Biography
Cushnie was born in Kingston, Jamaica, and moved to London at the age of 13. He began his career as a computer programmer at ICL, before going on to found a software business, Pentagon Business Systems PLC. He later founded Versailles, a group of companies which purported to be involved in the factoring business, effectively providing loans to manufacturers by buying their merchandise after a sale had been agreed to another company but before they had been paid for it. Potential investors were told that Cushnie used computer software to personally keep track of exactly what each investor's money had bought, whether it be "shorts or golf balls". [2]
Kingston is the capital and largest city of Jamaica, located on the southeastern coast of the island. It faces a natural harbour protected by the Palisadoes, a long sand spit which connects the town of Port Royal and the Norman Manley International Airport to the rest of the island. In the Americas, Kingston is the largest predominantly English-speaking city south of the United States.
International Computers Limited (ICL) was a large British computer hardware, computer software and computer services company that operated from 1968 until 2002. It was formed through a merger of International Computers and Tabulators (ICT), English Electric Leo Marconi (EELM) and Elliott Automation in 1968. The company's most successful product line was the ICL 2900 Series range of mainframe computers.
Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable to a third party at a discount. A business will sometimes factor its receivable assets to meet its present and immediate cash needs. Forfaiting is a factoring arrangement used in international trade finance by exporters who wish to sell their receivables to a forfaiter. Factoring is commonly referred to as accounts receivable factoring, invoice factoring, and sometimes accounts receivable financing. Accounts receivable financing is a term more accurately used to describe a form of asset based lending against accounts receivable. The Commercial Finance Association is the leading trade association of the asset-based lending and factoring industries.
In fact, the company only made one such trade, on which it lost money. Although one department was trading legitimately, the large majority of the company's turnover was produced by moving money back and forth between companies controlled by Cushnie and his co-director, Frederick Clough, who had also been part of Pentagon Business Systems. 'Profits' paid out came from new capital from investors and bank loans, "a classic Ponzi scheme". [3]
The company was floated on the Alternative Investment Market in 1995 and moved to the full London Stock Exchange Official List in 1997. Its share price was 8 pence at the time of flotation, and rose to 250 pence in December 1999, thanks to annual accounts showing turnover and assets significantly higher than they in fact were. Cushnie retained a controlling stake in the company which gave him an estimated worth of £340 million, and sold part of his shareholding at the top of the market for £28.6 million. [4]
AIM is a sub-market of the London Stock Exchange that was launched on 19 June 1995. It allows smaller, less-viable companies to float shares with a more flexible regulatory system than is applicable to the main market.
London Stock Exchange is a stock exchange located in the City of London, England. As of April 2018, London Stock Exchange had a market capitalisation of US$4.59 trillion. It was founded in 1571, making it one of the oldest exchanges in the world. Its current premises are situated in Paternoster Square close to St Paul's Cathedral in the City of London. It is part of London Stock Exchange Group (LSEG).
In 1999, following a six-figure donation to the Labour Party, Cushnie was chosen by Tony Blair to appear in a European election broadcast for the party alongside Mick Hucknall and Alex Ferguson. In the broadcast, Cushnie spoke flatteringly about Blair's leadership abilities.
The Labour Party is a centre-left political party in the United Kingdom that has been described as an alliance of social democrats, democratic socialists and trade unionists. The party's platform emphasises greater state intervention, social justice and strengthening workers' rights.
Anthony Charles Lynton Blair is a British politician who served as Prime Minister of the United Kingdom from 1997 to 2007 and Leader of the Labour Party from 1994 to 2007. He was Leader of the Opposition from 1994 to 1997. As of 2017, Blair is the last British Labour Party leader to have won a general election.
The European Parliament Election, 1999 was the United Kingdom's part of the European Parliament election 1999. It was held on 10 June 1999. Following the European Parliamentary Elections Act 1999, it was the first European election to be held in the United Kingdom where the whole country used a system of proportional representation. In total, 87 Members of the European Parliament were elected from the United Kingdom.
On 5 May 1999, before the broadcast, the Department of Trade and Industry had instigated an investigation into the company, and in November accountants were asked to examine it under the rules of the LSE. Trading in the shares, then at 268p giving the company a value of £632 million, was suspended on 8 December 1999. Versailles collapsed after it emerged that its reported turnover had been fabricated.
Cushnie claimed that the fraud had been perpetrated by the Versailles finance director, Clough, and that he was unaware of it. In 2004, at their four-month-long trial, Cushnie exercised his right not to give evidence while Clough, who had been stealing money from the company, pleaded guilty and gave evidence for the prosecution. After ten days of jury deliberations, Cushnie was found guilty of fraud in one of the smaller trading companies but cleared of the larger fraud in Versailles and both men were sentenced to six years in prison (Clough's sentence later being reduced to five years on appeal) and banned from being directors of any company for many years. Cushnie was also ordered to pay back £10,140,732 of the money he had defrauded or serve an additional three years. [5]
In June 2001, one month before charges were brought against him, Cushnie transferred control of a substantial property in the south of France to his sister. This was challenged by those who had lost money in his company, and a judge described his explanation that it was done for inheritance tax reasons as "highly unconvincing". [6] Following his conviction, one investor sued to recover their losses. Cushnie first claimed that they were not the relevant investor, a suggestion described as "completely fanciful" by the judge, then that the documents were forgeries, which the judge said had "simply no evidence" to support it. [7]
Although his appeal against conviction was refused, [8] he continues to maintain that he was innocent of all fraud committed within the company. Cushnie continues to reside in the UK.
