Why Roadships collapsed

24th September 1976, Page 102

24th September 1976

Page 102

Page 102, 24th September 1976 — Why Roadships collapsed

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Dept of Trade report says HIS 'not fit to be floated'

RALPH HILTON, John Skinner and Robert Withers, former members of the board of Road ships Ltd, together with the Industrial and Commercial Finance Corporation Ltd were heavily criticised in a Department of Trade report published at the end of last week.

Ralph Hilton's lack of integrity and management style, the general atmosphere sur rounding the company and the state of the company's accounts department are blamed for Ralph Hilton Transport Services Ltd (the former title of Roadships) being "not fit to be floated as a public company". But, says the report, the major responsibili ty, apart from that of Hilton himself, lay with ICFC who did not exercise reasonable skill and care in sponsoring the flotation.

Responsibility for a misleading prospectus, apart from the legal responsibility of the board, was apportioned to Hilton's professional advisers, principally ICFC.

Mergers with other companies and acquisitions of other transport organisations were also criticised. The merger with J and H Transport Group Ltd was a serious mistake with serious adverse consequences, which should have been foreseeable. The direct responsibility was attributed to Hilton and, to a lesser extent, ICFC who acted without skill and care in sponsoring the merger.

The acquisition of companies from British Oxygen Co Ltd was a serious mistake which also had foreseeable serious adverse consequences. The report says that Hilton acted recklessly in this and that ICFC showed less than reasonble skill and care. But it was the merger with J and H which rendered the collapse of HTS inevitable because of weaknesses in the HTS that had not been remedied at the time of the merger.

John Skinner bore the greater part of the blame for the overstatement of HTS results for the half year to January 1, 1971. This was due directly to fraud or lack of reasonable skill and care on his part. But it also arose indirectly from the state of the company's accounts department and improper pressures brought by Hilton on Skinner.

Much of the responsibility for the offer document for J and H, which was misleading, was attributed to Skinner, also. He was accused of fraudulently preparing an updated forecast under severe pressure from Hilton who ought to have known that the forecast was impossible of achievement. Thomson McLintock and Co and ICFC were also criticised in this for lack of reasonable skill and care.

James McNaughton, chief administrator who resigned in 1974 and who was "virtually in unchallenged control of the company, immediately following July 1972," was criticised for the lack of reasonable skill and care in producing the misleading report and accounts for the year ended July 29, 1972 and Wilson Wright and Co, auditors bore part of the blame for the state of the accounts department of the company.

Ralph Hilton's management style was described in detail. Between 1967 and November 1970, it was pointed out, the company's board never functioned as such. At every lunch time, a number of directors and employees assembled in the directors' canteen which was open to other employees not on the board. It was, therefore, in theory a daily opportunity for a full exchange of views and information. In practice, say the authors of the report, there was nothing of the sort.

Ralph Hilton ran the company as an autocrat and his style was not benevolent. One employee described the atmosphere at Charlton as "like Gestapo headquarters", but this the authors found was a bit of an exaggeration. But they did accept that "if any director or employee made a determined effort to stand up to him, his life at Charlton would indeed have been 'nasty, brutish and short'."

The directors could not inform themselves of the company's progress. There was no satisfactory internal management accounting system prior to flotation, nor were there any formalised accounting disciplines or procedures. Consequently, no trading figures were ever available to the directors. But the authors were satisfied that much of what was being said in November 1970 was either exaggerated or untrue. They were not even satisfied that grave allegations of criminal involvement was current as early as 1970.

Ralph Hilton, they said, was the object of much jealousy in certain quarters as his company expanded and succeeded at the expense of others and jealous eyes inspired scandalous tongues.

However, they did not believe that violence was commonly resorted to. This and other rumours of gangland associations were discounted. Nor did they accept the rumours that there was a financial relationship between the company and the loca police.

In a paragraph heade( "Integrity" the inspector; made the following comment "We do think that, if at th( time of the SIH negotiation! Hilton was indeed declarim £6,000 per annum incorni whereas he was in one form o another drawing £16,000 fron the company and cloaked par of the balance by raising fals expense vouchers in one yea to the total of £2,600 then fo two reasons he was unfit to b a director, let alone chairma and managing director, of public company.

"Firstly, the extent an method of the evasion woul have reflected a degree recklessness in respect of, not contempt for, his finana obligations and the law of tl" land which would have bee likely to extend beyond tF field of tax, and, secondly, i the absence of disclosure ar negotiations with the Inlar Revenue (which in fact nevi took place), the captain of newly launched public cor pany would be liable to 1 struck down at any time by ti thunderbolt of a backdu case or even a criminal pros cution."

• After the inspect° began their investigation 1974, Mr Hilton, 53, of Chis hurst, Kent, pleaded guilty the Old Bailey to falsificati of company accounts and VY fined £2,500 and ordered to p £2,500 towards the Depa merit investigation, the rep says.

Former director and co pany secretary Mr John Sk ner, of Sevenoaks, Kent, v given a suspended prison si tence at the same court at admitting conspiracy, fats cation of company accou and forgery.

The company's former cl accountant, Mr Rob Withers, gave evidence for Crown at Mr Hilton's trial.

The report, price £6.15 fr HMSO, was prepared for Department of Trade by Be Alan Hytner, QC, and Alexander Noble Irvine, FCA.