Director banned over £5.6m football stadium accounting failure
A property developer who received millions in council funding to redevelop a football stadium has been banned from running companies for 10 years, after an Insolvency Service investigation found it was not possible to determine the exact nature of more than £5.6m worth of payments made to various parties
2 May 2019
Howard Grossman, from Hertfordshire, was the sole director of 1ST Land Ltd, which was incorporated in August 2013 to act as the contractor for Northampton Town football club who wished to redevelop the Sixfields stadium.
Between December 2013 and July 2014, 1ST Land received a balance of at least £6m from Northampton FC to go towards the costs of redeveloping the stadium. The football club in turn received the funds from the local authority, Northampton Borough Council.
However, by January 2015, 1ST Land entered into administration following the petition of a creditor before entering into creditors voluntarily liquidation in December 2015.
Due to the high-profile nature of the administration and the significant amount of money involved, in co-operation with Northamptonshire Police the Insolvency Service carried out an investigation in the public’s interest into the collapse of 1ST Land and Grossman’s conduct while a director.
This revealed that Grossman failed to ensure the company maintained adequate accounting records or delivered a sufficient amount of records to the administrators. As a result, it has been not possible to determine the exact nature of more than £5.6m worth of payments made to various parties from 1ST Land’s accounts.
One such payment concerns approximately £2.65m of transfers made to two separate third parties, whether they were made as loans, and under what terms.
It has also not been possible to establish the purpose of payments totalling £1,273,654 which were made from 1ST Land’s two bank accounts between 24 September 2013 and 22 December 2014, or verify whether these payments were made in the ordinary course of business.
Another payment investigators were unable to establish was whether approximately £1.5m was paid to the benefit of Grossman, his family and other connected parties and whether such payments were treated as dividends.
Grossman has now signed a 10-year disqualification undertaking. He did not dispute that he failed to ensure that 1ST Land maintained and/or preserved adequate accounting records, or in the alternative failed to ensure that such accounting records as were maintained were delivered up to the joint administrators. He also did not dispute that he breached his fiduciary duties to 1ST Land.
Sue MacLeod, chief investigator for the Insolvency Service, said: ‘Howard Grossman, like all directors, had specific duties as a company director but he blatantly disregarded them.
‘The company’s insufficiencies when it came to record keeping means that we are unable to determine the exact nature of payments worth millions of pounds of tax-payers money, who along with supporters of the football club are the real victims here.
‘We have been able to secure a substantial ban for Howard Grossman and if he breaches his disqualification, he risks being sent to prison.’
Northamptonshire Police is continuing their nationwide investigation into the missing Northampton Borough Council loan money and is working with other prosecuting authorities to recover public funds.