The director and two senior employees of a steel trading company which defrauded banks of more than £170m have been sentenced to a combined 12 and a half years in prison following an investigation by the Serious Fraud Office. The outcome is an important success for the embattled office, which said it is the fifth case in the past year in which it has secured individual convictions.
Balli collapsed in 2013 with debts of $500 million. An SFO investigation found that Balli had committed the fraud to secure bank loans in an attempt to keep the company running.
Nasser Alaghband, chief executive of Balli Steel plc, and employees Melis Erda and Louise Worsell, were sentenced at Southwark Crown Court yesterday.
Alaghband, 62, pleaded guilty to one count of fraudulent trading and was sentenced to six and a half years in prison and disqualified from serving as a director for 12 years.
Melis Erda, 56, was convicted of four counts of conspiracy to defraud after a five-month trial and sentenced to three years and 10 months and disqualified from being a director for six years. Louise Worsell, 68, was convicted of four counts of conspiracy to defraud after a five-month trial and sentenced to three years and two months and disqualified from being a director for six years.
During the afternoon’s sentencing, His Honour Judge Hopmeier said the conduct of the defendants was ‘so serious only a custodial sentence can be justified’. He said: ‘This was a sophisticated fraud in which each of the defendants played an important role.'
The court heard that Balli Steel had, for many years, operated as a ‘respectful honest and substantial company trading in steel’ but when the company got into serious financial difficulty ’at the direction of Mr Nasser Alaghband… trading became fraudulent.’
Balli secured bank loans by creating false contracts for non-existent steel shipments. The shipping documents were certified by an in-house company registered in the Cayman Islands and operated by fax machine via Balli’s London offices. The banks were unaware the shipping company was not independent.
Hopmeier said that such fraud was not a victimless crime. 'Whatever the turnover, whatever its balance sheet, a fraud of this nature causing a bank to lose many millions of pounds may plainly cause real damage not only to the bank but to ordinary men and women who hold their savings in the bank as well as employees of the bank should the bank fail.'
The court heard that the cost to the taxpayer of Erda and Worsell’s trial was ‘in the region of £2m’ and the costs of the SFO investigation ‘was £6m or more’. The SFO opened its investigation into Balli Steel in 2014 and gathered information from 36 jurisidictions.
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