Former Norton boss Stuart Garner 'acted dishonestly' says Pensions Ombudsman
The Pensions Ombudsman has ruled that Stuart Garner, sole trustee of the three pension funds wholly invested in Norton Motorcycles, of which Garner was Director at the time – "acted dishonestly and in breach of his duty of no conflict."
Following complaints made by 30 pension investors, a hearing was held in February this year, which Garner failed to attend. That hearing revealed that investors had paid in up to £170,000 each to the funds and had since been unable to recoup their funds, despite many attempts to do so.
Garner told the Ombudsman that he had concerns for his personal safety which is why he didn’t attend the February hearing, even though security was promised.
The Ombudsman, Anthony Arter, ruled that Garner has to "pay back to the Schemes the amount lost on investment, less any money already recovered." Although the exact figure is unclear, members were submitted to the pension schemes between April 2012 and December 2013, transferring funds from other pension arrangements.
Related articles on MCN
- A new era for Norton Motorcyles
- Triumph cut 240 UK staff
- How Coronavirus is affecting the motorbike industry
The total amount transferred into the schemes was £10,931,647. The Ombudsman has also directed that interest of 8% per annum from the date of the initial investment would also be payable to each investor, as this is considered to be the likely fund growth had the sums been invested in a bona fide scheme.
The Ombudsman also ruled that Garner should pay £6000 to each of the 30 complainants "in recognition of the distress and inconvenience cause to them by the Trustee’s exceptional maladministration." He also ruled that the firm which administered the scheme, LD Administration LTD, should pay each complainant £3000 in recognition of the same – both within 28 days.
Garner asked for this ruling to be reconsidered as it would result in him commencing bankruptcy proceedings, but the Ombudsman added: "I do not consider it appropriate to leave it up to him to make ex gratia payments as he sees fit."
Garner claims £2m was paid back to investors and the Ombudsman does note that bank statements show evidence of this. Garner said in his statement to the Ombudsman that he "always acted honestly", although he accepts that he did not have experience of the role (of a pensions trustee).
He added: "At all stages, I have sought to act in the members’ best financial interests. I considered Norton to be a great investment and I did my best to make the business a success. When I came to realise that there were problems with my own position and the liquidity of the business as the basis of the investment, I tried to put things right. I have worked hard to sell the business to new owners and to achieve the best value for members."
Garner also said he placed his trust in the wrong people when the pension schemes were first set up. Those involved, Peter Bradley and Andrew Meeson were jailed for tax fraud in 2013. Another, Simon Colfer (who was acting under a false name), was convicted of fraud in 2018 for the way he had promoted these, and other, schemes.
However, the Ombudsman stated in his judgement: "I find that the Trustee (Garner) acted in breach of trust by failing to fulfil his duty to avoid conflicts of interest and his duty to not profit from his position as Trustee.
"In my judgment, it is this general blunting of his moral antennae which explains why the Trustee had a lower standard of honesty, as well as his recklessness for others’ rights.
"I conclude, on the balance of probabilities, having regard to the evidence and submissions received, that the Trustee’s belief that investing the entirety of the Schemes’ funds in [Norton Motorcycles] Holdings was in the members’ interests, and his failure to take advice on the matter, or inform himself of his responsibilities and duties as a pension scheme trustee, was so unreasonable that no reasonable trustee could have held such a belief."
Ombudsman Arter concluded that Garner had acted "dishonestly", that there were inadequate controls in place to manage conflicts of interest and that there was a failure to ensure investments were "appropriate for scheme members."
Norton went into administration in January after Metro Bank called in administrators BDO. The company was sold in April to Indian motorcycle manufacturing giant TVS, who are currently working to start production and fulfil outstanding customer orders.
The findings are final and binding, subject to an appeal to the High Court. A separate investigation by The Pensions Regulator is ongoing.