Friday, March 06, 2015

CAPITAL JUDGE: As top judge suspends sheriff over £28m law firm writ alleging links to £400m Heather Capital collapse, what now for Lord Gill’s battle against a register of interests & transparency for Scotland’s judiciary

Alleged judicial links to collapsed hedge fund force top judge to act. SCOTLAND’S top judge Lord Brian Gill – who has waged a bitter two year battle with the Scottish Parliament over proposals to create a register of judicial interests – has been forced to suspend a judicial colleague after allegations surfaced in a writ concerning links between a serving sheriff and his former law firm to individuals under investigation in connection with the collapse of Heather Capital -  a multi million pound hedge fund.

Lord Gill (73) suspended Sheriff Peter Black Watson (61) after demanding sight of a multi million pound writ against Glasgow law firm Levy & Mcrae – where Watson was formerly a partner.

It has been reported Watson offered to step aside temporarily – while the litigation concluded - however a Judicial Office spokesperson said “The Lord President concluded that in the circumstances a voluntary de-rostering was not appropriate and that suspension was necessary in order to maintain public confidence in the judiciary.”

Watson’s former law firm -  Levy & McRae, is one of several companies being sued by Heather's liquidator, Ernst & Young, after the fund's collapse in 2010. Watson was a director of a company called Mathon Ltd - a key part of the Heather empire.

The collapsed hedge fund Heather Capital – run by lawyer Gregory King is now the subject of a Police Scotland investigation and reports to the Crown Office. Gregory King – a lawyer - is named along with three others – lawyer Andrew Sobolewski, accountant Andrew Millar and property expert Scott Carmichael in a police report.

A statement from the Judicial Office for Scotland issued last week confirms: Sheriff Peter Watson was suspended from the office of part-time sheriff on 16 February 2015, in terms of section 34 of the Judiciary and Courts (Scotland) Act 2008.

“On Friday 13 February the Judicial Office was made aware of the existence of a summons containing certain allegations against a number of individuals including part-time sheriff Peter Watson.

The Lord President’s Private Office immediately contacted Mr Watson and he offered not to sit as a part-time sheriff on a voluntary basis, pending the outcome of those proceedings.

Mr Watson e-mailed a copy of the summons to the Lord President’s Private Office on Saturday 14 February.

On Monday 16 February the Lord President considered the matter.

Having been shown the summons, the Lord President concluded that in the circumstances a voluntary de-rostering was not appropriate and that suspension was necessary in order to maintain public confidence in the judiciary.

Mr Watson was therefore duly suspended from office on Monday 16 February 2015.”

At the Court of Session yesterday (Thursday) judge Lord Woolman heard more details of the summons mentioned by the Judicial Office in their statement relating to the suspension of Sheriff Watson – who was formerly a partner at the Glasgow based law firm of Levy and Mcrae – who are now being sued for £28 million over allegations relating to their involvement in the downfall of Heather Capital.

In CA207/14 Paul Duffy v Levy & McRae &c Shepherd & Wedderburn (Pursuers) Simpson & Marwick (Defenders) - Former Dean of the Faculty of Advocates - Richard Keen QC - who is representing Paul Duffy of Isle of Man based liquidators Ernst & Young - told the court the action proceeded on the basis of "breach of fiduciary duty and dishonest assistance". Keen alleged there had been "a fraud" on Heather Capital. Further details were reported by the Herald newspaper here

The Scottish Sun previously reported on a dossier handed to prosecutors which focussed on Glasgow-based Mathon Ltd. Mathon was linked to the failed £400m Heather Capital hedge fund run by King.

The Gibraltar-based investment scheme was launched in 2004 and some of the cash was loaned by Mathon to bankroll developments across Scotland. But many of the Mathon-funded plans did not happen — and some of the cash was never repaid.

Reports in the Scottish Sun revealed liquidator Paul Duffy, of Ernst & Young, has been battling to recover investors' money since being appointed in 2010. They filed a £100million writ in an Isle of Man court against accountancy giants KPMG -  who were Heather's auditors.

In court papers, they claim that the developments were a "fabrication and a sham". And a judge has said it is likely that "fraudulent conduct exists”.

While the Judicial Office have so far refused to give further comment at this time on the allegations linking judges to court litigation involving collapsed hedge funds - the details surrounding directorships  of members of Scotland’s judiciary should now be brought to the attention of the Scottish Parliament’s Public Petitions Committee - who are currently considering proposals to create a full register of judicial interests as called for in Petition PE1458: Register of Interests for members of Scotland's judiciary.

The move to bring transparency to judges wealth, links to business & other interests comes after it emerged members of the judiciary have a significant proportion of their undeclared riches in offshore tax havens, arms length trusts, shareholdings in vested interests, energy firms, land ownership, companies linked to public contracts - some within the justice system itself, companies involved in organised crime and secretive links to big business, finance & banking.

Previous articles on the lack of transparency within Scotland’s judiciary, investigations by Diary of Injustice including reports from the media, and video footage of debates at the Scottish Parliament’s Public Petitions Committee can be found here : A Register of Interests for Scotland's Judiciary

18 comments:

Anonymous said...

Good point - Gill can hardly claim exemption for judges after all those headlines!

Anonymous said...

"in order to maintain public confidence in the judiciary." - Judicial spokesperson

Public confidence in the judiciary no longer exists Mr Gill and you helped see to that in your refusal to go to parliament..

Anonymous said...

What a coincidence this happens at the same time top judge Mr Gill is campaigning against a register of interests!

What excuse will the good lord now use to divert msps attention away from this latest headline involving the judiciary?

Anonymous said...

Top judge has some more top explaining to do and while they are at it the msps should call in Gill again just like they are taking it out on the cops

Anonymous said...

“The Lord President concluded that in the circumstances a voluntary de-rostering was not appropriate and that suspension was necessary in order to maintain public confidence in the judiciary.”
====================================
I have no confidence in the judiciary and I suspect many others do not either. They just don't get it do they?

Anonymous said...

*cough* before it is lost *cough*
http://www.heraldscotland.com/news/home-news/law-firm-sued-for-28m-over-an-alleged-hedge-fund-fraud.120017657

Law firm sued for £28m over an alleged hedge fund fraud
Tom Gordon
Scottish Political Editor
Friday 6 March 2015

ONE of Scotland's best known law firms is being sued for £28 million in connection with alleged fraud at a failed hedge fund, it has emerged.

Glasgow-based Levy & McRae is being pursued by the liquidator of Heather Capital, a £400m hedge fund set up by Scots entrepreneur Gregory King, which collapsed in 2010.

At a preliminary procedural hearing at the Court of Session before Lord Woolman, Richard Keen QC, acting for liquidator Paul Duffy, said the action proceeded on the basis of "breach of fiduciary duty and dishonest assistance" and alleged there had been "a fraud" on Heather.

Mr Keen said the dishonest assistance element involved diversion of funds from Heather Capital "to the accounts of one Gregory King" allegedly with the assistance of Levy & McRae "and in particular its partner Peter Watson".

Mr Keen said two tranches of money - of £19m and then more than £9m - had been diverted from the hedge fund in early 2007.

He said there had also been a later diversion of £200,000 "to the personal account" of Mr Watson, then senior partner at Levy & McRae.

Mr Keen said the liquidator was told by Levy & McRae it held two files on Heather, but was refusing to release a third file on Mr King.

"We are anxious to recover the King file," Mr Keen said.

For the defenders, Alistair Clark QC said the allegations made by the liquidator against Levy & McRae and its partners were "extremely grave".

However the defenders' position was that they were "without foundation", he said.

He said he would be seeking evidence from the liquidator to justify the "very serious" claims.

He also said three individuals being sued joined Levy & McRae after the alleged incidents.

Mr Clark also said it was disputed that Heather was a Levy & McRae client before 2007, yet this claim underpinned the liquidator's whole case.

In response, Mr Keen said that Levy & McRae had previously accepted Heather was a client, but later said that was "a mistake" in a letter.

Mr Keen also said dishonest assistance did not rely on a client relationship, merely a breach of trust.

A further hearing is due in late April or May.

Mr King, who now lives in Spain, and three other men are the subject of a police report to the Procurator Fiscal for alleged embezzlement.

Mr Watson, 61, who left Levy & McRae last year to set up his own law firm, is not one of the four men in the police report.

Last month he was suspended from sitting as a sheriff in light of the Heather civil case.

Mr Watson said: "Proceedings are live which prevents fuller comment other than to say these proceedings are being robustly defended and any allegations of impropriety are denied."

Levy & McRae is one of several companies being sued by Heather's liquidator, Ernst & Young, as it seeks to recover money from the hedge fund.

Others include lawyers Burness Paull & Williamsons LLP and Knight Frank LLP.

Levy & McRae, which provides legal advice to the Herald & Times Group, publishers of The Herald, declined to comment.

Anonymous said...

Yes absolutely spot on Gill is in a corner with this one and he must know it.

Anonymous said...

So, just more example of 'borrowing without consent'.

Anonymous said...

If Heather's liquidator Ernst & Young had been aware of this blog I bet they would have moved heaven and earth to have it heard anywhere but Scotland.

No coincidence that "Ernst & Young, has been battling to recover investors' money since being appointed in 2010", and no point holding their breath for the outcome of "a Police Scotland investigation and reports to the Crown Office".

Past experience tells how that will end, a slap on the wrist at best or more likely a verdict of 'insufficient evidence to proceed'.

Anonymous said...

Seems like Lord Gill is attempting to persuade us that all is rosy in the garden and by implication there is no need for a judicial complaints reviewer.

No rational thinking person will be convinced.

Anonymous said...

Anonymous said...
“The Lord President concluded that in the circumstances a voluntary de-rostering was not appropriate and that suspension was necessary in order to maintain public confidence in the judiciary.”
====================================
I have no confidence in the judiciary and I suspect many others do not either. They just don't get it do they?

6 March 2015 at 22:33
//////////////////////////////////////////////////////////////

The only people who trust the Scottish Judiciary are the Scottish Judiciary?

Anonymous said...

proves a register is needed and not just for judges

Anonymous said...

I am reminded of your earlier report at;

http://petercherbi.blogspot.co.uk/2014/05/proceeds-of-crime-judicial-interests.htmlTop


There judge Alistair Dunlop was 'revealed to have shares in bribes link firm'.

Sheriff Dunlop declined to comment but the Judicial Office for Scotland said investments were "a matter for the individual".

Further evidence that this blog makes differences for the better to real people's lives, not least DOI's recent report on the jailed lawyer John O’Donnell.

Anonymous said...

Any judge sheriff or whatever with a directorship should be required to declare it in this register you are proposing for the judiciary

Anonymous said...

and Lord Gill is now doing exactly what?now he has been rumbled big time?

Anonymous said...

What are you up to?
One of my work colleagues said today he gets hassle when you go quiet!

Diary of Injustice said...

In response to several unpublished comments, information relating directly to "Heather Capital" should be emailed to Diary of Injustice or via the usual channels.

Anonymous said...

Thanks for the warning on Scots financial enterprises - best steer clear seems to be sound advice for all