At Southwark Crown Court today, former company chairman, Malcolm Richard Stone was sentenced to 4½ years imprisonment and former finance director John Rupert Mottram was sentenced to 18 months imprisonment. The case concerned business ventures to finance and build three power stations in China.
Background
In late 1994, Malcolm Stone recognised that the energy market was ripe for development and decided to exploit the opportunities. He entered into a joint venture contract with the Chinese authorities in respect of power station developments. In order to finance these projects he looked for an established company. He selected an American company, Powerhouse Resources Inc (then known as Com-Tek Inc) listed on NASDAQ and in London.
An 'offer and placing' of shares in Com-Tek was proposed intending to raise US$ 7.2 million to finance the projects. The 'offer and placing' was unsuccessful and the take up by investors very low. 'Underwriters' were introduced who were no more than front companies with no assets and who were not in a position to meet their underwriting liabilities. To get over these difficulties Stone accessed the company's funds using them to purchase its own shares- some of which were held in his own name. He also used company funds for his other business interests.
Mottram assisted in diverting the company's assets. He also backed up Stone's misleading and false statements to the other directors of Powerhouse concerning the use of the company's funds.
Offences
Both Stone and Mottram were convicted of theft, false accounting and conspiracy to defraud shareholders in the company by giving misleading explanations to the directors as to the uses to which the company's money had been put.
Notes to Editors
The investigation was conducted with the assistance of the City of London Police and the Metropolitan Police.
Counsel for the SFO were: Victor Temple QC and John Anderson.
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