Farepak investigation complete

Investigations into the issues that led to the collapse of
Farepak have been completed by the government’s Companies
Investigations Branch.

The Department for Business, Enterprise and Regulatory Reform said the CIB
would now seek legal advice on whether evidence contained in its report could
form the basis of legal action.

BDO Stoy Hayward, Farepak’s receiver, was tasked with investigating the loans
made through the Christmas hamper club to Farepak’s parent company, European
Home Retail.

In 2006, the Christmas club received about ?40m from 150 000 families and
loaned ?17m to its parent and sister companies by the time it went into
administration.

The investigation involved the analysis of thousands of documents and
numerous interviews with the directors and other interested parties.

The CIB has the power to apply to the court to disqualify a director; refer
evidence to other investigators or prosecutors (e.g. the police or the Serious
Fraud Office); refer information to other regulators or bodies to consider
disciplinary or other action against their members (e.g. the Institute of
Chartered Accountants, or the Law Society) apply to the Court to wind-up a
company (not adopted in this case as the companies were in administration and
had creased trading).

The contents of the investigation however remain confidential by law, unless
the matter goes to court, at which stage details will emerge during proceedings.

Consumer Affairs Minister Gareth Thomas said that government is working to
prevent other families suffering similar problems in the future.

‘We initiated a comprehensive investigation to establish the facts. We are
now getting legal advice on whether there are grounds for further action,’ said
Thomas.

Further reading:

AIDB
to investigate Farepak collapse

BDO and DTI to investigate Farepak collapse

Farepak parent company owes £80,000 to directors