UK Car Lending

Former Norton Bikes boss Stuart Garner illegally used millions in pensions to keep the company afloat

The man who saved Norton Motorcycles only to see it fall into administration amid accusations of dishonesty and poor practice has pleaded guilty to illegally investing millions of pounds from outside investors’ pension funds in the failing business.

Stuart Garner rescued the historic bike brand in 2008, opening a factory in Castle Donington on the Leicestershire/Derbyshire border and developing the 961cc Norton Commando and a new range of Norton motorcycles. As sales increased, it expanded its workforce to around 100 people and initiated plans for a national training academy.

But in 2019 the company was in dire straits, pulling fundraising and facing liquidation petitions from the tax authorities over hundreds of thousands of pounds in unpaid tax.

In early 2020 the administrators were called in and the following summer the pensions ombudsman charged Garner – as trustee of the company-linked pension schemes – with dishonesty, breaking investment laws and failing to ensure that investors were putting their money in the right kind of plans. .

The Norton brand is now under new ownership after being sold to India’s TVS Motor Company in April 2020, which relocated production to Solihull in the West Midlands.

Appearing at Southern Derbyshire Magistrates’ Court today (Monday February 7), Garner admitted to illegally using around £11million from the company’s pension schemes to reinvest in the business.

In addition to being the owner of the company at the time, Garner was also the sole trustee of the pension plans that other people had invested in.

During the brief hearing, the 53-year-old, of Park Lane, Castle Donington, pleaded guilty to three counts of breaching Employer Related Investing (ERI) rules.

The pensions regulator says the maximum penalty for a breach of ERI rules is an unlimited fine and/or a prison term of up to two years.

Handing him an unconditional bond, District Judge Jonathan Taaffe said: “I recognize that this is a complex case and clearly involved a conflict of interest involving substantial amounts.

“This clearly crosses the detention threshold and I am sending the case to Derby Crown Court.”

The court explained how the breaches related to three defined contribution plans: Dominator 2012, Commando 2012 and Donington MC which had a total of 227 members.

The investments were made in exchange for preference shares between 2012 and 2013.

Nicola Parish, executive director of frontline regulation at The Pensions Regulator, said: “As a trustee, Stuart Garner failed to comply with restrictions on investments that are intended to protect pension plan funds.

“Directors have a critical role in protecting member benefits and we will take action where that responsibility is abused.

“Trustees need to be clear when a pension plan can invest in its sponsoring employer.”

Garner will be sentenced on February 28.