An Essex developer and his banker friend had a cosy loan-for-kickbacks relationship – until the Serious Fraud Office found out. David Wigan reports
Most of us have to work for whatever wealth we have. We may dream of winning the lottery or discovering our wealthy long-lost cousin, but it rarely actually happens.
Property developer Brian Burrett and his friend Gordon Skingley thought differently and set about making their dreams come true. The only problem was that they broke the law doing it. Skingley, a high-ranking executive at Hill Samuel bank, used his position to make illicit loans to Burrett’s property business. In return, Burrett made substantial donations to Skingley’s private bank account.
Things went well – so well, in fact, that between 1988 and 1992 Hill Samuel lent Burrett’s residential development companies more than £22m. During the same period, Burrett illegally paid Skingley more than £650,000.
The pair might never have been caught were it not for a quirk of corporate opportunism. In 1995 Lloyds took over the TSB, which itself had bought Hill Samuel in 1988. Shortly after the takeover, a Lloyds customer made an unrelated complaint against Skingley. The bank launched an investigation, and found irregularities in Skingley’s working methods. The deeper they dug, the more they found. A few months later, the Serious Fraud Office was called in. The kickbacks-for-soft-loans scam was discovered and four years of unrelenting corruption came to an end.
Serious Fraud Office investigation
An extensive investigation by the Serious Fraud Office and the City of London Police followed, and on 15 September 1997 the two men were each charged with six counts of corruption under the Prevention of Corruption Act 1906.
On 1 February 1999 Burrett and Skingley stood in the dock at Middlesex Guildhall Crown Court. The trial lasted more than two months and was hard fought on both sides. Both men maintained their innocence throughout, arguing that both the loans and the payments were legitimate business.
On 11 May, at 1.45pm, the jury retired to consider its verdict. As he waited to hear his fate, Burrett, the 60-year-old former solicitor, reportedly displayed little emotion. Skingley, 66 and suffering from a degenerative brain condition, leaned heavily on the dock. Relatives of both men looked on from the gallery.
In the rear of the court a crowd of newspaper and television reporters gathered, mobile phones at the ready. Both Burrett, of Saffron Walden, Essex, and Skingley, of Southend-on-Sea, were respected pillars of their communities – Burrett a former solicitor and father of five, Skingley a certified accountant. The journalists smelled a scandal and had been told by their editors to wait as long as it took.
It didn’t take long. Shortly before 4pm, an usher announced that the jury had reached a decision. Surprise rippled through the courthouse. Following a 56-day trial, the jurors had considered their verdict for less than three hours.
The lawyers and the press knew that an early decision had serious implications. Either the men would be unanimously convicted or they would be acquitted. Split juries never make fast choices. They also knew that early verdicts often mean that jurors had made up their minds before the end of the trial, which was often bad news for the defence.
In the gallery, the men’s families scanned the lawyers for some clue as to the outcome. But they did not have to wait too long. The verdict was unanimous: Guilty. Burrett was convicted on four counts of corruptly giving inducements for loans and Skingley of four counts of corruptly accepting inducements from Burrett.
“Everybody was amazed at the speed of the verdict,” said Paul Lund, a lawyer with the Serious Fraud Office. “But it spoke for the persuasiveness of the evidence.”
Sentencing the men to nine months in prison, Judge Derek Inman described Burrett and Skingley’s activities as the unacceptable face of capitalism. “Such conduct,” he said, “damages commercial life, and the giving and accepting of bribes must not be tolerated in this country.”
From law career to the property trade
Brian Edward Ernest Burrett left an early law career in the 1970s to enter the building and property trade. He had known Gordon Skingley for many years. While Burrett’s property business grew, Skingley rose through the ranks of Hill Samuel’s loans department. Tim Barnes QC, prosecuting at the trial, said that evidence, even during those early years, showed that the banker had received payments for work done for his friend and his growing business concerns.
In 1980 Burrett incorporated Construct Reason, a firm of builders and contractors specialising in building residential developments in the South and East. In the early 1980s it rode the property boom and by 1988 had a turnover of more than £13m.
In the same year Gordon Skingley was promoted to general manager of Hill Samuel’s corporate loans department. He was in a powerful position, with around 70 people reporting to him. Former employees describe him as a hard taskmaster, running his department with a “rod of iron”. But it was following his appointment that serious amounts of money began to flow into Burrett’s companies.
More than £12m was lent to a company called Trebane Developments, incorporated in 1987 by Burrett and his business partner, Alan Reason, who was not involved in any wrongdoing and later gave evidence for the Crown. Trebane was used to buy six sites in East Anglia and one in Kent. Burrett and Skingley worked closely on the deals, preparing master contracts, site agreements and loan documentation.
The loans were made interest-free, secured on the value of the building sites themselves or completely unsecured. Such was Skingley’s position in the bank that the nature of the loans was never questioned.
The contractor for the developments was Construct Reason, to which the bank paid £10m for the construction of Trebane’s houses. Skingley was required under Hill Samuel internal rules to refer such payments to the bank’s credit committee. He failed to do so, instead directing the money to Construct Reason on a work-in-progress basis.
Unusually, the bank did not require repayment of any of the Trebane loans until the houses were sold. Hill Samuel took all the risk, and although it said later it had not lost any money from the transactions, it admitted Skingley would almost certainly have been sacked had the loans come to light. At trial Skingley said that the loans were legitimate and within his discretion.
Skingley also assisted in providing a tax loss company to another of Burrett’s companies that led to favourable tax benefits.
In return for his co-operation, he was paid more than £650,000. The cheques were signed by Burrett on behalf of Construct Reason against invoices prepared in the name of MRS Securities. The payments were ostensibly for commission, advertising and marketing consultancy.
SFO and City of London Police investigations showed that the firm was bogus and that Skingley did not perform all of the services shown in the invoices. The payments were a crucial part of the prosecution evidence at the trial. Skingley was acquitted on four counts of corruption, where he was able to show that tax advice was legitimately provided.
Cheques in return for co-operation
The second crucial piece of evidence was Skingley’s contract of employment, which required him to reveal to the bank any sources of employment outside his position at Hill Samuel. The fact that Skingley failed to reveal the existence of MRS Securities to the bank was inferential evidence that he had something to hide.
After the sentencing, the City of London Police said they were “pleased” the pair received a custodial sentence, but admitted the judge had taken into account Skingley’s age and failing health in passing sentence. As the pair’s crimes were indistinguishable, Burrett was also given a nine-month term. The pair were ordered to pay £425,000 in costs.
Their lawyers immediately lodged notices of appeal against conviction. The appeal is to be heard on 1 November.
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The banker-developer relationship: how the fraud worked |
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Burrett’s Trebane Developments received more than £12m over four years in interest-free, largely unsecured loans from Hill Samuel, while Construct Reason, also owned by Burrett, was given £10m to pay construction bills. In return, Hill Samuel loans director Gordon Skingley received £650,000 paid into MRS Securities, a bogus company |
