Quindell deal in the spotlight

ClAIMS processing firm Quindell is facing questions over why it allowed a senior director to fund personal expenses with loans backed by the company’s shares, writesPeterCampbell.

last week three board members used their existing shares as collateral to take out a loan to buy more. But the Mail can reveal one of them used the money for other purposes.

on Wednesday, the firm revealed three directors – chairman Rob terry, finance director laurence Moorse and director Steve Scott – took out a loan ‘to fund the acquisition of shares’.

the deal saw all three post up to £64m of shares as collateral. the move spooked investors and shares fell 9pc during trading on thursday.

on Friday the company’s corporate broker Cenkos issued a statement, clarifying: ‘We have confirmed that the executive directors are only using the loan to buy equity’.

But Scott, as a non-executive member of the board, is not an ‘executive director’.

this means that Cenkos’s clarification – that he only used the money to buy shares – does not apply.

It has since been confirmed that he used the money to fund personal expenditure, as well as using it to buy 700,000 shares in Quindell.

Scott is a long-term business partner of terry, and joined the board of Quindell in 2009. Between 1999 and 2006 he was the commercial director of the Innovation Group, a software business founded by terry – although terry was forced out in 2003 following questions about the firm’s accounting policies.

Quindell has been dogged by allegations over its business model, and saw its shares halved by a short-seller’s report alleging it is ‘built on sand’. It then successfully sued for libel over the report.

Quindell refused to comment on the Cenkos note.