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7.36 pm
Mr. Bob Blizzard (Waveney): I shall concentrate on the part of the Bill that deals with insolvency. I support the Government's enterprise agenda because it is a key part of job creation. Clearly, full employment is the best form of social justice and the Government's record is already quite remarkable.
When the Conservative Government left office, my constituency was well and truly the unemployment black spot of East Anglia, with unemployment of 11.5 per cent. Last autumn, it was down to 4.5 per cent. It edged up only a little over the winter and as we move into the spring it is starting to move down again. There are levels of optimism in my constituency that we did not see for many years under the Conservatives. I will not talk about feel-good factors, but things are much better than they ever were under the Tories.
Mr. McWalter: Would my hon. Friend like to remark on the idea put forward by the Conservatives that the Labour Government took over a golden inheritance?
Mr. Blizzard: The 30,000-odd people who voted for me in 1997 did not think that it was very golden. They were fed up with 11.5 per cent. unemployment and they threw out the Conservatives, who had held the seat for about 40 years.
The hon. Member for Bury St. Edmunds (Mr. Ruffley) said how bad things are and whinged about competitiveness. As he will be aware, I know his constituency well as I was born there and it is my family town. I know that business is booming there at the moment and that employment is as near to full as it can get in that town, so I do not see the local basis for all his moans and groans.
Having said that, however, we must be careful that rogues cannot take advantage of the greater freedom that the Bill would introduce in the insolvency laws. It is important, therefore, to distinguish between responsible risk takers and culpable bankrupts. I am certainly pleased that the Government intend to extend the penalty for culpable bankrupts—or outright rogues—to a disqualification period of up to 15 years. I hope that it will be possible to distinguish clearly between the two types and to take firm action against those who need such action to be taken against them.
I feel strongly about this matter because of some events in my constituency last autumn. Those events showed the inadequacies of existing insolvency law and how rogues can get away with appalling practices again and again. The people who suffer in such situations are not only those who are owed money; the work force, their families and the wider community suffer, and the taxpayer ends up picking up some of the costs—in particular, redundancy payments.
The company in my constituency was called Zephyr Cams and employed 100 people; we call that a large company in my constituency. It became clear in the autumn that the company was in trouble. The people who worked there knew that, and strange things were happening. The management would not speak to them. There was no communication or meeting and employees were kept in the dark.
Understandably, the workers contacted me. I wanted to speak to the management confidentially to try to be helpful. However, the management would not speak to the elected representative of the people of the area where the factory was based. I have never experienced that before; they did not want to know and did not answer the phone. When we obtained the mobile phone number of the man concerned and rang him, he turned it off to avoid facing up to his responsibilities.
When one experiences such behaviour, one can only suspect the worst and that something improper, suspicious or shady is going on. The staff in the accounts department knew that any income received by the company was immediately being shipped out and transferred elsewhere. However, the company was also having county court orders made against it for not paying its bills.
I then received information from the sheriff's office. By early September, writs against the company from the county court totalled £38,000. The sheriff's office has to recover that money, but its guidance is to try not to destroy companies in doing so. The sheriff reached agreement with the company over an item of machinery worth £9,000, which it wanted to seize as part of the repayment. However, the company said that the machinery was essential for it to struggle on. Agreement was reached that the company would pay the money by the end of September and that the sheriff would not take the machinery. But the company did not honour the agreement with the sheriff.
In October, the sheriff tried to remove some other equipment and received a letter saying that the company did not own the machinery, but that it was owned by a holding company. Therefore, legally, the sheriff could not get his hands on it. Clearly, this was a blocking device that would necessitate the sheriff going back to court.
Staff then had to watch while machinery was removed from the company, but there was still no communication or information from the management. The staff believed, and have evidence, that some machinery and other assets were taken by the management themselves and transferred up the road to another factory in Great Yarmouth, the Breydon Bay company. Certainly the person running Zephyr Cams in Lowestoft, Mr. Paul Harris, is now running the Breydon Bay company. However, he was so unwilling to be held to account that he would not speak to his Member of Parliament.
Once the story became public, I received all sorts of other information, and eventually learned the most worrying thing of all; that the process we had witnessed at Zephyr Cams—of assets being stripped out of a failing company and put into another—had happened four years earlier with the same people. Two companies in Weston-super-Mare—one called QEP Camtec Ltd, and the other called Quality Engineering Parts Ltd—went down owing £2 million, including one individual debt of £100,000. Again, assets and money were taken out of those companies to acquire Zephyr Cams in my constituency.
The man behind it all was an American called Mr. Kenny Joseph, of Wells Industries, New Jersey. He was the ultimate owner; he was the so-called "holding company". He had a record of doing this kind of thing over there as well.
There was misery for the work force, who all lost their jobs, with the taxpayer having to pay redundancy payments. However, Mr. Joseph has got away scot-free. He is not exactly hard up; I understand that he has an apartment in New York valued at about $12 million and a nice little house in the Hamptons, worth about $40 million.
There is something deeply unfair about this. We do not begrudge people earning money legitimately. However, someone who has acquired such a fortune should observe decency and propriety in running a business over here without putting hundreds of people out of work. We have made attempts to get the matter investigated, but there are problems with the current receivership procedures. I am pleased that the Government want to reform them.
Mr. Djanogly: I am not exactly sure what proposal in the Bill the hon. Gentleman is suggesting would solve the problem to which he has referred. The Insolvency Act 1986 provides for preferences for fraudulent trading and wrongful trading, but I am not sure how the example he gives in any way relates to the insolvency provisions in the Bill.
Mr. Blizzard: I understand that the Bill will lead to cases being properly investigated, and the case to which I have referred has not been properly investigated. We have been in contact with the economic crime unit, because we have all sorts of evidence. However, the unit can only investigate a company in administration on matters relating to fraud if the company dealing with the
receivership makes a formal request to the DTI, or the creditors make a formal complaint to the economic crime unit. That has not happened in this case. It should not be at the discretion of the receiver as to whether the matter is investigated if there is evidence—I have evidence in my possession regarding this case—that should be investigated. I am asking Ministers to take note of these proceedings to ensure that the Bill's proposals regarding receivership and investigation can deal with such cases.There are also questions about the treatment of employees. I do not know whether these must be dealt with in other legislation or in the Bill. Some of the workers concerned had worked for the company all their lives, and they deserve better treatment. Sometimes companies fail and one must give bad news to employees. I have described what has happened to the company in my constituency as a smash-and-grab raid, while employees were left in the dark. People should not be allowed to do that.
I hope that the Bill will be tight enough to identify and punish culpable bankrupts. How does the Bill relate to foreign owners, such as the American chap to whom I have referred? Will such people be able to be caught if there is evidence against them? People like that are simply rogues who give business and enterprise a bad name. There are some who think that big business is awful because of these incidents. That is not the case—most people run their businesses properly and well, but some play fast and loose with other people's money and employees' livelihoods.
People have spoken of the different culture in the United States regarding risk and failure. That culture has spawned a successful and dynamic economy. Unfortunately, not all Americans, as we can see from the case to which I have just referred, are the kind of entrepreneurs that we want to encourage here. People such as Mr. Joseph do not deserve another chance—they simply deserve to be dealt with.
Finally, it is the view of some in the economic crime unit that it is still too easy for companies and individuals to take everyone for a ride. I hope that the Bill will address these issues and ensure that people taking a genuine risk and trying their best have other opportunities while rogues, who treat people badly, are well and truly dealt with.
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