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Pension trustees plead guilty to illegal loans

Ref: PN22-24

Issued: Wednesday 17 August 2022

Two trustees have pleaded guilty to making illegal loans amounting to £236,000 from a company pension scheme to the scheme’s employer, in a prosecution brought by The Pensions Regulator (TPR).

Company director Andrew Kyprianou, 60, of Glebe Avenue, Enfield, Middlesex and Colin Werb, 71, of The Birches, Grimsgate, Diseworth, Derby both admitted two counts of making prohibited employer-related investments at Leeds Crown Court today (Wednesday 17 August).

Werb and Kyprianou had also been charged with providing false or misleading information to TPR contrary to section 80 of the Pensions Act 2004. TPR had alleged that the pair, employees of Eastman Staples Limited — one of Huddersfield’s oldest and largest suppliers to the textile industry — fabricated minutes of trustee meetings to disguise the loans as investments. These charges will lie on file.

The pair initially pleaded not guilty to all charges.

Illegal loans

The court heard how between 2017 and 2018 Kyprianou and Werb unlawfully paid £236,000 from Eastman Machine Company Limited Superannuation Scheme in the form of two loans to Eastman Staples Limited, contrary to section 40(5) of the Pensions Act 1995.

The first loan was for £96,000 in 2017 and a second, for £140,000, was paid out in March 2018.

Both defendants were replaced by TPR as trustees of the pension scheme in December 2020 by independent professional trustees, Pi Consulting Trustee Services.

The pair were released on bail to appear before Leeds Crown Court for sentencing on 7 October.

Notes for editors

  • Employer-related investments are prohibited by Section 40 of the Pensions Act 1995 and the Occupational Pension Schemes (Investment) Regulations 2005, regardless of the amount involved. Breach of Section 40 is a criminal offence and can potentially lead to an unlimited fine and/or imprisonment.
  • TPR is the regulator of work-based pension schemes in the UK. Our statutory objectives are: to protect members’ benefits; to reduce the risk of calls on the Pension Protection Fund (PPF); to promote, and to improve understanding of, the good administration of work-based pension schemes; to maximise employer compliance with automatic enrolment duties; and to minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of the regulator’s functions under Part 3 of the Pensions Act 2004 only).

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