Fine wine investors have lost £100m over four years by entrusting their savings to failed wine companies, a senior accountant has estimated.
Bordeaux: investors lose out as companies fold
Nedim Ailyan, a director at insolvency firm Abbott Fielding, which is handling two high-profile wine investment company bankruptcies, told the BBC that some 50 such companies have failed in the last four years, costing investors up to £100m.
The latest bankruptcies include Beaumont Vintners and Bordeaux UK, both of which Ailyan is liquidating. They have collapsed owing creditors an estimated £1.5m and £10m respectively.
Investors are expected to recoup a fraction of that sum – around 20p in the pound in the case of Bordeaux UK. Their investments are not covered under any financial compensation scheme.
One investor told BBC radio’s Money Box programme that she knew little about wine and a ‘very, very persuasive’ caller from Bordeaux UK induced her to part with £180,000 over two or three years, until she received a short letter from the company announcing that due to ‘some admin problems’ it had gone into liquidation.
Although at present there is no question of illegality in these company failures, the unregulated end of the fine wine investment business is riddled with fraud.
In January last year company director Benedict Moruthoane was jailed for 7½ years for a £1m fraud relating to two wine investment companies, Templar Vintners Ltd and International Wine Commodities Ltd.
The companies took nearly £1m from investors for Bordeaux vintages but neither bought any wine to back the investments.
In July 2011 two company directors received lengthy prison terms for fraudulently selling Bordeaux en primeur.
Paul Craven of Bordeaux Wine Trading Ltd was sentenced to six years and Oseghale Hayble of International Wine Commodities Ltd to five years for selling millions of pounds of 2005 Bordeaux without placing a single order with negociants.
Ailyan told Money Box he had dealt with about eight liquidations of wine investment companies, ‘but I would estimate certainly over the last four years there’s been probably at least 50 that have been dealt with by other insolvency firms.’
These insolvencies would have lost investors ‘tens of millions, potentially even over 100 million,’ he said.
Written by Adam Lechmere