Fladgates sticks with client Orb despite fraud allegations
31 March 2003
11 September 2013
7 April 2014
10 October 2013
11 December 2013
9 July 2014
Fladgate Fielder is continuing to act for Orb, the Jersey company currently at the centre of an investigation by the Serious Fraud Office (SFO). Last week the firm, which has had to hand documents over to the SFO in relation to Orb, advised on the disposal of Orb's Thistle Hotel portfolio to Tyneside entrepreneur Allan Rankin.
The portfolio is thought to have gone for around £900m and is just one of the company's assets up for sale. Orb faces looming debts (it missed two repayments to Morgan Stanley, which funded the original Thistle purchase) and potentially expensive legal challenges.
The SFO investigation, which was launched last December, centres around £33m of missing funds that belong to Izodia, a former e-commerce company known as Infobank, in which Orb holds a 30 per cent stake. The missing cash was allegedly transferred to a subsidiary of Orb and now cannot be found.
Fladgates has handed over documents to the SFO as it is an adviser to both Orb and Izodia.
Orb, however, was causing a furore in the City well before the SFO investigation started, largely because of an intricate web of companies with which it has links.
Fladgates is no stranger to these companies. In the past it has not only advised Orb and its controlling company Lynch Talbot, but also Izodia and Alexanders Holdings (now Quays Holdings), both of which have come under scrutiny from the Takeover Panel in relation to their Orb dealings. It has also advised a little-known Orb-backed company called Atlantic Caspian, with which Orb shares its London address.
Orb Securities was created in July 2000, when venture capital firm Lynch Talbot bought Orb Estates through an offshore vehicle called Tabsie Ventures and created a parent company for Orb, Euro & UK Property, which is based in the British Virgin Islands. Fladgates played a large part in the transaction, advising both Lynch Talbot and Orb Estates. Also acting on the deal was financial adviser Corporate Synergy (now Abingdon Capital).
The company first came under scrutiny in early 2002 when Alexanders Holdings, a client of Fladgates, bought a number of properties in Poole owned by Orb Estates. A number of Alexanders' shareholders raised concerns with the Takeover Panel, questioning the independence of some directors. However, the panel let it proceed but told Alexanders' financial adviser Corporate Synergy that it could not advise on the deal. Fladgates was also the legal adviser on the transaction.
Orb was back in the spotlight in early October in relation to its indicative bid to take over Izodia. A number of the shareholders made a complaint to the Takeover Panel when they discovered Fladgates was also advising Izodia.
They also raised concerns about the appointment of Izodia's new chairman John Pither, who was also a director of Abingdon Capital (previously Corporate Synergy). Pither's tenure as chairman was to be shortlived - just two days later he was ousted. In the end, the deal did not proceed, so the Takeover Panel did not address Fladgates' involvement.
Now Pither's name has reappeared in the Orb web. He has connections with Rankin (advised by Newcastle firm Mincoffs), who bought the Thistle pubs last week. Pither sits on the boards of two of Rankin's companies.
Orb is now facing legal action from both Izodia and Thistle, over money the two parties believe is owed to them.
Fladgates declined to comment on the matter, saying issues of client confidentiality and client privilege prevented it from answering The Lawyer's questions.
It is currently unclear whether the firm's role will now come under scrutiny. Orb did not return calls, Pither could not be reached at the time of publication and Abingdon declined to comment.