Philip David Claremont Morris and William Edward Strutt, directors of Capital Acquisitions Ltd (CAL) and City Asset Partnership Limited (CAP), both based in London, have been banned from acting as directors.
Mr Morris gave an undertaking to the Secretary of State for Business, Innovation & Skills to be disqualified as a director for a period of 14 years and Mr Strutt has been disqualified as a director by the High Court for a period of 13 years. Both received bans for selling Voluntary Emission Reductions (VERs), a type of carbon credit, to members of the public as an investment.
This disqualification follows investigations by the Official Receiver at Public Interest Unit, a specialist team of the Insolvency Service, whose involvement commenced with the winding up of the companies, in the public interest following investigations by Company Investigations into the affairs of the companies.
The disqualification regime exists to protect the public. Mr Morris disqualification from 7 July 2015 and Mr Strutts disqualification from 19 November 2015 means that they cannot promote, manage, or be directors of a limited company until 2029 and 2028 respectively.
The Official Receivers investigation uncovered that Mr Strutt and Mr Morris caused and/or allowed CAL and CAP to sell VERs to members of the public for investment purposes for 1.9 million on the basis that the VERs would increase in value and could then be sold for a profit. However, CAL and CAP charged a mark-up of between 2.20 and 5.50 for VERs it purchased thereby hindering the VERs as a viable investment from the out-set.
Furthermore, the Official Receiver, and indeed the markets own self-regulating authorities, HM Revenue & Customs and the Financial Conduct Authority have been unable to identify a viable secondary market for VERs further evidencing that VERs were not a suitable investment for CAL and CAPs customers. This information was available to Mr Strutt and Mr Morris prior to the first known sale of VERs to members of the public as an investment.
The absence of a viable market into which to sell VERs means that those members of the public who have purchased VERs from CAL and CAP will be unable to realise their investment and will suffer a financial loss as a result.
Commenting on this case Paul Titherington, Official Receiver in the Public Interest Unit, said:
The directors displayed a lack of commercial probity whilst selling carbon credits to hardworking members of the public. Those individuals are now left in a position where they cannot sell their carbon credits for profit or at all. The Insolvency Service will investigate those directors who sell dodgy investments.
As a result of this investigation, the marketplace has been protected from Mr Morris and Mr Strutt who have been banned from acting as directors for a substantial period of time.