Polly Peck

I never met Asil Nadir, but while working in the City I did business with Polly Peck and knew the company fairly well (only one person, Mr Nadir, knew everything about it).

Now it seems that Nadir is back in the UK to 'clear his name'. I think most people have come to the conclusion that he is guilty; certainly the press has. So why has he returned? Perhaps he felt Northern Cyprus was too small for him, although at nearly 70 years old it would seem an excellent retirement haven.

As a matter of fact I don't think a conviction is going to be that easy to reach. Polly Peck was an interesting business model. Its cost base was in Turkish lire but its sales, low level electronics and fresh fruit and vegetables, were in hard currency. In the late 1980s and 1990s the Turkish Lira was in free fall so the asset side of the business was falling, while the income side was strong. What Nadir was doing is rather like hedge funds do today (quite legally). The surplus cashflow was invested in new businesses and it grew bigger and bigger. It is a system which works wonderfully until the music stops and you have to find a chair. Some investors found their stake was worth 1,000 times what they paid for it. Polly Peck was one of the 100 largest companies on the stock exchange. Then in September 1993 it was worth nothing.

The charges against Nadir are that he syphoned off around £200 million into Northern Cyprus. He will presumably claim that this was the very nature of his business, earning pounds and dollars and investing in production faciities where they are cheap. If his accounting procedures were over simple he could be disqualified as a company director but that is a civil procedure. To convict him of fraud they will have to do better than that.

But the bookkeeping systems were inadequate: the figures are untrustworthy; getting information out of Northern Cyprus to show he pocketed the money rather than invested it is hardly going to be easy (if we can't even recognise them diplomatically they aren't going to bust a gut to help); the events were nearly 20 years ago; some of the people involved will be very grateful to Mr Nadir.

The trial starts on 3rd September. It will be interesting, but I don't think it will be easy.

*PS I should say that although it is alleged that £200m went missing, the charges relate to £34m