EXCLUSIVE by OUR BUSINESS EDITOR
An investor who lost more than £35,000 after buying shares in the worthless Avocet Group of 'disruptive technology' businesses has spoken of his dismay and frustration after being told lengthy investigations by the UK Government's Insolvency Service failed to collect enough evidence to ban the firm's directors from running companies.
The angry shareholder who is also a pensioner is now demanding to see a copy of the report compiled by those who investigated the conduct of the directors of Omega Infinite PLC and three associated companies following the total collapse of the Group.
A Police Scotland investigation continues two and a half years after allegations of fraud and embezzlement involving millions of pounds were made and supported by 50 disgruntled shareholders.
It is estimated that in total more than 600 investors in the 'revolutionary' agricultural and fuel production processes promoted by Avocet chairman Martin Frost and his colleagues have lost £17 million.
The investor contacted by Not Just Sheep & Rugby - he claims a group of 10-15 individuals in his area lost £500,000 between them - first wrote to his MP in 2022 asking for assistance after realising he had suffered a sizeable financial loss. We have decided not to identify him.
He told us: "My loss amounts to over a year's wages and while I realised the risks associated with share purchases I did not take into account that my money might be embezzled or stolen. I want the perpetrators held accountable. I now leave for work at 6 am to try to make good what I've had stolen".
The MP he turned to for help - Sir Julian Smith (Con) the member for Skipton & Ripon - passed his constituent's concerns to the then Secretary of State for Business, Energy & Industrial Strategy. But the matter appears to have been given a very low priority rating as nothing further was heard by the complainer.
But after a further approach to Sir Julian Smith in August, the Yorkshire MP received a very detailed response from Justin Madders, the recently elected Labour Government's Parliamentary Under-Secretary of State for Employment Rights, Competition and Markets.
Mr Madders thanks Sir Julian for his correspondence of 15 August addressed to the Secretary of State for Business and Trade on behalf of his constituent "regarding Martin Frost, Bob Jennings, Eirlys Lloyd and Omega Infinite PLC (Omega) previously called Avocet Infinite PLC. I am replying as insolvency matters fall within my Ministerial portfolio."
Dr Jennings was a director of Omega from 2015 onwards while Ms Lloyd was the Company Secretary between 2015 and 2021.
Mr Madders continues: "I am sorry to read of ******'s situation and the financial losses he incurred through his dealings with Omega. I understand how difficult it must be to invest in a company in good faith to then see that company become insolvent with little prospect of recovering the investment."
The letter says the Government expected directors to act honestly and to comply with their legal duties in respect of the companies they run, and it had a range of enforcement powers to use where necessary. These included civil powers to investigate both the conduct of the directors of companies which have entered insolvency proceedings, and to investigate live companies which had not entered a formal insolvency process.
Mr Madders goes on to say: "I am advised that following their insolvencies, the Insolvency Service conducted an investigation into Omega and two connected companies, Avocet Faculties Limited and Orrdone Farms Ltd to establish whether there was sufficient evidence, and whether it was in the public interest to bring director disqualification proceedings against any director of those companies, whether formally appointed as such or not.
"Ultimately, after substantial enquiries, the investigation concluded that there was insufficient evidence to support an allegation of misconduct to the extent required to satisfy a court that any director should be disqualified. Consequently, the investigation was closed."
The Minister also reveals that The Insolvency Service additionally conducted an investigation into a live connected company, Genfro Limited. However insufficient evidence was established to form the basis of winding up in the public interest and the investigation was discontinued.
In April of this year Dr Jennings lodged an application with Companies House to have Genfro struck off the Register of Companies and dissolved.
The company dubbed "Son of Avocet" by long-suffering shareholders in the Group seemed destined to be killed off in a matter of weeks, never having filed accounts since its birth in 2020. But the process was stopped in its tracks following an objection by an investor or a creditor.
After receiving the Madders letter, the complainer said: "I'm very disappointed with the outcome of the Insolvency Service involvement as this Avocet concept appeared to be promoted by the government in its infancy."
It appears this investor, like many others, was persuaded to part with money after reading glowing promotional articles about the Avocet Group in a magazine called Parliamentary Review and which they thought had the endorsement of the Conservative Government, and politicians Lord Blunkett and Lord Pickles.
In fact the publication is a pay-to-publish journal, with businesses having to write their own copy and pay up to £3,500 for it to be published. The journal is owned by Westminster Publications Ltd, a for-profit venture that is not affiliated with Parliament or the UK government.
Following a Sunday Times investigation into Avocet's collapse in 2022 the publishers removed all online content related to the Group companies.
The Yorkshire-based investor told us he was also influenced by a glossy brochure containing valuations of the Group's intellectual property [IP] which subsequently proved to be completely bogus. The Coller IP literature suggested Avocet held patents worth £60 million.
Avocet's sales pitch to investors also included the following entry in its 2017 annual accounts: "The agricultural division is expected to commence full trading in 2019. The Group also intends to launch its renewable energy division in 2019".
Neither 'division' managed to produce a single marketable product before their respective financial failures.
Our contact said: "So where was the due diligence by those who produced the IP valuations? My diligence was to trust the big players in all of this who unless things are ongoing in the background are too embarrassed and have scuttled away".
The individual has written again to Sir Julian Smith to say he believes the hundreds of investors in the companies led by Martin Frost would disagree with the Insolvency Service conclusions. He requests a copy of the investigation report.
He commented: "I am aware that a number of the shareholders have lost their life savings while others have now passed away. Yet the authorities who are supposed to regulate companies and their directors have failed to act".
We sent a detailed media enquiry to the Insolvency Service asking specific questions about the probe into the activities of Avocet's management.
In particular, we wanted to know: What did the ‘substantial enquiries’ involve? How many investors in the Group’s worthless shares were approached and interviewed? Was the Insolvency Service aware of a judgment in the Leeds Business Court which ruled that Mr Frost used well in excess of £400,000 of the company’s money to purchase two flats in Scarborough? Or that liquidators discovered a director’s loan account [DLA] in Mr Frost’s name which was used to pay for luxury holidays and a host of other items?
Mr Frost has claimed the DLA was fabricated.
In a response, the Insolvency Service stated: "You will appreciate the Insolvency Service cannot comment directly on the enquires undertaken in the course of investigations or the responses received. However, an investigation was undertaken and it was concluded based on the information available that there was insufficient evidence to support an allegation of misconduct to the extent required to satisfy a court that any director should be disqualified."
Meanwhile, Police Scotland merely said: "Inquiries are ongoing".
Again, Mr Frost has denied any wrongdoing while running the Avocet Group and has repeatedly rejected claims the entire venture was a Ponzi scheme designed to defraud investors.
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