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

£28m writ claims links Scots judiciary to £400m collapsed hedge fund. SCOTLAND’S top judge Lord Brian Gill – who has waged a bitter two year battle with MSPs over proposals to create a register of judges’ interests – has been forced to suspend a serving sheriff named in a writ involving a collapsed hedge fund.

The move came after allegations surfaced in a £28million writ naming Peter Black Watson – a part time sheriff - and his former law firm Levy and Mcrae, and a number of individuals under investigation in connection with the £400million collapse of Heather Capital -  a multi million pound hedge fund.

In response to queries from the media - the Judicial Office issued a statement revealing Lord Gill (73) suspended Sheriff Peter Black Watson (61) on 16 February 2015 - after demanding sight of a multi million pound writ against Glasgow law firm Levy & Mcrae – where Watson was formerly a partner.

It was also revealed 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”.

The Scottish Sun reports:


FIRM FIRM SLAPPED WITH COURT SUMMONS - Top legal outfit in megabucks lawsuit

Practice is linked to bust hedge fund - Briefs with ties to big business and high-profile clients

By RUSSELL FINDLAY Scottish Sun 15 February 2015

A TOP law firm has been hit with a multi-million pound writ linked to a finance company at the centre of a fraud investigation.

Legal practice Levy & McRae — which acts for footballers, politicians, cops and newspapers — faces the claim over its role in connection with £400million investment scheme Heather Capital.

It's claimed millions of pounds went missing following the collapse of the hedge fund. And The Scottish Sun told last week how four men — including tycoon Gregory King — have been reported to prosecutors probing the allegations.

King, 46, ran Heather subsidiary Mathon, where Sheriff Peter Watson — a former senior partner at Levy & McRae — was also briefly a director.

The Court of Session summons was served on the firm six months after he left the legal firm.

Watson is one of the country's most high-profile lawyers and spent 33 years with Levy & McRae before quitting to set up his own business.

The visiting Strathclyde University professor sat on an expert panel created by former First Minister Alex Salmond to look into media regulation in Scotland.

Watson also acted for former Lord Advocate Elish Angiolini after she was harassed by a campaigner who was later jailed.

'Their clients are a who's who of Scotland' And he includes ex-Glasgow City Council chief Steven Purcell among his list of clients, as well as senior police and prison officers.

The legal expert, 61 — chairman of Yorkhill Sick Kids' Hospital charity — has also acted for former Rangers owner Sir David Murray.

And a Gers supporters' group closed down its website following legal threats from Watson, who was working for under-fire directors Sandy and James Easdale.

A source said: "Watson and Levy & McRae are very well known and their clients are a who's who of Scotland."

Investors from around the world sunk their cash into Gibraltar-based fund Heather Capital, which launched in 2004.

Some of the cash was loaned to Mathon to bankroll developments across Scotland. But many of the Mathon-funded plans did not happen — and some of the cash was not repaid.

Liquidator Paul Duffy of Ernst & Young has been battling to recover investors' cash since 2010 and is suing Heather's auditors KPMG for negligence over their role. Isle of Man court documents — acquired by The Scottish Sun — claim Heather was operating a "Ponzi" scheme to dupe investors.

They alleged that as early as December 2006, senior KPMG staff feared that Heather Capital "may have been perpetrating a fraud".

And in August 2007, KPMG employee Raymond Gawne told a colleague that he was "very uncomfortable" acting for the fund which "may have acted in a criminal manner".

The claim also alleges that millions of pounds of loans passed through the client account of Glasgow lawyer Frank Cannon who acted for Heather. KPMG senior executive David McGarry sent an email to Gregory King stating: "Frank Cannon has been uncooperative, either in providing some form of explanation for all of the security documentation prepared by his firm, or in agreeing to facilitate access to Cannon's clients' money account". McGarry added he did not accept "that this is due" to Cannon.

Watson declined to comment on the writ and Levy & McRae and Cannon did not respond to our requests for comment.

The Police Scotland report naming Mr King and his associates Andrew Sobolewski, Andrew Millar and Scott Carmichael is now being considered by the Crown Office.

A spokesman for Ernst & Young confirmed: "Heather Capital, via Ernst & Young, has made a claim against Levy & McRae." And a KPMG spokesman said: "The passages in the plaintiff's summons provide a selective and misleading picture and are drawn out simply to seek to make what is a wholly unsubstantiated case.

"The allegations are completely unfounded and are being fully contested by KPMG."

GREGORY KING MARBELLA-based former Glasgow Academy pupil, 46, was a lawyer and taxi firm boss before launching Heather Capital in 2004. Family business dynasty includes nightclub boss cousin Stefan King.

PETER WATSON GREENOCK-born solicitor advocate, 61, carved out a fearsome reputation as a media lawyer during 33 years at Levy & McRae. He also dishes out justice as a part-time sheriff across Scotland.

KING'S £400million hedge fund Heather Capital loaned millions of pounds to Glasgow-based Mathon, of which Watson was briefly a director.

TOP lawyer and part-time sheriff Watson has acted for a string of high profile celebrity, political, sport and media clients in a glittering legal career:

Watson’s clients included Alex Salmond, Stephen Purcell, Elish Angiolini, Yorkhill Hospital Board, Rangers Chiefs.

and a further development reported by the Scottish Sun:

Bench ban for sheriff linked to fraud probe

Lawman, 61, suspended

By RUSSELL FINDLAY 25th February 2015, Scottish Sun

A SHERIFF was suspended after he was linked to a collapsed finance firm at the centre of a massive fraud probe.

Peter Watson, 61, was barred from the bench by judges’ boss Lord President Lord Gill following an inquiry by The Scottish Sun.

Watson, whose past clients include ex-First Minister Alex Salmond, was briefly a director of Mathon, a company run by Glasgow bookie’s son Gregory King, 46.

It received millions in loans from King’s hedge fund Heather Capital which crashed owing a seven-figure sum.

Watson’s suspension came 24 hours after we revealed Heather liquidators Ernst & Young filed a multi-million court demand against his former law firm Levy & McRae.

Lord Gill, 73, can suspend sheriffs and judges if it’s “necessary for the purpose of maintaining public confidence”.

Watson forged a fearsome reputation as a media lawyer over 33 years with Levy & McRae before he left the firm six months ago.

King is one of four men named in a police report which is being considered by the Crown Office.

The Judicial Office for Scotland said last night: “Sheriff Peter Watson was suspended from the office of part-time sheriff on February 16.”

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.

This article has been updated since original publication. 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


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*

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;

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