Business & Consumer News: Farepak victims hit out after court case against ... - Scottish Daily Record

Jun 21 2012 By Craig McDonald

Farepak

FAREPAK victims were devastated last night after the case against the bungling directors who left them £42million out of pocket dramatically collapsed.

Business Secretary Vince Cable abandoned a bid to hammer the men behind the savings club which collapsed six years ago – leaving 25,000 ordinary Scots who used it to pay for Christmas presents heartbroken.

The Insolvency Service announced yesterday that they were discontinuing their £1million High Court action to fine and ban the directors.

Jean McLardy, 48, of West Kilbride, who lost £671 saved with her late mum Phyllis, said: "This is a total and utter joke.

"We have wasted even more taxpayers' money trying to get some action and some justice here. Yet again, it is us, the victims, who lose out."

"We hoped for some justice but these b******* are going to get away with it. Unbelievable."

Farepak Victims' Committee chair Louise McDaid, 48, from West Kilbride, added: "We still believe there should be criminal proceedings over this fiasco.

"Our committee will fight on and our campaign will continue."

There were dramatic scenes at the High Court in London as it was announced that the case against directors including £1million-a-year ex-CBI president Sir Clive Thompson was being scrapped.

The finger of blame was pointed at HBOS, who twice refused requests by Farepak directors to safeguard £4million of customers' money by placing it in a trust.

The decision meant the cash went to HBOS rather than being returned to customers when the business went under in October 2006. Senior bankers referred to Farepak savers' cash as "Doris money" in an derisory reference to hard-working customers.

Cable said he was "deeply disappointed" at the decision do drop legal action – despite the
fact that the Insolvency Service are part of his department.

In a mealy-mouthed statement, he claimed he felt huge sympathy for "those who lost out" and would "reflect" on the decision.

The case against the five Farepak directors flowed from a five-year investigation.

Over £1million in deposits was flowing into the company just weeks before it went under.

And it was revealed this week that the directors did their best to protect the cash but were turned down by HBOS. High Court judge Mr Justice Smith said: "That means that the bank is £4million plus better off during that period."

HBOS's £31million loan to Farepak was repaid in full.

Savers, meanwhile, have been offered just 15p in the £1. Most are still waiting to receive their money, expected to total around £5.5million.

This is dwarfed by the £8.2million earned by lawyers, administrators, insurers and PR executives during both the administration and liquidation of the company.

BDO, as administrators and now liquidators, have already earned fees of £3.8million – plus VAT. The firm are now examining the liquidation of Rangers.

Nearly 120,000 people lost an average of £400 when Farepak went into administration.