THE former Scottish Tory candidate at the heart of the Brexit dark money row has found himself caught up in a million pound scandal involving a bankrupted Ayrshire businessman, a convicted American fraudster, oil wells in Houston, the Old Firm, and at least 34 out-of-pocket investors.
An investigation by the Sunday National and Open Democracy can reveal that East Renfrewshire businessman and political donor, Richard Cook, was a trustee on a deed of trust between a Scottish company known as HGEC Capital Ltd and a Texas oil firm run by a man described by a judge almost a decade earlier as “a repeat offender with criminal convictions for securities fraud”.
The deed of trust, signed in 2018, saw HGEC Capital – formed in Glasgow in 2018 – agree to lend $14.3 million to Texas Gulf Coast Secured Lenders Joint Venture LLC in return for oil and land rights.
Both companies have now gone into administration.
Cook – who is the man behind a mysterious, record-breaking donation to the Democratic Unionist Party during the Brexit campaign – also registered HGEC’s website.
READ MORE: Tory dark money donor Richard Cook’s Union campaign funding boast
Scottish administrators have described the situation as “very unusual and problematic”.
In a report filed with Companies House last month, they said that HGEC’s creditors are owed at least £1.3m.
The real owner of the Texan properties, according to the deed, was a company called Houston Gulf Energy Corporation. This firm was run by John Ehrman, who at the time was being indicted by a grand jury over a $2.3m lease fraud involving a series of oil wells in Texas.
He was sentenced to 42 months in prison for fraud in August 2018. Ehrman had previously been given six months for deceiving investors as part of a stock price inflation scheme.
In a brochure allegedly circulated to potential Scottish investors and seen by the Sunday National, HGEC Capital Ltd said that it had launched a “joint venture” with Houston Gulf Energy Corporation, for what the firm said was an estimated $1 billion reserve of oil in Galveston Bay.
HGEC Capital said the downturn in the oil price has presented investors with an opportunity.
They listed a number of oil and gas sites which they said had a current asset value of $89,360,000, but which they claimed would, in 12 months time, be worth $666,000,000.
This type of investment is often known as a “loan-note” investment, where the investor effectively lends money to a company who then use it to invest in their assets and then pay it back over time at a high rate of interest.
As an unregulated investment, the offer is not covered by Financial Conduct Authority rules and financial services legislation. While the returns are potentially mouth watering, in this kind of venture there is also risk of complete loss.
In February this year, Ayr Sheriff Court appointed administrators to HGEC Capital following a petition submitted on behalf of Luxe Fund and Rosetta Private Equity Fund, which are “segregated portfolios” of Carlton James Mollitium Offshore Fund Manager Platform SPC, a Cayman Islands-registered fund based in Wiltshire.
According to Companies House, the sole director of HGEC Capital is Ayrshire businessman Kenneth Campbell.
Administrators Begbies Traynor have criticised Campbell for failing to provide them with “any information relating to the Company’s assets, its trading and financial position, details of the sums invested in the Company or its investment(s) in the oil and gas venture in Texas.”
They say it took Campbell “several weeks” to attend a meeting and that the information provided was “well short of the quality and quantity” expected.
They’ve said that there were “major deficiencies in the Company information that has been made available … leaving many serious questions over the Company’s administration and events leading up to the administration”.
“At this stage there are many questions unanswered and our investigations into the receivership, the assets and the funds which we are led to believe have been invested in the joint venture are ongoing,” the administrators added.
THE Scottish administrator’s report also reveals that Houston Gulf Energy Corporation was placed in insolvency in Texas in March 2019.
According to court documents in America, when US Marshals tried to visit the company’s Texas address late last year they found that the premise “has a lock on door due to non-payment of lease”.
Campbell was declared bankrupt in December 2019, however he is still currently listed at Companies House as a director of KR Advisory Ltd, RPEG Holdings Ltd, and Serenity Life UK, a Glasgow based company who claim to have over 30 years’ experience in estate planning and wills.
At least 34 investors are known to have handed money over to Campbell and HGEC Capital, with sums ranging from £5000 to £155,000.
And while the administrators have discovered debts of £1,396,018.97, they say that the one conversation they’ve had with Campbell led them to believe that the “total sums due to unsecured creditors may well be significantly in excess of the sums listed”.
And despite those significant sums, HGEC Capital have just £7700.88 in the bank.
Campbell has been involved with football clubs in the past, and is well known in footballing circles. He sponsored shirts for Clyde FC in 2015.
It’s understood HGEC approached a number of high profile footballers, including players for Rangers and Celtic.
A Northern Irish pension fund called Incartus also listed £7m investments in Houston Gulf Energy Corporation in Texas. The fund is now being controlled by the Pensions Regulator.
The Incartus fund was taken over by the pensions regulator in 2017 following concerns about its management. Three years later, many investors are still waiting to get their money back.
Sean Browes, a partner at Dalriada, the pension firm managing Incartus on behalf of the pensions regulator, said there were “material concerns” about the Houston Gulf Energy Corporation investment.
“We definitely have concerns about the oil and gas side of things,” said Browes.
COOK made the news back in 2017 following a lengthy investigation by Open Democracy, when he was named as the chair of the Constitutional Research Council, the mysterious organisation behind a record-breaking £435,000 donation to the DUP during the Brexit referendum.
Most of the money was spent outside Northern Ireland, including a prominent wraparound advert in the Metro newspaper – which is not available in Northern Ireland.
The identity of the CRC’s donors have never been made public due to donor secrecy laws.
Asked about HGEC Capital, lawyers acting for Cook said he was “retained to report to HGEC on certain investments he was instructed HGEC wished to make”.
They added: ”He visited the US on a number of occasions on HGEC’s instruction in relation to that.
“Mr Cook had no involvement with any investor in, or in securing any investment in, HGEC.
“At no time did Mr Cook ever have a mandate on or access to any bank accounts operated by HGEC whether used for investor monies or otherwise.
“Mr Cook has worked with Begbies Traynor and the Administrators of HGEC since their appointment and has co-operated fully with them.
“He has been retained by creditors of HGEC to advise them with a view to securing recovery of funds. In the circumstances, where investigations and potential recovery are ongoing, any further comment would be inappropriate at this time.
“Any inference or allegation that Mr Cook took decisions for or acted in any way as a principal of HGEC is entirely denied. Repetition of such inference or allegation is defamatory and will be founded upon and result in immediate Court Action.”
Campbell did not respond to requests for a comment.
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