James Lau (also known as James On-Loon Lau) was the director of GG Blue Sky Ltd, which operated in Chelmsford as a derivatives trading room, and of WFM Management Services Ltd, which provided financial advice to companies and individuals.

Both were placed into liquidation in September 2013, with an estimated deficiency to creditors and shareholders of £7,817,272 in Blue Sky and £26,162 in WFM.

The investigation found that Lau had failed to ensure that either company maintained, preserved and/or delivered up adequate accounting records from early 2012 to the date of the liquidation.

The records were inadequate to explain and account for more than £4m income and expenditure from Blue Sky and £500,000 income and expenditure from WFM over a period of less than two years.

A large proportion of the funds allegedly related to client pension and other investment management but it has not been possible to explain who these monies belonged to or where they went, leaving clients out of pocket.

The records were also inadequate to explain what happened to properties purchased for over £600,000 and payments totalling £41,300 made to an internet gambling site.

Specifically, the Insolvency Service reported it was not possible to ascertain the complete nature of GG Blue Sky’s trading activities, or its tax liabilities, or whether all amounts outstanding have been accounted for to HMRC. 

It was not possible to verify income and expenditure over the period, including what payments totalling £4,502,915 into GG Blue Sky’s bank account related to, nor what the purpose was of payments totalling £4,929,859 made from the bank account.

The only fixed assets realised at the liquidation were fixtures and fittings, but the accounts relating to GG Blue Sky for the year ended 31 December 2011 show freehold land and buildings totalling £674,953. Five properties were transferred out of GG Blue Sky just prior to the liquidation and it has not been possible to verify the reason for these transfers or whether proper or full consideration was received by GG Blue Sky.

There was similar uncertainty about a car purchased for £22,854 from GG Blue Sky’s bank account and a holiday home bought for £42,062, where it has not been possible to ascertain if these are a company asset or if these sums were applied to a director’s loan account.

It has not been possible to verify that shareholdings have been fully paid up and that the debtors of £6,462,802 referred to in the last accounts prepared (year ended 31 December 2011) have been recovered.

It has also not been possible to ascertain the reason for payments totalling £31,500 to an internet gambling site or whether they were for the benefit of GG Blue Sky.

Nor has it been possible to verify Lau’s remuneration from GG Blue Sky, the amount of any outstanding director’s loan, or the causes of the company’s failure.

Lack of adequate accounting records also meant it is not possible to ascertain the complete nature of WFM’s trading activities, tax liabilities , or whether all amounts outstanding have been accounted for to HMRC.

It has not been possible to verify payments totalling £589,434 made into WFM’s bank account together with payments totalling £593,932 from the company’s bank account.

The Insolvency Service has also not been able to ascertain the reason for payments totalling £9,800 to an internet gambling site or whether they were for the benefit of WFM, along with cash withdrawals, cheques and debit card payments of more than £90,000.

It was not possible to verify Lau’s remuneration from WFM, or the amount of any outstanding director’s loan, or verify the causes of its failure.

Rob Clarke, group leader, Insolvent investigations North, said: ‘This failure to maintain, preserve or deliver up records is totally unacceptable, especially where creditors and shareholders are owed substantial amounts, and potential assets were not preserved or disclosed for realisation by the liquidator.’