‘They know of The Indian being represented by London Lawyers…’
Did customs officers, receivers and toxic Irish bank collude in "racist" scheme to steal world’s most expensive house?
by Callum Watkinson
Property developer alleges kickbacks, corruption and institutional racism in £1.35 BILLION claim against HMRC
Defending hidden “nothing in writing” scheme is likely to have cost millions of pounds of public money, says claimant
It was a major media event. On the 19th July 2001 the most valuable house in the world was raided by British cops from three different forces.
Updown Court - in the well-heeled Surrey village of Windlesham - had just been rebuilt after it was gutted by fire during the great storm of 1987.
No expense had been spared. Twenty four bedrooms, a marble driveway (heated in case of snow) five swimming pools (one with a children's flume), a cinema, a bowling alley, a squash court, stables and a panic room, there was no doubt who the developers were aiming at. This was a 'trophy asset' for the the super rich. Watch a video about the house here.
News executives wouldn’t fancy tagging along on a police adventure like this nowadays. Not since a similarly orchestrated media circus - a search of the home of Sir Cliff Richard in 2014 - turned into a horror show and left the BBC on the hook for £2 million.
But back in 2001 TV bosses still thought this kind of thing was the answer to their falling ratings.
A news chopper buzzed overhead as officers from the National Crime Squad, Her Majesty’s Customs and Excise and Surrey Police descended on Windlesham.
They had a court order to restrain the assets of Updown Court’s owner Baljit Bhandal as part of an investigation into money laundering and excise fraud. As is standard practise, receivers were appointed by the High Court to administer any seized assets pending a prosecution.
Tony Pearce - the project’s manager - was arrested and charged but Bhandal was in the United States. No attempt was ever made to extradite him. He was never arrested, charged or convicted in connection with money laundering - in fact he was never even questioned. The case against Pearce was withdrawn in 2003 before it got to trial and a separate restraint order over his assets was discharged.
But that day in 2001 was the last day Bhandal had access to the house he had built. It was taken from him and disposed of in a fire sale that was part of a scheme, he says, to line the pockets of HMCE and others.
At the time he owed £14.2 million on Updown Court to the Irish Nationwide Building Society (INBS), who also appointed receivers.
Various estimates have been made as to the value of the house in the summer of 2001, ranging from £40 million to £75 million, but it was sold in October 2002 for £14.2 million - just enough to settle the mortgage.
The buyer was Updown Court Limited - founded two months earlier, apparently for the purpose of buying the house.
In December HMRC - the successor organisation to HMCE - will face a claim from Bhandal in London’s High Court in relation to these events for a jaw dropping £1.35 BILLION in damages, lost earnings and legal costs.
Often referred to as the world’s most expensive house it seems Updown Court could be set to break another record.
A tale of two receivers
A thirty-four page witness statement with supporting exhibits submitted to the court by Bhandal sets out explosive evidence that the sale of the house at a knock-down rate was part of a scheme to make a vast profit; that Her Majesty’s Customs and Excise was an active participant in this scheme; and that organisation was in line to receive a multimillion pound kickback from the eventual proceeds.
Over almost two and a half decades Bhandal has amassed thousands of pieces of documentary evidence in support of his claim.
They show frequent communications between the court appointed receivers, Kroll Buchler Philips, the bank’s appointed receiver, Vivian Bairstow of Begbies Traynor and a number of other people who stood to benefit from the bargain-basement asset disposal.
Kroll was appointed by HMCE and the court in July 2001. Bairstow was appointed by INBS in September 2001. Kroll was not discharged until June 2002.
For almost nine months, therefore, over the period the house was being sold there were two sets of receivers. Bhandal’s case is that Kroll’s real brief was to secure a share of the eventual profits for HMCE.
“An indication… that HM Customs and Excise are prepared to go along with the scheme”
In December 2001 Nigel Heath-Sinclair of Kroll received a letter from a William Elliott, who seems to have been engaged as a middle man to negotiate between Kroll/HMCE and other parties with an interest in Updown Court.
Elliott refers to “the proposition we outlined to you when we met.”
He goes on: “Each party has to feel that they will get something out of this. We therefore have two alternatives for HM Customs & Excise to consider.
“First that if the property is sold for in excess of £40 million plus commission paid to the agents on sale, then the next £2 million should go to HM Customs & Excise.
“Alternatively, they can receive not £3.5 million after base cost but £4.75 million i (sic) total, above base cost, as a "first" payment after base but have no further claim.”
“What I am looking for at this stage,” Elliott concludes his letter to Kroll, “is an indication that HM Customs and Excise are prepared to go along with the scheme…”
“Nothing in writing… Priority is on restraint of assets”
Bhandal offers the court forty four separate pieces of evidence in support of his assertion that Kroll was negotiating a corrupt share of a corrupt property seizure on behalf of HMCE.
Many of these are records of phone conversations and meetings between the receivers, their solicitors and other parties openly discussing the involvement of HMCE, or letters sent and received by them.
In one of these documents a desire for secrecy appears to be discussed, proving, according to Bhandal, that the participants in the plan knew they were engaged in wrongdoing.
In September 2001, whilst awaiting trial for money laundering, Tony Pearce - and his solicitor - met with receiver Vivian Bairstow’s solicitor Tom Withyman.
The note of the meeting records 23 points of discussion. Number 2 is “nothing in writing.”
During another of these conversations Bairstow and Gary McCullom - Head of UK Operations at INBS - discuss “increasing the kicker.”
“Kroll was actually involved in negotiating a cut for HMCE of £5m,” Bhandal says.
“The other parties involved in the scheme wanted confirmation via Kroll that HMCE sanctioned it.
“This now makes sense of notes of a meeting dated 6th April 2001 disclosed by HMRC which begins with the words: ‘Priority is for restraint of assets rather than conviction’.
“It also explains why they never tried to extradite me from the States. They weren’t after me. They were after the house.”
That receivers appointed by a court should be discussing what appear to be kickbacks to a government agency (and making notes to that effect) is remarkable.
Even more remarkable is the fact that negotiations were also underway about a “bonus” for Tony Pearce - the Updown Court project manager who was arrested on the day of the raid and charged with money laundering.
On the very day, in fact, that crown prosecutor Andrew Mitchell QC (as was then) was outlining the case against Pearce at Leicester Crown Court a letter was sent by the defendant’s solicitor James Devane to Vivian Bairstow’s solicitor seeking clarification on the size of Mr Pearce’s “bonus.”
He asked: “Are you saying that if Mr Pearce received a bonus in total of £6.25 million that would be inclusive of VAT?”
Why is the man accused of money laundering through a house instructing a solicitor to negotiate a bonus in connection with the sale of that house? Just one of Bhandal’s many questions.
“On the day Leicester Crown Court is being told he has laundered money his solicitor is negotiating whether he would pay VAT on his share of the money from the sale of the asset he had allegedly laundered money into,” Bhandal says.
“You really can’t make this stuff up. It was a sham prosecution. He’d never have gone along with the scheme if there was any chance he was going to go down.”
But Bhandal also insists HMCE should never have been in possession of his house in the first place, for the simple reason they went in without either a warrant to search it or a warrant for his arrest.
Bhandal says the absence of a warrant and lack of an ongoing criminal investigation effectively renders the actions of HMCE on 19th July 2001 illegal.
The Evening Standard said at the time: “A squad of officers, who arrived in a fleet of vehicles, rushed into Updown Court, in Windlesham Surrey this morning with a warrant to search the neoclassical style house.
“A spokesman for customs and excise said the warrant had been executed with assistance of officers from the National Crime Squad”.
So it seems journalists were told at the time that there was a warrant. Bhandal’s assertion there wasn’t was put to retired customs officer and raid mastermind Stephen Broad in June of this year and has not since been countered by him or HMRC.
Bhandal says that the absence of warrants and of any serious attempts to prosecute him for money laundering are proof that was never HMCE’s intention.
“I was never questioned - let alone convicted - and so HMCE should not have had a chance to get any of my property, which should have remained mine,” he says.
“My safes were all opened without my permission. I believe that section 9(1)(b) of the Theft Act 1968 may be engaged.”
His claim includes evidence that there is no record of a warrant on the Police National Computer (PNC).
“That will do nicely thank you”
Bhandal - a British born Sikh from East London - believes that institutional racism and his criminal record explain the way he has been treated. Around the time receivers were selling Updown Court he was referred to as ‘The Indian’ during a call to INBS.
A note of a call on August 8 2002 records: they know of The Indian being rep’d (represented) by London lawyers, though it is not clear from the note who said this.
“The lack of a search warrant shows that I am the victim of a crime by HMRC; a crime which I now believe was born of racism,” Bhandal says.
“I was born and raised in London but I was secretly referred to as ‘The Indian.’ It looks very much like they took the view that my property rights did not really exist because of that.”
An email written by Broad to a number of colleagues a few weeks after the raid repeats the claim there was a search warrant and makes reference to "interesting Indian style jewellery”, watches and a tie pin that were removed from Bhandal’s home.
"That will do nicely thank you," Broad’s email - described as “gloating” by Bhandal - concludes.
In that same message Broad also said a warrant for Bhandal’s arrest had been issued and sent to the United States via Interpol. Not true, says Bhandal.
"I wasn't hiding. My address in Los Angeles was known.
“If there was a warrant circulating on Interpol the FBI would have arrested me. They never did. There was never an arrest warrant and there was never a search warrant."
“30K seized… I claim it!”
Among the documents before the court is another hand-written note recording a phone conversation between one of the receivers and Broad.
“£30K seized ex TP home safe - I claim it!” the note says. (TP was the project manager, Tony Pearce, who was at this point awaiting trial for money laundering.)
This sounds very much like someone laying claim to thirty thousand pounds of seized cash.
“I don’t know what happened to that thirty thousand pounds,” says Bhandal.
After he returned to the UK in 2005 he WAS arrested - not for money laundering but an unrelated allegation that he was planning to kidnap a former business associate; a charge he has always denied. He was remanded then jailed following a trial in January 2006.
A refusal to admit guilt makes prison time harder but throughout almost five years in custody - and to this day - Bhandal has maintained that this was a fit up; a warning from the police not to pursue his rights.
He says he was even visited in prison and offered early release if he would relinquish his claim to the return of his property.
“In the summer of 2007 agents of the state visited me in HMP Belmarsh and offered to let me out of prison if I dropped my civil claim,” he says.
“The state must have understood that any claim by me pursued through the court might well eventually uncover the truth.”
Hunt & Gather is now investigating the possibility that one of the National Crime Squad officers involved in the prosecution of Bhandal in 2006 was also involved in the raid on Updown Court in 2001.
“Whilst I accept that I have a criminal record for various matters when I was a young man, I did not cheat the revenue and I did not conspire to kidnap anyone,” Bhandal says.
“I was framed for those crimes to hide the wrongdoing of HMCE, the National Crime Squad and Surrey Police.
“Those agencies all of course knew that my previous criminal record would make it hard for me to defend myself - as proved to be the case.”
Soon after these events INBS was engulfed in a toxic loans crisis and bailed out by the Irish government to the tune of €5.4 billion.
Gary McCollum - their UK Operations Head whose name appears again and again in Bhandal’s supporting exhibits - was fined €200,000 in 2021 for breaches of financial services law.
And this is not the first time this question - of whether the bank whose UK operation McCollum was running acted illegally in selling Updown Court for a fraction of its value - has been before the London courts.
At a hearing in 2013 to decide an earlier claim lodged by Bhandal in 2007 a judge was told that INBS and its receivers had sold his house at a “substantial undervalue” and this allegation was not challenged. Bhandal was awarded £113 million in compensation but has been unable to enforce that order because of the demise of INBS.
“Tell him to crawl under a rock…”
Bhandal says the preferred outcome for HMRC would have been for him to remain in the United States, recalling a conversation between his then solicitor Sheldon Lehman and Stephen Broad in 2002.
“Mr Lehman told me that he had a conversation with Mr Broad at the meeting on 21 February about me coming back to the UK to fight the allegation,” Bhandal says.
“Mr Lehman told me that Mr Broad said: “tell him to crawl under a rock and never to come back and we will not pursue him”
“I realise now that HMCE did not want me to come back and they probably assumed I wouldn’t… but crawling under rocks isn’t my style. I did time I didn’t deserve, and I want my money back.”
A spokesman for HMRC said: “We do not comment on ongoing legal proceedings.”
Kroll Buchler Philips and Vivian Bairstow have been contacted for comment.
A summary judgement hearing will take place at London’s High Court on 11 December 2024. Hunt & Gather will be in attendance.
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