PROMINENT Chester businessman Stephen Vaughan has signed an undertaking banning him from acting as a company director until the year 2020.
The owner of Chester City Football Club brought to an end two years of legal battles with the Insolvency Service’s Public Interest Unit by accepting an 11-year ban under a disqualification undertaking after they uncovered an alleged VAT fraud during his time in charge of Widnes Vikings rugby league club.
The deal means Mr Vaughan who, according to Companies House, terminated his role as a director of Chester City Football Club 2004 Ltd in April this year, may no longer act as either an active or inactive director, or exercise control over an individual who is a director, of any company.
Ade Daramy of the Insolvency Service said: “If you are subject to this undertaking then you are banned from being in the shadows or someone acting as your proxy.
“It’s a complete ban from being a director of a limited company and any of those roles or duties.”
The investigation began after the Vikings entered into administration in October 2007 with liabilities of more than £1.6million.
According to the Insolvency Service the undertaking, which was signed on Tuesday, contained details of alleged carousel fraud carried out by Mr Vaughan, designed to prop up the finances of the club which was technically insolvent at the time.
Mr Vaughan arranged for the club to purchase clothing from a UK company in three transactions worth a total of £2,877,228 plus VAT of £505,265.
On the same day the clothing was sold to a Spanish company for £3,002,855. The three transactions took place in June 2006.
The transactions appeared to be part of a linked series of purchases between the UK and Europe.
The service says he then attempted to reclaim VAT for the club. However Her Majesty’s Revenue and Customs refused the repayment of the club’s claim.
A statement from the Insolvency Service says Mr Vaughan caused these transactions to take place when he knew the club was insolvent and payment for the goods was not made to the alleged supplier, but was instead made into a third party’s bank account at the First Curacao International Bank, based in the Dutch Antilles.
The bank has been closed down by banking authorities after it was discovered that it provided banking facilities to a significant number of companies involved in carousel fraud.
Mr Vaughan failed to inform the other directors of the club of these transactions and also failed to disclose to other directors a loan of £392,000 made to the club in August 2006.
The disqualification takes effect on November 25. If he controls a company in any way before November 24, 2020, he may be prosecuted.