A High Court judge yesterday brought the curtain down on a controversial theatre investment company backed by former BBC boss Lord Grade and the Duchess of York.
A bitter court dispute – which saw the Conservative peer forced to defend his own company after his lawyers quit – laid bare allegations that Grade and other directors had ‘seriously mismanaged’ shareholders’ money.
The High Court in London heard that the company, Gate Ventures, was in ‘complete disarray’ and had lost £19million out of £24million invested.
Zheng Yongxiong – known as Quentin – and the Duchess of York, pictured together in Windsor in 2017 applied for administrators to be brought in and claims an investigation into loans and payments given out by the company is necessary
This had come mostly come from 3,500 Chinese investors who had been wowed by the presence of the duchess and Grade at glitzy roadshows in the Far East, where they ‘played to packed audiences’.
Quentin Zheng, a Chinese businessman, launched an application to place the company into administration on the basis that he was unable to recoup a £2.5million loan.
Lord Grade said Gate Ventures had fallen victim to a ‘serious fraud’ committed by Mr Zheng, who had promised investment of £7.5million following the Far East roadshows, which has never materialised.
The former ITV executive chairman then dramatically accused the tycoon of ‘organising and leading pyramid selling activities’ in China.
However, after three days of evidence, Judge Sebastian Prentis took control of Gate’s assets out of the directors’ hands and placed the company into administration.
Question marks have been raised about the conduct of Gate Ventures’ directors since its formation in 2015. It was founded by former Elvis Presley songwriter Geoff Morrow and its former chairman is Hong Kong tycoon Dr Johnny Hon.
It has invested in West End musicals such as Sunset Boulevard and 42nd Street but also a string of obscure films in the Far East as well as a tea firm founded by Sarah Ferguson. The duchess was a director before standing down in December. Dr Hon made headlines last year when it emerged he had bankrolled at least three members of the Royal Family to work for his companies ‘because of what they can do for individual projects’.
Gate Ventures loaned Sarah Ferguson £287,577 and loaned £232,003 to her tea, dinnerware and jewellery company, Ginger & Moss, according to court documents seen by The Guardian
Granting the administration application yesterday, Judge Prentis noted the ‘simply extraordinary’ sum of around £4.7million Dr Hon invoiced the company during his tenure for expenses including meetings with various celebrities. He was succeeded as chairman by Lord Grade in December 2017.
Judge Prentis said: ‘Dr Hon has been billing himself as a man of influence through the use of company money. That is not the purpose for which these small Chinese investors paid their money in to the company.’
He cited a £6,500 bill for lunch with fashion designer Tommy Hilfiger, thousands for lunch with Prince Albert of Monaco, £12,293 for a meeting with Manchester United’s Paul Pogba and a £4,000 piano lesson.
In a last-ditch bid to save the firm, Lord Grade said he was hoping for a £7.5million investment from a ‘substantially high net-worth individual’. But rejecting his pleas, Judge Prentis said the ‘administration route seems the most preferable one’. Gate Ventures could now be forced to sell all of its remaining assets.
Earlier, the High Court had heard unexplained loans of more than £500,000 to the Duchess of York from an investment company are a ‘matter for investigation’.
Gate Ventures loaned Sarah Ferguson £287,577 and loaned £232,003 to her tea, dinnerware and jewellery company, Ginger & Moss, according to court documents seen by The Guardian.
Gate Ventures, which is also alleged to have paid £4.7million in expenses to former chairman Dr Johnny Hon, who wanted the company to go into voluntary liquidation.
Conservative peer Lord Grade is the current chairman of the company
The company is now chaired by former BBC and ITV boss Lord Grade. Dr Hon resigned in December 2017.
Ferguson is a former director of Gate Ventures but resigned in December 2019.
Mr Youngxiong’s counsel, Matthew Parfitt, reportedly told Judge Prentis: ‘There were various transactions with the Duchess of York and entities related to her while she was a director of the company.
Grade is pictured here to the left of Zheng following an investor roadshow in the Far East
Mr Parfitt also recommended investigation into Dr Hon (pictured with Sarah Ferguson) invoicing £4,738,174 and being sold investments of £3,834,250
These included ‘a direct and unexplained loan of at least £287,577 to her personally’.
‘It is certainly a matter for investigation.’
Judge Prentis was also told there was ‘strong evidence that directors sought to exploit the company for their own personal interests’.
Mr Parfitt branded Gate Ventures ‘a company that loses money have over fist’ after it was revealed that although investors had handed over £24.5million, it had less than £5million left.
He also recommended investigation into Dr Hon invoicing £4,738,174 and being sold investments of £3,834,250.
On the list of expenses were private jet trips, lunches with the rich and famous and shopping sprees.
Mr Parfitt said: ‘£4.7million of shareholders’ money allowed Dr Hon to indulge in jet-setting, high fashion and political meetings’.
The company’s lawyers resigned last week as the company was not able to pay them, the court heard.
And as a result Lord Grade has been forced to represent the company in high court.
Gate Ventures reportedly has a claim against Mr Youngxiong over £7.9million that he owes the company.
He allegedly raised the money on behalf of the company but never paid it.
The judge was told that there were concerns that administrators chosen by Mr Youngxiong would not be independent.
The judge has heard Gate Ventures had an ‘e-commerce venture’ with Ginger & Moss.
Yesterday Judge Prentis ruled the company should enter administration.