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Media captionA BBC investigation found a number of bankrupts apparently enjoying a lavish lifestyle

Criminals and dishonest debtors are exploiting weaknesses in the bankruptcy system to keep hold of their assets and wealth, a BBC investigation has revealed.

The BBC team found former millionaires enjoying lavish lifestyles, seemingly untouched by insolvency.

Convicted fraudster Barry Hughes, who declared himself bankrupt in 2014 owing £10m and claiming he had no assets, was seen along with his wife driving a line of luxury cars worth £500,000.

Barry Hughes
Image caption Barry Hughes owed £10m when he declared himself bankrupt
Bentley with personalised plates
Image caption Barry Hughes has been seen driving luxury cars

Former millionaire mining tycoon Graham Gillespie failed to disclose multiple assets to creditors during his £12.8m bankruptcy. At the time, one asset being sought by his Trustee to pay debts was an exclusive private registration plate – GG1 – worth £180,000.

Mr Gillespie told the authorities he’d sold it to pay off a gambling debt.

But just a few months ago the BBC filmed him at the plush Gleneagles Hotel in Perthshire driving a new Bentley – complete with GG1 licence plate.

Graham Gillespie
Image caption Graham Gillespie was involved in a £12.8m bankruptcy

When contacted, Mr Hughes and Mr Gillespie refused to provide a comment.

The BBC team also found serious weaknesses in the system designed to punish bankrupts who try to hide their assets or the extent of their wealth.

Any bankrupt found to have been dishonest or reckless during the process can be given a Bankruptcy Restriction Order (BRO).

Under the order, which can last for up to 15 years, a bankrupt is banned from being a company director. They also cannot form, manage – or even give the impression of managing – a limited company.

A breach could lead to up to two years in prison.

NassauImage copyright Getty Images
Image caption Malcolm Scott was found to have failed to declare assets in the Bahamas

Malcolm Scott, a former treasurer of the Conservative Party in Scotland, was given a BRO in 2015 after he was found to have lied to his Trustee.

The former multi-millionaire was found to have transferred shares, secretly sold a luxury car without declaring the proceeds, and failed to declare a speedboat and other assets in the Bahamas.

He is under the restrictions until 2021.

The BBC team had heard that Mr Scott was running a property company, with interests across the UK, in breach of his BRO.

Malcolm Scott
Image caption Malcolm Scott is associated with a company called Sandnewco One Ltd

It sent in an undercover reporter to pose as a businessman interested in investing in his developments. One was run by a company called Sandnewco One Ltd, whose registered director was a man called Alexander Duncan.

Despite the restrictions, Malcolm Scott told our undercover investor that the company was run by himself and Mr Duncan, who was a “silent partner”.

When asked by the undercover investor about the corporate structure of the company, he claimed to be at the top, agreeing that he was the “head shed”.

We also found that Mr Scott had formed a property company called Northside Residential Ltd, another breach of his BRO.

Maureen Leslie
Image caption Insolvency expert Maureen Leslie said forming a limited company is a breach of a Bankruptcy Restriction Order

The BBC showed its footage to insolvency expert Maureen Leslie.

She said: “He’s holding himself out as the decision maker in the company… He’s not a named director, but he’s acting as if he were a director, or he is allowing someone to form the perception that he is a director.”

Shown the incorporation documents for Northside Residential Ltd, she said: “He’s [Malcolm Scott] just formed a limited company. The Bankruptcy Restriction Order does not allow you to form a limited company. That is a breach of the terms of the Bankruptcy Restriction Order.”

Richard Dennis, chief executive of Scotland’s Accountant in Bankruptcy, the agency which gives out BROs, admitted no-one “proactively” monitored those given the orders.

He said: “As with all BROs, there is no active monitoring of the BRO system.”

He refused to discuss individual cases, but added it was “serious” if people were breaching their BROs.

He said: “I’ll take away the evidence that you’re prepared to provide us and we’ll have a look at the case, and I can’t say anything further than that.”

Through his solicitor, Malcolm Scott denied acting as a director of any company.

Alexander Duncan, the director of Sandnewco One Ltd, told the BBC that Mr Scott was an “employee” of the property company, with “no executive decision-making authority”.

Millionaire Bankrupts Exposed will be broadcast on BBC One Scotland on Monday 8 January, at 20:30, and afterwards on BBC iPlayer. A Panorama version will air at the same time in England, Wales and Northern Ireland on BBC One.


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