each director in relation to the relevant company or companies makes him or her unfit to be concerned in the management of a company,” the Insolvency Service said.