The 2021 collapse of Arena Television and subsequent fraud allegations could have broad consequences for the banking industry, according to a report in The Times, with Lloyds Banking Group (Lloyds) acknowledging the ongoing claims in its half-yearly results.
Lloyds is continuing to defend two High Court claims over allegations it breached its “Quincecare” duty, which requires a bank to exercise reasonable care and refrain from executing payment instructions if fraudulent activity is suspected, according to report.
OB company Arena Television ceased to trade amid allegations it had borrowed against equipment that either did not exist or had already been used as security elsewhere. The alleged £1.2 billion asset finance fraud was said to be the “largest ever” of its type in the UK.
Liquidators Kroll has alleged Arena’s owner, Richard Yeowart, “misappropriated proceeds of asset-backed lending in excess of £1.2 billion with over 55 different lenders,” including Bank of Scotland and Lloyds.
Further allegations state that Yeowart replaced equipment serial numbers with forged labels, using the falsified records to obtain multiple loans using the same items as security. According to The Times, liquidators also allege Sentinel Broadcasting was presented as a buyer of the equipment by Yeowart and his co-director, Robert Hopkinson, enabling it to raise funds. Sentinel “sold” non-existent equipment to lenders, which leased it back to Arena. Sentinel paid around £1.1 billion to Arena from funds raised from lenders. Insolvency practitioners alleged that just 66 pieces of the 8,196 pieces of equipment listed actually existed.
The UK’s Serious Fraud Office began an investigation in 2022. The whereabouts of Yeowart, who has been declared bankrupt, are unknown. Hopkinson was located in France and also made bankrupt, but his whereabouts are also now unknown.
Administrators for Sentinel claim the bank was on notice because of the pattern of thousands of transactions, saying it should have stopped payments from at least 2012. Sentinel is asking for its account to be reconstituted with £1.1 billion, or alternatively £945 million, bring the sum it paid to Arena from May 2012, stating the bank had “reasonable grounds for believing” the payments were not legitimate.
Arena’s liquidators have alleged that Lloyds and its Bank of Scotland subsidiary processed payments “without authority”, adding there were “a number of facts and matters which would have caused a reasonably skilful and careful banker” to question whether transactions were “truly authorised.”
A spokeswoman for Lloyds said, “We are continuing to robustly defend the claims. We believe the claims wrongly seek to hold Lloyds liable for the financial consequences of a complex alleged fraud perpetrated against more than 50 lenders, including Lloyds.”
A trial is scheduled for October 2028.
