As the prosecution of Business
Telecom directors restarts, Claire Hack talks to lessees and
lessors about how they have been affected by the
debacle.
Go deeper with GlobalData
The number of allegations of deception against
Business Telecom Ltd continues to grow, as a Trading Standards
investigation into allegedly fraudulent leasing deals linked to the
company comes to court.
Three Business Telecom employees appeared on
trial at Norwich Crown Court at the end of April, including the
company’s MD, Christopher Boughton-Fox.
They are all accused of using
misrepresentation to induce people to sign lengthy leasing
agreements for telephone equipment.
Boughton-Fox was charged with conspiracy to
defraud, alongside employees Jonathan Parrish and Daniel
Cullen.
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By GlobalDataThey appeared at Norwich Crown Court on April
14 for a pre-trial hearing, which was expected to provide guidance
in relation to the Proceeds of Crime Act 2002, but no directions
were given.
A trial began on April 26, and was listed to
last between four and six weeks. Cullen has since pleaded guilty to
conspiracy to defraud. The prosecution was brought by Norfolk
Council’s Trading Standards unit, following an extensive
investigation into Business Telecom’s activities which began in
2007.
The trial was initially due to start earlier
this year, but was delayed after the jury was discharged in
February, following a number of illnesses.
Parrish and Boughton-Fox deny the charge. A
fourth Business Telecom employee, Neil Debenham, pleaded guilty in
December 2009 and is expected to be sentenced alongside Cullen
following the trial.
The scandal surrounding Business Telecom has
continued to grow as more and more companies claim they were duped
into signing leasing agreements for telephone equipment.
Great Yarmouth-based Business Telecom, now in
liquidation, is alleged to have approached companies around Norfolk
and elsewhere, persuading them to enter into arrangements for the
supply of telecommunications systems and accessories by making
false representations.
They are also alleged to have made numerous
verbal inducements such as promises of annual rebates on calls of
more than £1,000 (€1,100).
Promises not redeemable
Customers said they later found promises were
not redeemable after signing lease agreements, brokered through
intermediary Shire Leasing.
Shire Leasing said it was not aware of any
verbal arrangements made between Business Telecom staff and lease
customers.
Agreements were signed for equipment to be
provided through the leasing arms of banks including ING, Bank of
Scotland and BNP Paribas, from which customers have so far been
unable to extricate themselves.
ING Lease UK chief executive Chris Stamper
said: “We would not comment on any specific deals, but if we have
got an agreement which means that we collect from a customer in
respect to whatever assets, then that is the deal.”
A spokeswoman for BNP Paribas Lease Group said
the company would not comment because of the impending court case
against Business Telecom, and Bank of Scotland Equipment Finance
had not made a statement at time of going to press.
Meanwhile, several companies in Norfolk say
they are continuing to pay thousands of pounds in rental on
telephone equipment, which they believe is worth much less.
This included uninterruptable power supplies,
designed to protect against lightning strikes, which Garry Mahn,
practice manager of Norwich-based Madgdalen Medical Practice,
claims should have cost no more than about £1,000.
He said: “We have been renting it for about
£50 a month since 2004.”
The practice is also paying about £12,000 for
telephone equipment, which Mahn claims should be worth half that
figure.
He admitted he could not be sure Business
Telecom actively made misrepresentations to the practice as he did
not begin work there until 2005 but said he believed the benefits
promised did not match up to reality.
Andy Thompson, director of Cragmay Motor
Factors, based in Kings Lynn, said his company first had dealings
with Business Telecom almost five years ago.
Thompson claims he was told the company could
pay off the lease after 12 months, but is still paying off an
£8,000 debt for equipment he believed to have been worth no more
than £1,500.
He said: “They said they would not charge us
for fitting the system and we thought that would be a saving.
“They came down and fitted it, but it only
took about half an hour, which made me suspicious.”
Thompson said he thought no more about it
until he asked for a settlement figure from lessors ING after 12
months and was told the cost would be £8,000.
He added: “It was all just a [Business
Telecom] ploy to get us on the lease.”
Bogus BT links
Companies making the allegations also say
Business Telecom staff led them to believe they were linked to
British Telecom, and claim they also played on vulnerabilities such
as high workload or premises moves, taking their attention away
from the details of the leasing agreements.
They also claim they were falsely told
telephone lines and equipment had become obsolete due to
“digitalisation” and would have to be replaced.
Kelly Clarke, managing director of Kelly
Clarke Motor Services, based in North Walsham, tells a similar
story. He said he later found out from an engineer installing
broadband at his company that the new equipment was
unnecessary.
He added: “We are paying about £17,000 over
seven years for something that was probably worth about £3,000,
tops.”
A fourth company, Ames Air Conditioning,
became involved with Business Telecom in 2006.
In a complaint letter sent to the Finance and
Leasing Association (FLA), director Shaun Ames claimed Business
Telecom had made “significant misrepresentation”.
The company is now involved in a dispute with
lessors ING as it has discontinued payments on telephone equipment
leases, believing the agreements made to be “unenforceable”.
Ames said: “We were told we would pay a
certain amount each month, with an annual rebate on calls.”
Ames said this did not come to pass, however,
and he also claims Business Telecom told him the agreement was only
on a three-year basis, rather than seven years, adding he was never
even aware he was signing a lease.
He has also made a witness statement to
Trading Standards as part of their investigation.
Since going into liquidation, Business Telecom
has been taken over by Interactive Business Technology Group.
Lyndsey Grady, who works in accounts at the
company, said: “We were assigned the maintenance books when
Business Telecom went into liquidation.
“We have taken over where they left off – we
are still doing their maintenance and we are starting new sales
again soon. We are trying to clear up a lot of problems that were
here when we first took over. We are in touch with previous
customers and we are trying to do a much better job than Business
Telecom did.
“We have had quite a few complaints but we
have been talking to the customers to let them know we are not
going to be treating them the way Business Telecom treated
them.”
However, it also appears Business Telecom
customers may have been tied into maintenance agreements without
their knowledge, according to Mike Watson, MD of Pace Racing, which
makes machine parts for the motor sport industry.
He first had dealings with Business Telecom
five years ago and is continuing to pay for a seven-year lease on
telephone equipment at a rate of £65 a month.
And Business Technology Maintenance Ltd, part
of the Interactive Business Technology Group, has now been in touch
to say that Pace Racing have a maintenance agreement for which the
company has not been paying, according to Watson.
Watson said: “They are saying I am obliged to
take over maintenance because of my acceptance of the initial
contract.”
Watson also said he is seeking legal advice
before accepting terms and conditions sent to him by Business
Technology.
