Get all your news in one place.
100’s of premium titles.
One app.
Start reading
Birmingham Post
Birmingham Post
Business
Martin Naylor & Tom Pegden

Ex-Norton boss Stuart Garner spared jail after illegally using people’s pensions to keep business afloat

The former owner of Norton Motorcycles has been spared jail after illegally putting millions of pounds of investor’s pension money into the failing business.

Stuart Garner was given an eight-month jail sentence, suspended for two years, for using pension schemes linked to the firm to prop up the business when he still owned it.

He has also been disqualified from being a company director for three years and ordered to pay more than £20,000 in costs, despite being bankrupt.

Garner was responsible for rescuing the historic bike brand in 2008, starting production again at a factory in Castle Donington on the Leicestershire/Derbyshire border, and growing the workforce to around 100 with plans for a national training academy.

By 2019 the business was racking up debts, pulling funding campaigns and facing winding up petitions from the taxman over hundreds of thousands of pounds of unpaid taxes.

Administrators were called in in early 2020 and by the following summer the Pensions Ombudsman had accused Garner – as trustee of the pension schemes connected to the business – of dishonesty, breaching investment laws and failing to ensure investors were putting their cash in the right sort of schemes.

Norton is now under new ownership having been sold to India-based TVS Motor Company in April 2020, with a new factory in the West Midlands.

Today Derby Crown Court heard how 53-year-old Garner, of Park Lane, Castle Donington, ploughed cash from the pension schemes into the business.

Judge Nirmal Shant QC, Honorary Recorder of Derby, 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 did not know you were breaking the law, however it is plain, in setting up a pension fund worth £11 million, that you should have known your basic responsibilities as a trustee.

"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.

"By 2020 £1.5 million was paid out to members (but) there's a shortfall of £10 million. This is not just financial harm, I have read statement after statement from ordinary people who invested.

"Many speak of broken relationships and ill health. The harm this caused cannot be understated."

William Hays, prosecuting, said the offences were in relation to three defined contribution schemes: Dominator 2012, Commando 2012 and Donington MC which had a total of 227 scheme members.

The investments were made between 2012 and 2013.

He said: "It is accepted he was receiving advice for a scheme to raise funds for the business, banks were not prepared to lend and that led to unlawful means of investment.

“The schemes in this case were used to inject capital into the Norton business at the time for investment and Norton was suffering production and liquidity problems.

"Members asked to withdraw the money, as they are entitled to do but Mr Garner explained the business was suffering cash-flow problems. It is accepted Mr Garner did correct the illegality.

"It was reckless and negligent but it is not suggested Mr Garner knew of the offence. However he is an experienced businessman and this was a carefully constructed scheme."

He said a number of victim-impact statements had been obtained by the Pensions Regulator, who brought the prosecution.

The prosecutor said: "In the statement, many speak of how they feel their confidence in the pensions system has been severely undermined.

"There have been marital problems and one victim refers to himself as 'an utter mug'."

At an earlier hearing in February, Garner pleaded guilty to three charges of breaching employer-related investment (ERI) rules.

Peter Caldwell, mitigating, said his client's actions had led to "a tragic fall from grace".

He said: "He has experienced personal anguish and rather serious mental health crises both last year and at the beginning of this year.

"He was negligent in getting proper advice but there was no syphoning off of cash. He did not know he was breaking the law when, in fact, he was.

"It was not a cynical enterprise. The objective was not personal gain."

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
One subscription that gives you access to news from hundreds of sites
Already a member? Sign in here
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.