Pic: Reuters – Sam bankman-Fried

‘Ponzie’ crypto trial

By Harry Mottram: Crypto Currencies are often called ‘Ponzie schemes’ by their detractors but it the case of crypto exchange FTX they have a point. It’s CEO Sam Bankman-Fried is currently on trial in the USA on charges of conspiracy and fraud for taking his clients’ cash on an industrial scale and spending it as you do on luxury homes in the Bahamas. Ian Carrotte of ICSM said the media focused on the eye-watering amounts of cash he is alleged to have siphoned off to buy influence with politicians and sports teams but the suppliers to his offices, real estate portfolio and luxury consumer goods have been left with nothing. “His clients entrusted him with their cash as well,” said Ian Carrotte, “and he told them their investment was paying dividends and making them rich. Sadly, it was a pack of lies. If something is too good to be true, then it is just that.”

Retail woes

More than 20,000 retail workers have lost their jobs this year while suppliers have been shortchanged somewhere north of £1 billion pounds. The latest casualties include Victoria Plumb the bathroom specialists who were sold in a pre-pack to AHK Designs plus the well documented collapse of Wilko. The Company’s failure means that creditors are now owed as much as £625m. Last month Thought Clothing went into administration while ‘so-called’ ethical fashion firm People Tree UK went bust owing it suppliers a very unethical £8.5 million pounds.

Packaging firm folds

The Yorkshire print industry manufacturer from Pharmaceutical Packaging Leeds (PPL) that went into administration in July is having is kit and stock sold off in an auction this week. Writing in the trade publication Print Week Dominic Bernard reported: “PPL sought advice from FRP on 23 March, and marketed the company for sale. With no buyers forthcoming, PPL’s director put the company into administration under Mark Hodgett and Philip Pierce of FRP on 6 July. The assets, listed via auctioneer Walker Singleton, include machinery, furniture, and £100,000 of printing stock and materials. The auction is due to end on Thursday (12 October) at noon.”

He continued: “Pressure on the company’s cashflow grew further after installation, as problems with the new press’ print quality meant PPL had to issue affected clients with “significant” credit notes, as well as re-run orders on fresh stock.”

Windows closed

The door and window manufacturer UK Windows and Doors based in Taff’s Well, Rhondda Cynon Taf, Wales has closed – prompting concerns amongst Welsh politicians. The BBC’s Antonia Matthews & Andy Gourlay reported: “The firm’s chief executive said a decline in sales meant the business had become financially unsustainable. A worker who did not want to be identified said staff were told their jobs were going in a conference call. The Welsh government said it stood ready to offer support to those impacted by any job losses. The area’s MP Sir Chris Bryant, MS Buffy Williams and the leader of Rhondda Cynon Taf council Andrew Morgan said in a joint statement that the news was “shocking” for everybody involved. Administrators Teneo said the firm’s “sevenday” business had been sold off, preserving 91 jobs. It also said 73 employees would be retained during the administration process.”

China crisis

Two giant Chinese firms that have come to symbolise everything that is wrong with the Communist country’s economy are on the brink of collapse. The un-Chinese sounding Country Gardens and Evergrande are struggling with billions of pounds of debt as they struggle to stay afloat. In any other world they would have gone into administration but in China the Government is so fearful they will bring the economy into recession that they have been allowed to continue to trade. The firms are mostly involved in property but also have business interests around the world including in the UK.

Evergrande has halted trading after several executives, including the chairman, who were been detained by Chinese authorities last month. When VIPs are detained in China they disappear into the nightmare world of a Kafka-esque legal system where there is no justice. The CEO and founder of Evergrande Hui Ka Yan is joining a long list of executives in the People’s Communist Republic who are found guilty of crimes related to corruption – but never spelt out in detail as they would be in the UK. Zhao Weiguo of the chip manufacturer Tsinghua Unigroup disappeared in 2020, Bao fan of China Renaissance funding group vanished earlier this year, while wheel chair bound  Xiao Jianhua of Tomorrow Holdings was sent to prison last year for 13 years for corruption.

Metro Bank saved – for now

A midnight deal has saved Metro Bank from collapse this month – but for how long? Once a bank publicly announces it has liquidity issues there is only one thing that will happen: customers withdraw their cash en masse. And that’s what happened – as it did to some USA banks earlier this year and also Credit Suisse had the same problem. The problem being customers can go online and take out their cash in a matter of minutes – unlike the old days of a run on a bank when they had to queue up outside and demand their money from a clerk.

White knight Colombian billionaire Jaime Gilinski Bacal came up with he ackers on Sunday night in a surprise rescue pumping some of the £325 million into the bank from backers and amassing a 53 per cent stake by investing £102million into the group and contributing to Metro Bank’s £325million fund raise, which comprises of £150million worth of new equity and £175million of new debt. He wants to open more High Street branches – the opposite of the big four banks who are busy closing them as customers go online. The bank’s shares were close to worthless last week – but with the rescue plan in place they rose sharply which is relief for businesses who have their accounts with the firm. How long the honeymoon lasts is anyone’s guess – but don’t hold your breath.



For information on ICSM visit www.icsmcredit.com or call 0844 854 1850.
ICSM, The Exchange, Express Park, Bristol Road, Bridgwater, Somerset TA6 4RR. Tel: 0844 854 1850. www.icsmcredit.comIan.carrotte@icsmcredit.com