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The QCS ‘consultants’ – Mills, his wife Alison, 52, Michael Bancroft, 73, and John Cartwright, 72 – ransacked the businesses’ accounts by charging exorbitant fees and expenses

Senior Impaired Asset [IA] manager Lynden Scourfield, 54, exploited ‘systemic and personnel weaknesses’ within HBOS to make millions with crooked businessman David Mills, 60, and his associates.

They targeted 200 small businesses that were struggling to repay HBOS loans between 2003-2007.

The bank’s IA division took control of the failing clients in order to steady the ship and protect their loans, or to recover what funds they could through asset stripping.

Scourfield threatened to stop the flow of cash to companies unless they hired ‘turnaround consultants’ from Mills’ firm Quayside Corporate Services [QCS] for up to £30,000 a month each.

Once they agreed, Scourfield authorised more than £500million of loans to the high-risk clients from his HBOS office in Reading, regardless of their ability to repay.

The QCS ‘consultants’ – Mills, his wife Alison, 52, Michael Bancroft, 73, and John Cartwright, 72 – ransacked the businesses’ accounts by charging exorbitant fees and expenses.

When the firms went into administration, Mills seized what assets were left and transferred them to his sham companies The Sandstone Organisation and Knightingale Investments.

The QCS gang spent the profits on millions or pounds’ worth of property across Europe, birthday bashes in Thailand and Barbados, trips to Ascot, and a yacht.

Scourfield was rewarded with at least £1million by way of luxury holidays, lavish gifts, and orgies with high-class escorts.

His IA colleague Mark Dobson, 56, helped to divert funds from two high-risk clients to Mills’ bogus businesses in return for £30,000 and lavish hospitality.

Accountant Jonathan Cohen, 57, was said to have organised Scourfield and Mills’ tax affairs to conceal the scam while his troubled firm Brett Adams raked in loans from HBOS’s IA division. He was cleared of any involvement by the jury today.


HBOS had a ‘second pair of eyes’ principle, which meant all credit applications Scourfield authorised should have been looked over by his manager and senior director, Paul Burnett.

The Managing Director of Credit Risk Hugh McMillan should have been alerted to the biggest deals.

But neither man realised Scourfield was funnelling tens of millions into Mills’ criminal enterprise – despite the fact that escalating debt from his loans was recorded and submitted to Mr Burnett.

It was only when senior HBOS director Tom Angus was appointed to oversee IA in January 2006 that the bank began to wake up to his flagrant corruption.

Within six months of his new role, Mr Angus asked to see authorisations for Scourfield’s credit applications.

Mark Dobson, 56, helped to divert funds from two high-risk clients to Mills' bogus businesses in return for £30,000 and lavish hospitality.

Mark Dobson, 56, helped to divert funds from two high-risk clients to Mills’ bogus businesses in return for £30,000 and lavish hospitality.

He had to chase the fraudster repeatedly before receiving a suspicious bundle of documents that contained ‘no evidence of appropriate sanctioning’ in January 2007.

A month later HBOS carried out a review of 38 struggling businesses that had received irregular loans from IA and together owed the bank £375million.

The conclusion was damning: the bank stood to lose up to £288million from companies that had engaged QCS under Scourfield’s supervision.

Mr Angus confronted the conman with the findings at the bank’s Bishopsgate office on 8 March 2007 – but within hours he went off sick with ‘work-related stress’ and never returned.

HBOS suspended Scourfield for gross misconduct and he resigned in April 2007.

The former banking giant carried out two further investigations but neither one uncovered the ‘true nature’ of Scourfield’s corrupt relationship with Mills.

Prosecutor Brian O’Neill QC said: ‘Some other employees of the Bank do not emerge well from the investigation, most particularly Paul Burnett, who was Scourfield’s immediate line manager.

‘There is little doubt that his apparent lack of oversight was partly responsible for Scourfield’s ability to act in the way that he did and for as long as he did.’

He continued: ‘Had Burnett and others paid closer attention to the crib sheet figures, Scourfield’s activities may have been identified sooner..

‘Burnett lost his position at the Bank as a result of his failures as a manager.’

Jurors were told ‘systems and processes undoubtedly contributed to Scourfield’s ability to behave dishonestly’ as he began ‘exploiting systemic and personnel weaknesses which he knew to exist’.

But Mr O’Neill insisted there is ‘no evidence’ Mr Burnett or any other HBOS employees were complicit in the conspiracy, and said the bank wasn’t ‘knowingly turning a blind eye’ to the con.


HBOS, once the UK’s biggest mortgage lender, suffered a devastating collapse during the credit crunch – and taxpayers were left to foot the £20.5billion bill.

The banking giant was formed by the 2001 merger of Halifax and The Bank of Scotland and loaned £435billion within seven years as it pursued an aggressive expansion plan.

But it lost £10.8billion in 2008 as profits plunged by 70 per cent when the credit crunch hit.

Gordon Brown’s Labour government quickly issued a £20.5billion bailout package to fix HBOS’s massive funding gap and avoid a ‘banking meltdown’.

The Banking Standards Commission later slammed HBOS bosses for ‘catastrophic failings’ and a ‘colossal failure of management’.

Former CEO James Crosby, the ‘architect’ of HBOS’s failed strategy, forfeited the knighthood he was granted for ‘services to the finance industry’ after leaving the bank for a senior FSA role in 2006.

Mr Crosby, thought to draw more than £400,000 a year from his HBOS pension, said he was ‘deeply sorry’ for the disaster.

In 2012 HBOS senior executive Peter Cummings was fined £500,000 and banned from banking for life by the FSA for his part in the bank’s near-collapse.

Mr Cummings retired in 2009 with a £352,000 a year pension after making his name by lending to high-profile clients including Top Shop founder Philip Green.

Lloyds Bank acquired HBOS in January 2009 as part of the rescue package.

Amid the chaos, Lloyds instructed Deloitte to investigate Scourfield’s activity after the Financial Services Authority (now the Financial Conduct Authority) issued a requirement notice.

The criminal investigation didn’t begin until after the report, dubbed Project Windsor, was completed in 2010.


The 2010 report revealed that of the £250million written off by HBOS’s IA division, £245million related to customers under Scourfield’s management.

Nearly all of them had engaged QCS’s ‘consultancy services’.

Businesses that fell prey to the criminal plot include golf equipment firm Seoul Nassau, fishing tackle company Sharpe’s Holdings, aviation group Corporate Jet Services (who owned Club 328 and Euromanx), textile business Magenta, restaurant and nightclub operator the Mezzanine Group, and Remnant Media, a company setup to buy porn mags including Asian Babes.

HBOS began legal action against some of the clients, including couple Paul and Nikki Turner, who ran Cambridge-based music publisher Zenith before it was destroyed by Scourfield’s scam.

The bank took the Turners to court more than 15 times in an unsuccessful attempt to evict them after Scourfield devastated their business.

Oxfordshire farmer Justin Riggs, 57, said his livelihood was ‘annihilated’ when Scourfield authorised a £375,000 loan and advised him to sell land and chicken coops in 2004.

The farmer was forced to remortgage his house when his loan rose by £7,000 after he had paid £231,000 in interest and fees.

Mr Riggs’ plight was discussed in parliament in 2009 as MP Ed Vaizey noted: ‘There is a pattern in the way that Mr Scourfield engaged numerous people.

‘He has taken businesses and loaded them with loans, charges and consultancy fees. It’s now up to HBOS to come to the table.’


The six-year investigation, dubbed Operation Hornet, was ‘the most complex and far-reaching’ fraud case in Thames Valley Police’s history, involving 120 officers.


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