'Clear-cut' conflict of interest in £10m property scheme

'Clear-cut' conflict of interest in £10m property scheme


After failing to show sufficient ‘competence and capability’ after carrying out two property deals in which they had an interest, and investing too great a proportion of a pension fund scheme’s assets into commercial property, three trustees have been barred by the Pensions Regulator.

Robert Angus Hill, Nicholas John Halton and Simon Christopher Ragg were trustees of the Hugh Mackay Retirement Scheme when the regulator deemed them ‘not fit and proper persons’ for breaching pension investment regulations.

The Pensions Regulator held a determination panel to discuss the fate of the trustees after the three men resigned from the scheme in October 2011.

According to the supervisory body, a conflict of interest was carried out in two speculative property deals. The deals, worth £10 million, were sold by two companies which Robert Hill had holdings in. The former property developer owned 50 per cent of one of the companies, which was paid a reported £1.55 million for a former car park site.

He also co-owned (alongside his two daughters) property company Chartpoint which acted as the scheme’s sponsor. However, it was revealed at panel that more than £1 million was paid to the company between 2006 and 2009. All three of the trustees benefited financially as a result of this payout.

According to the regulator, the trustees’ relationship with Chartpoint resulted in serious conflicts of interest which were not managed properly.

Bill Galvin, chief executive of the Pensions Regulator, said: “Our investigation in this case unearthed some of the most worrying examples of mismanagement of a final salary pension scheme that we’ve seen. Typically the sponsoring employer supports the pension scheme – here the scheme provided the company’s main source of income.

“The risk to members’ benefits posed by the investment strategy and borrowings secured against scheme assets was stark; and it is difficult to imagine a more clear-cut conflict of interest than a trustee effectively negotiating with himself as the vendor in a property deal.”

The scheme invested £35 million into commercial majority, which broke regulation decreeing that a pension scheme’s assets must largely be held in investments which can be traded on regulated markets.

The pension scheme is now set to be entering the Pension Protection Fund, as a result of its financial troubles.

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