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Businessman Peter Catto |
Fraud squad doctor told businessman at centre of inquiry: You have cancer
Bombshell diagnosis and then shotgun death as investigators probed missing millions
WHEN troubled businessman Peter Catto told inspectors from the Serious Fraud Office (SFO) he was too unwell to stand trial for his alleged part in a multi-million pound financial swindle, it turned out to be the most tragic case of jumping out of the frying pan and into the fire.
Mr Catto, 64, had been struggling with a heart problem and agreed to be assessed by medics hired by prosecutors investigating the disappearance of £34 million from ailing software company Izodia.
But a new report from the SFO claims he had no idea until that medical examination in June 2005 that he had actually developed cancer.
It was a harsher sentence than any judge could have handed him and a diagnosis that the medical experts could hardly have counted on delivering to Mr Catto, whose wife Gillian is the highly regarded art dealer behind the reserved style of the Catto Gallery in Hampstead.
Sixteen months later, he walked into a barn in France – tortured by unbearable pain, according to those closest to him – and killed himself with what police said was either a shotgun or a hunting rifle.
Gendarmes in Cahors, a town not too far from Bordeaux that had become a favoured retreat for the Catto family, promised to investigate but to anybody taking an interest it was as clear a case of suicide as they had come across.
Mr Catto was buried in France soon after his death and the case file was closed.
When the New Journal asked the Foreign Office what record it had of the incident, officials produced a simple database entry that confirmed Mr Catto’s death, some particulars and little more.
But the SFO has not forgotten its brush with Mr Catto. Investigators, clearly delighted at the conviction of one of Mr Catto’s business associates, Dr Gerald Smith, have lifted the lid on their probe into his dealings.
The SFO has triumphantly devoted a whole chapter of its annual report to the scandal that swamped Izodia.
It was a complex inquiry which, when boiled down to its bare bones, amounted to large tranches of money being siphoned out of Izodia and into a separate company set up in Jersey and effectively run by Dr Smith.
Mr Catto and another associate, Jar Vahey, were effectively accused of being stooge directors prepared to cover up the fact that the money was being pocketed by Dr Smith, whose lavish estate in the Channel Islands betrayed Izodia’s ailing fortunes.
As an aside, the SFO notes how Dr Smith was installing giant flatscreen televisions in all his bedrooms when investigators turned up to question him – but what apparently irritated them more was the discovery that at least £1.8 million of cash effectively belonging to Izodia’s shareholders had been spent on a down payment for a personal yacht being secretly built in Australia.
Izodia was once a thriving £2 billion success but after the dot-com bubble burst it was was struggling to survive as share prices plummeted.
Officials at the Reading branch of the Royal Bank of Scotland first noticed suspicious and unexplained money transfers in 2002.
When Izodia’s cashflow was frozen, it was Mr Catto who “told enough lies” to get restrictions released, the SFO report says.
In truth, Dr Smith, a qualified GP who gave up medicine to wheel and deal in the software and property business, was always the SFO’s main target. He was convicted of fraud and began an eight-year jail sentence just months before Mr Catto’s death. The case against Mr Vahey was later dropped.
The SFO report, released last month and presented to Parliament, reveals how it was SFO medics who had to give Mr Catto the bleak news that he had cancer.
“He [Mr Catto] was charged towards the end of March 2005. By the beginning of June the prosecution was aware of the severity of his heart condition, for which he was waiting surgery,” the report said. “In such cases it is routine practice for an SFO doctor to verify the medical facts presented by the defence. What is not usual is for the prosecution doctor to uncover an even more serious diagnosis: Catto had cancer and would never be well enough to stand trial.”
When Mr Catto died in November last year, his family revealed the extent of his battle with ill health but it was perhaps inevitable that details of the SFO’s investigation would resurface.
There were suggestions that Izodia’s shareholders could pursue Mr Catto privately as he had not been exonerated and, for what it was worth, the charges against him had been “left on file”.
SFO case controller Katie Badger said: “Gerald Smith was clearly the mainspring but he could not have done it alone. By far and away the most prominent and active among his helpers were Peter Catto and Jar Vahey. They’d lied to the Royal Bank of Scotland about their status as directors, fraudulently authorised electronic access to Izodia’s cash and then lied to conceal the identity of the facility. They joined Smith in repeatedly giving false assurances [to Izodia staff] about the security of Izodia’s cash.”
On the face of it, Mr Catto had, until the SFO’s investigation at least, been a respectable and largely popular man in Hampstead circles.
After his death, friends talked of a man who had become more and more beleaguered and a director who had been “saddened” by the Izodia case. Some of his most generous supporters say it was just his misfortune to get involved with someone like Dr Smith, who has the dubious reputation of being the only man successfully convicted by the SFO in two separate cases.
Nevertheless, the financial scandal was in sharp contrast to the style with which Gillian Catto has conducted her affairs.
Over 20 years, her gallery in Heath Street has stood the test of time. Famously, crooner Tony Bennett twice snubbed central London galleries to display his work there. Musicians Bill Wyman and Jamie Cullum have been known to visit.
Mrs Catto has never spoken publicly about her husband’s death. There has never been any suggestion that she was part of or had any knowledge of any financial wrongdoing.
Her son Ben said at the time of his stepfather’s death: “It was his physical illness that was the contributing factor. He was physically in a lot of pain. He was undergoing radiotherapy.
“We were not sure of the prognosis. He was quite stoic about it but he was in a lot of pain. Everyone who knew him loved him. The financial affairs had been resolved. That was done and dusted as far as he was concerned. He was a great character with a great sense of humour. He will be sorely missed by his immediate family and by others as well.” |
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