The Employment Tribunal has heard its last day of witness evidence from parties in this rollercoaster ride of a journey through the last days of failed P2P firm Lendy.
Today the tribunal heard:
That consultant Charles Bellringer described one decision as a “an appalling mistake to make and I’m not surprised the FCA were furious“
That the culture at Lendy was said to include “shouting and criticising the staff [which] creates a fairly toxic atmosphere for anyone to work in.“
Mr Brooke told O’Connor: “I wish you hadn’t ever come near Lendy so you hadn’t had to have gone through this massive shit storm“
See the context behind Mr O’Connor’s assertion that he “always wanted to be the towel boy in the ladies gym [but] you had to pretend to be gay to get the gig“
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Reporting by Daniel Cloake.
The remote hearing began with the final part of witness evidence from Charles Bellringer, 67. Mr Bellringer, a chartered accountant and self-employed consultant specialising in financial services became involved with Lendy after reading about the company’s problems in a FT article.
Prompting Employment Judge Emery to say “put that down“, Mr O’Connor had gone to the back of the room he was in and took a certificate from the wall – “[Mr Bellringer] says I wasn’t a qualified accountant… how about this then” Mr O’Connor said holding something up to the camera.
In discussing whether it was important or not that Mr O’Connor had any accountancy qualifications, Mr Bellringer told the tribunal that “As the business had got into crisis mode [an accountant] was needed because we weren’t going to be in a position to raise finance which was Mr O’Connor’s area of expertise, … we’d come to the conclusion that it wasn’t going to be likely we could raise capital as the business wouldn’t pass any due diligence that anyone would require which meant we needed a different type of CFO.”
Mr Bellringer said: “I have spoken about it here before, that Mr O’Connor’s approach to Treating Customers Fairly was quite inappropriate, starting with calling them punters, putting out documents to investors that were clearly misleading.
“He’d said to me before that people are taking the risk here and they need to know this is really risky business, well they do need to know that but it needs to be very well explained in the documents they see and I’m afraid his comments on the 6th November that people like me and the FCA are in the gutter and that I treat you with contempt well I’m afraid you can’t talk to me about treating customers fairly after all the other comments.
“I’m sorry I’m unshakable on that... You cannot have a CFO who makes those comments in a retail financial services business, it’s as simple as that“.
In discussing the ‘Privileged and Confidential’ letter from the FCA that had been sent to the lenders, Mr Bellringer explained that: “frankly when you’ve [sent the letter] you were already in deep difficulties, in my opinion, with the regulator, because anyone who has a compliance function knows you never send a letter out that has gone to the FCA to anyone, even if you ask for permission they won’t give you it.
“That was an appalling mistake to make and I’m not surprised the FCA were furious and I ought to just clarify that that sort of issue would have gone very high up in the FCA and would have caused great concern and you can see not long after that that the FCA starts sending more demanding letters and being very serious, at one stage, only a few days later, they say we don’t think you don’t meet any of the threshold conditions.
“When I saw that I thought this is going to be very very difficult to survive.“
Mr Bellringer was critical of the culture at Lendy: “this is a company, and you will have seen it in the administrators report, which is chaotic and which has what I would call an undesirable management style. Where a lot of shouting, and some abuse is thrown at the staff, I wouldn’t say that mainly comes from Mr O’Connor but shouting and criticising the staff creates a fairly toxic atmosphere for anyone to work in. “
As to the future of Lendy Mr Bellringer opined: “I did for a few days think that maybe it would be possible to crisis manage and bring this ship, as you call it, into safe harbour. But it became clear to me, very early on, that there were too many unknowns so it wasn’t possible. There was no motive at all to get rid of Mr O’Connor but it had become clear that he had damaged his relationships not just outside the business but in the business as well.“
What’s referred to is an incident, said to have taken place at a meeting with the FCA in October 2018, and described in Mr Bellringer’s witness statement:
“That meeting was held in FCA headquarters in Edinburgh … the FCA had been interested to see Lendy’s legal advice in relation to a litigation matter but there were concerns that to share it with the FCA would result in a loss of privilege.
“Paul [Coles, Head of Compliance] described to me that Kieran got up from his seat and crossed the room to where the FCA representatives (including Andrew Kay who was a manager of the department) were sitting and he placed the documents in question in front of them saying words to the effect that ‘he wasn’t supposed to share them but if he were to leave them there and they happened to read them….’.
“Apparently the FCA representative was taken aback at this and told Kieran to return to his side of the table and to take the documents with him. I understand that he was also told that his behaviour was inappropriate.
“I had the impression of that having been a very embarrassing and awkward occurrence and that no doubt the FCA would have had concerns with Kieran’s conduct. In my opinion this was an unacceptable event and that the FCA would have taken a very dim view of it. It was, in my view, the behaviour of someone who was not familiar with dealing with the regulator and I considered it to be unprofessional. I had the impression that Kieran had been confrontational towards the FCA.“
Mr O’Connor denied that this happened.
Liam Brooke
Shortly before midday the tribunal began hearing evidence from former CEO and director Liam Brooke, 40, of Southsea.
In written submissions Mr Brooke explained how he had shared responsibilities with his former business partner:
“I originally set up Lendy in 2012 with my business partner Tim Gordon … I was responsible for the property and sales side of the business, taking responsibility for selling finance to borrowers, whilst Tim handled Lendy’s financial affairs.
“Tim stepped down from his role in the business following health issues. Having historically left the financial side of business matters to Tim, on reflection I recognise that I had a limited understanding of what the financials of Lendy were like at that time.“
Mr Brooke says he:
“…was married on 29 September 2018 and spent the rest of September and beginning of October on honeymoon (although I remained generally contactable during that time).
“I was under pressure though because I knew at that time that Lendy was under some scrutiny from the press and we were very much being closely watched by the FCA. When I came back from my honeymoon, I think it would be fair to describe the business as being in chaos. I don’t mind admitting that I found it a bit overwhelming.
“On 26 October 2018, when it became too intense, I even suggested that Lendy should have a new CEO“
It’s an important part of Mr Brooke’s defence that even though Mr O’Connor was found to have made a series of so-called protective disclosures to him, he would have been dismissed in any event.
One reason was said to have happened on 6th November 2018. Mr Brooke says:
“on the 6 November 2018, the FCA sent an email to me stating that they would require Lendy to sign a Voluntary Requirement . This meant that any expenditure made by Lendy in excess of £5,000 would require approval from the FCA before it could be made. This would have included salary payments in excess of £5,000 and any bonus payments that were planned.
“I arranged to have a meeting with Charles and Kieran to discuss the VREQ. I shared the VREQ with Kieran and his reaction was extreme. In a room with Charles and myself, Kieran was clearly upset and emotional. He was shouting, expressing his unhappiness at the fact that we had received the VREQ. I remember that he said:- “I quit, I can’t do this, if I can’t get paid I’m out.” He also shouted at Charles about disliking him and the FCA. He was very anti-Regulator and I understood he couldn’t stand to be told what to do by government bodies.
“Kieran angrily stormed out of the meeting… I was taken aback at Kieran’s reaction in the meeting and it was clear that Charles was too. I started seriously considering Kieran’s employment at this time and whether, considering his outburst, if I should dismiss him.“
Mr O’Connor denies that this happened.
Mr Brooke says “I did recognise and accept that his continuing presence was detrimental to the business and I had to put Lendy first… I emailed the letter of notice of termination across to Kieran on 9 November 2018. I appreciate it was not the best way to serve him his notice and that was not meant maliciously but because, in hindsight, I had not been brave enough to do it face to face.”
It was the wording of this dismissal letter that was said to have been damaging to Mr O’Connor’s employment prospects going forward as the reasons would have to be disclosed.
Words to that effect were sent via WhatsApp very shortly after the dismissal letter was sent.
Mr Brooke later admits this wasn’t handled very well:
In oral submissions to the Tribunal, Mr Brooke said he felt sorry O’Connor had got involved with Lendy. (It’s unknown if these sentiments extend to the 11,000+ lenders).
“It’s a horrible outcome and I feel for you, as a human being, as a man, I feel for you, this outcome, I wish you hadn’t ever come near Lendy so you hadn’t had to have gone through this massive shit storm. I’m sorry you even came to Lendy, I hated that you’ve been exposed to this. I think you’re a great bloke, but I stand by the decision I made for the reason I made it. Everything I have said is true and accurate.“
All love is not lost between them, with Mr Brooke suggesting at one point “And yes Kieran if you do want a beer after this…” before later adding that Mr O’Connor is “without question one of the most impressive people I’ve ever met in my life“.
Mr Brooke had previously described the culture at “Lendy as being quite “laddish”. There was regular banter between colleagues including myself and Kieran. It was the case that Kieran and myself would message each other on WhatsApp frequently and we would often have a joke with each other, albeit without offending the other“
One such exchange was shown to the Tribunal:
It wasn’t immediately clear what, exactly, was in this parcel:
It is Mr O’Connor’s case that he was fired to prevent disclosure of information to the FCA, information that could show the company was insolvent.
It is said Mr Brooke was instead trying to pursue a sale of his shares in the company, said to be valued in the region of £360m. One potential investor, is said to have flown down in his private jet to meet with Mr Brooke at his home. “If there’s a trade sale of the business it’s happy days for you” remarked Mr O’Connor.
The tribunal continues tomorrow.
Coverage
22/11/2021: Lendy CFO reported ‘serious financial irregularities’ before sacking, Tribunal finds
02/08/2022: Former Lendy CFO’s £6.6m Employment Tribunal claim begins
04/08/2022: Lendy: “It was a dysfunctional company”, tribunal hears on 2nd day
05/08/2022: Lendy was in “regulatory financial cardiac arrest”, tribunal hears on 3rd day
08/08/2022: CEO: Lendy was “in chaos…I found it a bit overwhelming”, tribunal hears on 4th day
09/08/2022: O’Connor “was responsible for knowingly misleading both the FCA and investors” tribunal hears on 5th day
10/08/2022: Tribunal rejects £6.6m claim but finds Kieran O’Connor was “a convenient scapegoat”
Case Details
Employment Tribunal Case No: 1400452/2019
London Central Employment Tribunal
Before Employment Judge Mark Emery
Sitting with Tribunal Members Jennifer Cameron and S Hearn
Claimant:
Mr K O’Connor
Respondent:
(1) Mr Liam John Brooke
(2) Lendy Limited
Mouse in the Court 
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