Polly Peck International (PPI) was a small British textile company which expanded rapidly in the 1980s and became a constituent of the FTSE 100 Index before collapsing in 1991 with debts of £1.3 billion, eventually leading to the flight of its CEO, Asil Nadir, to Northern Cyprus in 1993.
[2] Polly Peck began in 1940 as a small fashion house, founded by the husband-and-wife team of Raymond and Sybil Zelker.
These included Uni-Pac Packaging Industries Ltd, Voyager Kibris Ltd, and Sunzest Trading Ltd, three companies incorporated in the Turkish Republic of Northern Cyprus.
Uni-Pac was a corrugated box manufacturer and packaging company formed to take advantage of surplus citrus fruit being grown in Cyprus, which was forecast to produce a minimum of £2.1 million profit.
[4] Vestel manufactured colour televisions, Betamax video recorders, air conditioning units, audio equipment, microwave ovens and washing machines.
PPI's success in the electronics business was substantially enhanced in early 1986 when Akai of Japan decided to join Ferguson, Salora, and GoldStar as licensors to Vestel.
By 1989 Polly Peck had become an international player by acquiring a 51% majority stake in Sansui (a Japanese electronics company on hard times).
Also in 1989, Polly Peck bought the former Del Monte canned fruit division for $875 million from RJR Nabisco, which had previously acquired it.
[4] An independent investigation by the accountants' Joint Disciplinary Tribunal found that during 1988 Polly Peck made 24 separate payments to its subsidiaries in Turkey and northern Cyprus, totaling £58 million.
The report said that "Mr Nadir was able to initiate transfers of funds out of [Polly Peck's] London bank accounts without question or challenge.
In 1990, Polly Peck's board became so worried about the money transferred into Northern Cyprus that it confronted Mr Nadir and asked him to return it.
On top of these massive money transfers and "unwise transactions", the regulators found that some of Polly Peck's assets had been secretly registered in Mr Nadir's name.
In addition the Didima Hotel development in Northern Cyprus, valued at £15.5 milliom, and £6.7 million worth of other buildings, had no registered owner.
[7] In 1991, Polly Peck Group transferred all of its Vestel Electronics shares to one of its subsidiaries, Collar Holding BV, which was based in the Netherlands.
[8] Nadir left the UK just after his £3.5 million bail had lapsed, while the detectives who were watching him were off duty to save overtime pay on a bank holiday.
[9] In 1996, Mr Nadir's aide Elizabeth Forsyth was convicted of laundering £400,000 stolen from Polly Peck and sentenced to five years.
[11] In July 2010 it was reported that Asil Nadir intended to seek bail to return to the United Kingdom to face the 66 counts of theft.