The case against James Guerin and others that they perpetrated a massive fraud on Ferranti International Plc and its shareholders looks cut and dried following the guilty plea of Guerin’s company, Parent Industries Inc, to fraudulent diversion of more than $700m from International Signal & Control Inc. Parent agreed to pay a ludicrously low $4.4m to settle the charges, but criminal charges are expected to be brought against Guerin. Parent admitted that at a time when Guerin was its sole shareholder, it set up holding companies and bank accounts around the world, awarded International Signal non-existent contracts in the Third World, and then had it pay money ostensibly to subcontractors through the accounts. The money was then recycled circuitously back to International Signal as staged payements on the contracts, thereby inflating its apparent value. After selling International Signal to Ferranti, Guerin allegedly used his $67m of Ferranti shares as collateral to raise money with which he hoped to buy back the part of International Signal holding the fictitious contracts, and prevent the fraud ever being discovered. But he ran out of time and Ferranti learned of the fraud. Ferranti has issued new writs and hopes to recover some of the money – to be shared with its holders.
