The Scottish Mail on Sunday

Shipping giant in perfect storm

Bosses sacked this executive over his rogue share dealings He claims other staff paid for prostitute­s on expenses Now the City watchdog has taken command of a probe...

- By Jamie Nimmo

AN EXTRAORDIN­ARY row between an historic shipping company and a former executive over suspicious share trades and claims that staff paid for prostitute­s on expenses has triggered an investigat­ion by the City watchdog.

The Mail on Sunday can reveal that the Financial Conduct Authority is probing share sales made by Kevin Gorman when he ran Cory Brothers, a shipping logistics firm founded in 1842 which is owned by AIM-listed Braemar Shipping Services.

Braemar sacked Gorman, who headed up Cory, and was a member of the company’s executive committee, after he failed to disclose he had sold shares in the company.

Gorman, 56, hit back with allegation­s of his own, including that employees misused expenses to pay for prostitute­s, and engaged in bribery and corruption.

The explosive allegation­s were revealed in an employment tribunal earlier this year in which a judge threw out Gorman’s claim of unfair dismissal.

He was sacked by Braemar after he refused to step down over his unauthoris­ed share dealing.

Braemar called his allegation­s that staff paid for prostitute­s on expenses and engaged in corruption and bribery ‘historic’, adding that the judge deemed them ‘not relevant to the case’. The judge also said he found no evidence to back up his claims.

The company, which declined to comment on the FCA probe, said: ‘Any such allegation­s are taken very seriously. Braemar is proud of its reputation as a leading shipping services business and has a full set of company policies and procedures for following when a formal allegation is issued.’

Gorman is now running a new rival firm called Sterling Shipping Agencies, based at Birkenhead, Merseyside. Sterling Shipping Services, the parent company, is chaired by Quentin Soanes, a co-founder of Braemar. Soanes remains a top shareholde­r in Braemar.

In the tribunal, Gorman argued that he was not aware that his role as a senior manager meant he had to report share trades following new rules brought in during 2016. However, the judge said he found his argument ‘unconvinci­ng’.

Gorman sold shares in 2016 and 2017 for a total of more than £70,000. He claimed this was to fund holidays to Thailand, Spain and skiing, his son’s 18th birthday present, a replacemen­t boiler and to make up for £12,000 stolen from his credit cards.

After being reminded by his employer of share trading rules in January 2017, Gorman told the company he had sold shares the week before, just days before a profit warning that wiped around 20 per cent off the firm’s value. He

agreed to donate around £9,000 to charity – the amount of profit he made from the share sale.

However, Gorman failed to disclose that he had also sold shares a few months earlier, in November and August 2016. Stock market rules state that executives need to notify their employer before making any share trades.

The FCA launched an inquiry into the share trades in 2017, suspicious of insider trading related to the August share sale, which was carried out just days before another profit warning from Braemar, which sent the share price down. The FCA probe is ongoing.

The company itself is not under investigat­ion. After Gorman told the company of his ‘unauthoris­ed trades’ in 2016, Braemar launched an investigat­ion and decided to suspend Gorman on October 31, 2017, and then sacked him. Gorman had rejected an offer to resign, instead emailing the board to say he ‘would not go quietly’.

Gorman appealed against the decision to fire him. In a letter after his dismissal, he alleged misconduct by other employees had gone unpunished, including that expenses claims had been misused, including to pay for prostitute­s.

HE also accused Braemar’s chief executive James Kidwell, who stepped down in July, of having carried out similar trades in 2004 on behalf of his wife, which were investigat­ed by the Financial Services Authority, the FCA’s precursor.

The FSA found no wrongdoing as he sought permission to sell shares and was given the clearance to do so. The judge delivered his verdict on the dispute at the end of February

and sent his decision to Gorman and Braemar in early March.

In its review, the company agreed with Gorman that he did not dump the shares with a view to making a profit.

Braemar, founded in 1972, employs 530 people. It is probably best known for its shipbroker­s who act as gobetweens for shipowners and charterers to transport cargo or act as intermedia­ries between buyers and sellers of ships.

Cory Brothers was founded in Cardiff in 1842 by Richard Cory as a shipbroker and coal exporter. It was sold to Braemar in 2003. Gorman became managing director of Cory Brothers in 2007 when it bought a firm he started, Gorman Shipping, and became a member of Braemar’s executive committee.

Sterling Shipping Agencies unveiled Gorman’s arrival on its website last December, referring to the dispute with Braemar, noting it was to conclude shortly. It added: ‘We are therefore looking forward to working with a well-rested and energised Kevin whose reputation and knowledge of the industry will help us deliver a high quality service to our clients as well as guiding the developmen­t and continued expansion of the company.’

In a statement, Gorman said: ‘I believe the mistake I made pales into insignific­ance with what happened within Braemar with certain individual­s who were not punished, or even reprimande­d for what were more serious issues or behaviour.

‘I made a genuine mistake which I brought to Braemar’s attention when I realised it was not in accordance with procedures, which both the FCA and Braemar acknowledg­ed in their investigat­ions, and I think I have been unfairly punished for my honesty.’

The FCA declined to comment.

 ??  ?? UPHEAVAL: Kevin Gorman was fired after refusing to quit
UPHEAVAL: Kevin Gorman was fired after refusing to quit

Newspapers in English

Newspapers from United Kingdom