From the gleaming blue glass windows in the flashy Heathrow
Boulevard office complex, Dr Stephen Nathan and John Rees could survey a brave
new world ripe for exploitation.
They had the shiny new BMWs in the car park and a generous bank overdraft at
their disposal. With investors’ cash about to flow in, they could pay themselves
salaries of £200,000 a year.
Like thousands of other modern entrepreneurs, they hoped to turn a quick profit
from trading in wind power and other forms of green energy.
Labour’s push to generate 10% of Britain’s energy from green sources by the end
of the decade has created a boom time likened by one expert last week to the
South Sea Bubble.
Nathan and Rees hoped that their new company, Pure Energy & Power, would take
advantage of generous government subsidies, European grants and an eagerness by
the City and banks to invest without doing proper due diligence.
For they had a dirty secret. Nathan was not the respectable lawyer with a PhD in
economics that he made himself out to be. Fellow inmates at Wandsworth prison
had known him as Ronnie, a serial fraudster who could not resist a con. It was
in prison that he met Rees, a disgraced private detective, who was serving a
seven-year sentence for attempting to plant drugs on a client’s wife.
Given their dubious backgrounds, they needed someone who could give them
credibility and open the door to the corridors of power. Enter Professor Ian
Fells.
The emeritus professor at Newcastle University is one of Britain’s foremost
experts on green energy. He is from an elite band of academics — alongside Susan
Greenfield and Colin Blakemore — who have won the Royal Society’s Michael
Faraday prize for scientific work.
His expertise is much sought after. He was the science adviser to the World
Energy Council for 11 years until 1998 and is also an energy adviser to the
European Union.
He is particularly close to senior British government officials after acting as
an adviser for cabinet and select committees. This week he will be in London to
advise officials engaged in rewriting the energy white paper.
Despite his many commitments, he is still available for hire. He runs Fells
Associates which advises the nuclear lobby and a series of high profile
corporations. One of its services is ‘high quality and informed intelligence’
for clients.
Fells was first approached by Nathan in autumn last year. At the time Pure
Energy was seeking £250,000 in grants from government. According to board
minutes, the company was seeking to lobby ‘MPs, MEPs and other influential
people such as Professor Fells’.
It was very persuasive. Within weeks Fells had agreed to become head of Pure
Energy’s advisory board. His name appeared on its prospectus for investors
alongside the words “government adviser’.
It was an unwise venture for the professor. In 1993 Nathan was convicted of
stealing £135,000 from clients and was jailed for one year — an offence the Law
Society described as the “tip of a large iceberg” when it struck him off.
Three further prison sentences for dishonesty and deception were to follow,
including a £1.5m fraud on Coutts bank. The serial fraudster was disqualified
from acting as a director but this did not seem to matter.
Leaving prison three years ago he adopted his middle name Stephen and began
using a series of false birth dates as his own. He used this identity to set
himself up as a director of his new company, Pure Energy. This was a criminal
offence.
His fellow director Rees was not the only other company man with a criminal
record.
One of Pure Energy’s two accountants, Barry Beardall, had also served six years
in jail for Vat fraud after being caught attempting to smuggle £7m of alcohol
into Britain.
None of these criminal records was disclosed to the banks or potential investors
as Pure Energy sought cash. This included a £50,000 overdraft from Barclays
Bank, acquired using Nathan’s false identity.
Nathan continued to woo investors, claiming that the company had interests in a
potential wind farm site at Nigg in the Moray Firth. But the plans to create 35
wind turbines were just a pipe dream, according to a former senior employee.
Cheques to Fells bounced and several directors left as the creditors started
circling. Nathan and Rees fled the company’s Heathrow offices without paying
their rent. They set up another company, Pure Electricity, using a box number
address and invited Fells to become a director. He accepted.
The Sunday Times was alerted to the relationship between the government adviser
and the fraudsters after being approached by creditors. Among the documents
shown to the newspaper was a driving licence in Nathan’s false identity which
gave his address as Latchmere House. It is an open prison in Ham, Surrey.
Last week an undercover reporter from The Sunday Times approached Fells to see
whether he would vouch for the company to investors. Fells was quick to point
out how lucrative the business could be as there were large grants available for
wind farms: “It will be £1 billion a year by 2010 . . . In fact, in
five years you will probably see investments being paid off and a handsome
profit being made.”
He volunteered that his role for the Pure companies was to “get involved when
they need some technical advice or when they need a minister talking to or
somebody like that, which I can do without any difficulty”.
He boasted of his contacts with ministers including Alan Johnson, the trade and
industry minister, and Malcolm Wicks, the energy minister. It was this that
prompted our reporter to inquire whether he would arrange meetings on our
behalf.
Fells has now opened himself up to allegations of conflict of interest by
representing paid clients and, at the same time, acting as a government adviser
who should give untainted advice.
Nathan and Rees this weekend face a police inquiry.
On Friday Fells issued a statement through his lawyers saying that he was
“appalled” to learn through The Sunday Times about his fellow directors’
criminal past and that he is resigning from the company immediately.
Rees said that the company had been operating legitimately and nobody had been
defrauded. Nathan initially denied being the same man as his fraudster
alter-ego. Later the company’s solicitor admitted that they were the same
person.
