When the gates of Marcus Worthington Group were still open

Throughout my career, I have been brought up to consider the fiduciary duty binding and the rules governing pension trusteeship actionable if broken. Since the days of Robert Maxwell, the idea of embezzling other people’s money, through a raid on the pension scheme has ranked pretty high on the scale of corporate crime. Just because the pension scheme represents “low-hanging fruit” , doesn’t entitle Adam to take the apple. Adam was expelled from the garden and miscreants who steal from pension funds go to jail.

Well almost.

Reading this statement from Nicola Parish of the Pensions Regulator, you would imagine that the perpetrator was spending some time behind bars.

“Rules restricting trustees from lending scheme money to a sponsoring employer are there to safeguard workers’ pension pots.

“Smith chose to flout these rules and, as this prosecution shows, we will take tough action to punish those who risk the pension funds they are entrusted to look after.”

Stephen Smith, has been given a 10-month jail term, suspended for 12 months, after admitting to using scheme funds to make five prohibited loans to entities connected to the scheme’s sponsoring employer.

Smith, we are told, played a central role in running the scheme but had failed to act in the best interests of its beneficiaries or with impartiality and was negligent in the performance of his trustee duties. He was at the time , also a director of the sponsoring company which has since gone bust.

We learn from the Pensions Regulator’s original statement on the matter in 2022 that;

These included three loans by the scheme to Stonewell Property Company Limited, which was the parent company of the sponsoring employer, Marcus Worthington and Company Ltd.

The scheme also made an investment in a retail park where the land concerned had been let on a long lease to companies connected and associated with Marcus Worthington and Company Ltd.

What has become of  Derek Thomas, 85, of West Oxfordshire, a professional adviser to the scheme, who was accused of assisting or encouraging four prohibited loans and David Boardman 70), Smith’s co-trustee,  who were cited as co-defendants by TPR – isn’t known.

These loans haven’t been paid back, they have been written off because the connected entities have gone bust. The money has been spent and not well spent. To the members of the pension scheme, the money has been stolen.

What does this say?

This does not say much for the exercise of TPR’s powers which suggest that white collar crime is still punishable with community orders and suspended sentences. That doesn’t sound much like a deterrent to me.

150 hours of unpaid work in the community and having to pay £1,000 in prosecution costs doesn’t strike me as “tough action”.

I’m left asking

Who has had to fill the £700,000 hole in the pension scheme funding?

and

What remains of Marcus Worthington  and associated companies?

The answer to the second question is to be found at Companies House and this advertisement from PWC

Boardman and Smith ceased being Directors of these companies only in 2019 when the companies were wound up.

In short, the scheme is now in the PPF and the PPF is on the hook for the impact of that £700,000 loss, the benefits of the members of the scheme are being paid -with restrictions – by the PPF.

Are there any losers?

Of course there are.

The losers from all this are the trustees who don’t steal money, the companies that follow the rules and most of all the members of the pension scheme who receive a haircut to their pensions and , should they be still working for Worthington, lose their jobs.

They see the bosses who played fast and loose with their retirement security, walking free.

A deterrent?

Meanwhile, the victims of the Ark pension fraud are still being pursued into bankruptcy and sometimes beyond by HMRC – as a deterrent.

Meanwhile the steelworkers conned into thinking a SIPP was a proper replacement for a pension continue to wait for redress.

I need not remind readers of the summary justice served to post office sub-postmasters.

The impression given by this sentence and the lack of sentencing of others, is that stealing £700,000 from a pension scheme and blowing it on failed investments in property amounts to 150 hours of unpaid work.

In researching this article , I found 16 reports of this case. Not one of them questioned whether this investigation resulted in value for the money spent on bringing Smith to “justice”.

TPR should be very angry that Smith has got off so lightly. We should be asking questions of our penal system, which penalises the victim and lets the guilty walk away.

I hope that Nicola Parish can find some solace in reading this. I know she must put a brave face on this but inside, she and her colleagues must be seething.

a failed pension and a failed company