A Scottish oil and gas company linked to the man behind the Democratic Unionist Party’s mysterious £435,000 Brexit donation owes at least £4.5 million to more than fifty investors, an investigation has found.
Glasgow-based businessman Richard Cook signed a deed of trust between the Scottish company, 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”.
HGEC Capital Ltd went into administration earlier this year. Documents produced by the administrators now reveal that the company owes at least £4.5 million.
Known investors include elderly couples, small business owners, and one z-list Scottish celebrity.
The firm’s director, Kenneth Campbell, could now be summoned to court for a ‘private examination’.
Earlier this year openDemocracy and the Sunday National revealed Cook’s involvement in the HGEC Capital Ltd scandal. He made a number of visits to the US on the company’s instruction and also registered the firm’s website.
Cook’s greatest claim to fame is his role as the chairman of the Constitutional Research Council, which made the record-breaking £435,000 gift to the DUP just weeks before the 2016 Brexit vote.
Under the deed of trust signed by Cook, HGEC Capital Ltd – formed in Glasgow in 2018 – agreed to lend $14.3 million to Texas Gulf Coast Secured Lenders Joint Venture LLC in return for oil and land rights.
In a brochure allegedly circulated to potential Scottish investors, HGEC Capital Ltd said the current downturn in oil prices presented an opportunity. It listed a number of oil and gas sites in Texas which, it said, were worth $89,360,000 at the time, but which it claimed would could be sold for $666,000,000 in twelve months’ time.
It seems at least 56 investors handed over cash in the hope that they would see similar returns.
Despite the millions invested, administrators say they have, so far, been able to find only one bank account, containing just £7700.88.
Ayr Sheriff Court appointed Begbies Traynor as administrators in February this year following a petition submitted on behalf of an offshore fund registered in the Cayman Islands.
In the administrators’ latest progress report, lodged with Companies House, Begbies Traynor says that around £1 million was transferred “to and from” a bank account in the US between April and June 2018. However, it has been unable to find “trace of any further transfers” to the States after this time.
According to HGEC Capital Ltd’s bank statements, all sums invested after June 2018 “were distributed shortly after receipt to various parties, including Mr Campbell”.
The administrators have now written to the recipients of larger sums “seeking a clear explanation and entitlement to such monies”.
Lawyers acting for Cook say he is not one of these recipients.
The administrators have criticised Campbell, accusing him of ignoring requests for details of the company’s finances, and all books and records.
They say Campbell’s “failure to provide satisfactory cooperation” has made their work “significantly more difficult than would normally be expected”.
Begbies Traynor say it will ask Campbell to pay back more than £1 million in HGEC’s funds paid to him or “personal payments made on his behalf”.
The real owner of the Texan properties, according to the deed signed by Cook, 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 $2.3 million lease fraud involving a series of oil wells in Texas.
He was sentenced to 42 months in prison for fraud in August 2018.
Cook made the news back in 2017 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.
Campbell, meanwhile, has been involved with football clubs in the past, and is reasonably well known in the game. He sponsored shirts for Clyde FC in 2015.
It is understood HGEC approached a number of high-profile footballers, including players for Rangers and Celtic, though none appears on a list of unsecured creditors that Begbies Traynor, lodged with Companies House earlier this year.
However, the document does name Cheryl Dunn, who, according to recent media reports, is the partner of Rangers goalkeeper Allan McGregor. She is also a former business partner of Campbell.
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 cooperated 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.”
Campbell did not respond to requests for a comment. Dunn could not be reached for comment.