Garner avoids prison over Norton pension rules breach

The news that Stuart Garner has received an eight-month suspended jail sentence after pleading guilty to using other people’s pension money to invest in his own business, Norton Motorcycles, has raised concerns about sentencing.

The 53-year-old invested £11 million worth of pension funds into the business. He was the sole trustee of the company, and used that position to illegally invest the funds, the court case heard.

Garner bought the rights to the Norton motorcycle brand in 2008. The business was endorsed by MPs, and the Government invested nearly £5 million in the venture, too. When Norton began to struggle, Garner set up a pension fund and invested all the money into the business, when he should have only invested a maximum of 5%, the court was told. Garner’s defence was that he did not realise he was breaking the law when he did this. He pleaded guilty to three counts of breaching employer-related investment rules.

Judge Nirmal Shant QC said: “You controlled the Norton Motorcycle business and in 2012 the business needed funds and you raised around £11 million by establishing three funds which were under your control. You were obligated to act in a prudent manner according to law. You are an experienced businessman and you must have known there was a conflict of interest. It is quite plain the reason was that the banks were not prepared to lend you the money. The fact that banks were not prepared to lend you the money should have set alarm bells ringing to an experienced businessman.”

Records revealed a shortfall of £10 million in the pension funds. As well as the suspended jail term, Judge Shant disqualified Garner from being a company director for three years. He has also been ordered to pay £20,716.69 costs, despite being made bankrupt following legal action by Leicester City Council after Norton Motorcycles defaulted on a £750,000 economic development loan that Garner had personally guaranteed.

Many of those affected have complained about the apparent lenience of the sentence, however, the maximum penalty for a breach of employer-related investment rules is an unlimited fine and/or a prison sentence of up to two years. Garner’s guilty pleas will have been taken into account under sentencing guidelines, and as he is bankrupt, a large fine would not have been collectable. Norton Motorcycles was bought out of administration by Indian manufacturer TVS for £16 million shortly after the Garner operation ceased trading. TVS has set up an entirely new Norton operation in a new factory base in Digbeth.