Transworld Payment Solutions - Case Update

The High Court has dismissed long-running claims brought by the liquidator of Transworld Payment Solutions UK Ltd (TWPS) seeking to recover more than £200 million in VAT liabilities. The claims, which related to events which took place between 2003 and 2006, targeted First Curaçao International Bank (FCIB) and its owner John Deuss, alleging they had dishonestly assisted the companies’ directors in breaches of fiduciary duty by providing accounts used to facilitate missing trader intra-community (MTIC) VAT frauds, and that Deuss himself acted dishonestly. Fraudulent trading claims under s.213 Insolvency Act 1986 were also advanced.

Justice Leech held that while the directors of the MTIC companies clearly breached their fiduciary duties by exposing them to VAT liabilities through carousel transactions, the claims against FCIB and Deuss failed because dishonesty could not be established. The Court accepted that the companies “would not have been able to engage in the MTIC fraud without the assistance of banking services (which FCIB provided)”, but emphasised that provision of accounts alone did not amount to actionable assistance unless dishonesty was proved.

Applying the test in Ivey v Genting and Group Seven, the Court considered whether Deuss or FCIB had actual or blind-eye knowledge of the fraud. The claimants argued that Deuss deliberately targeted high-risk sectors and turned a blind eye to obvious fraud indicators. Justice Leech rejected this, noting contemporaneous evidence that Deuss later withdrew FCIB from the telecoms and computer trading sectors for compliance reasons. The Court concluded it was “not prepared to draw any inference of dishonesty” from FCIB’s weak AML controls or Deuss’s use of terms like “closed loops”. Without proof of dishonesty, causation for dishonest assistance could not be established, and the claims were dismissed in their entirety.

Read the decision HERE.

Professionals involved:

• Bankim Thanki KC, Saul Lemer and Paul Fradley (instructed by Quinn Emanuel Urquhart & Sullivan UK LLP) for the second defendant, John Deuss

• Andrew Scott KC and Barnaby Lowe (instructed by Jones Day) for the first defendant, First Curaçao International Bank N.V.

• Christopher Parker KC, Caley Wright and James Woolrich (instructed by Gowling WLG) for the claimants, liquidator Stephen Hunt of Griffins and Transworld Payment Solutions