Jim Aitken: Scots rugby legend amongst four arrested on alleged fraud

He bought what became one of the UK’s leading suppliers of grain and cereals to the whisky and distilling industries, after captaining the Scottish Grand Slam side that won the 1984 Five Nations Championship.

The collapse was seen by some as one of the worst financial disasters to hit Scottish agriculture in the modern era and administrators anticipated a total deficit of around £80m.

The arrests came against a background of a legal row over 'missing grain' as major companies laid claim two years ago to stock estimated initially to be worth £30m but is since said to have doubled.

That year, the global drinks maker Diageo alone had a claim for £13.3m worth of malting barley, which is used in brewing, amounting to 65,000 tonnes.

Police Scotland have not confirmed that the arrests are connected to that dispute.

The Herald understands that all four arrests made by Police Scotland involved members of the company board before the firm fell into insolvency.

They include Mr Aitken's 48-year-old director son Neil, 49-year-old quality assurance manager Colin Wright and 76-year-old company secretary Margaret Anderson.

The individuals are yet been charged with any offences and a report is to be submitted to the Procurator Fiscal.

Before taking ownership of one of Scotland's largest grain merchants Jim Aitken had notched up 24 international caps and scored one try, playing at loose head prop, between 1977 and 1984.

The firm, which operated five grain stores across East Scotland and the Borders area, had turnover of around £100m and employed 40 staff.

Chad Griffin and Thomas MacLennan of FRP Advisory Trading Limited were appointed administrators two years ago.

Mr Aitken made original contact with FRP about the financial state of the company in May 4, 2021 and after consultation with Macquarie Bank, notices of intention to appoint administrators were lodged.

Farmers made up more than one-third of the 166 unsecured creditors which were owed more than £6m.

The latest administrator's report suggests that unsecured creditors are only likely to get a maximum of £600,000 back.

Adminstrators said that at the time that business had been suffering from weaker trading in recent months following a poor harvest in 2020 and a fall in demand stemming from the Covid pandemic.

Multiple companies including Diageo and Bairds Malt Limited laid claim to 88,000 tonnes of grain - including wheat, malting barley, feed barley, oil seed rape and oats.

AIS held large quantities of grain at the time of administration, including that of customers who had bought in advance but left it in storage.

But according to an administrators' analysis in 2021 there are were "significant stock shortfalls - with claims far outweighing the amount grain being kept.

Their analysis said there had been a major discrepancy between grain stocks in company books and the reality of what was in store.

Jim Aitken Source:YouTube

Administrators said that after a stock count estimated levels were 30% lower than originally calculated.

It was feared that major financial losses would consequently fall on cereal growers in the south of Scotland and the north of England.

A progress analysis from the administrators published last summer said that the overall stock deficit - the difference between the amount of stock that should have been stored by the company against the actual amount at the date of the financial collapse had an approximate value of £57.736m.

The administrators invited those that were owed money to provide information on any concerns they have regarding the way the company's business was conducted.

They said at the time that "given the scale of the losses and the stock shortfall claims, we are consulting with key creditors and reserve all rights to bring recovery actions where viewed as being in the interests of the company and its creditors."

A civil court action started two years ago, which was to decide who owns what, and their were concerns that in the meantime the likes of the malted barley that was held would start to degrade.

The complexity and size of claims in relation to the amount of grain in store prompted the administrators to apply to the courts for permission to sell the grain. It also pursued court directives over the competing stock claims.

Among the claims were those from suppliers alleging they retained ownership of grain stock.

The administrators' initial 2021 data showed that the collapsed company held 50,000 tonnes of malting barley worth around £10.3m, which was 60% lower than the 80,000 tonnes of claims received, valued at around £16.5m.

It also held around 30,000 tonnes of wheat, worth around £6m - but that was 90% lower than the 57,000 tonnes of claims put in, valued at around £11.4m.

At that time, the stock calculation showed 3000 tonnes of feed barley, worth over £500,000, but that was 40% lower than the 4200 tonnes of claims submitted worth around £700,000.

Alexander Inglis properties had been put up for sale.  It's grain drying, storage and  warehousing facilities in East Lothian, the Scottish Borders, Northumberland and Perthshire were available for over £16m. Source: Savills.

And there was 3000 tonnes of oil seed rape, worth £1.5m - some 30% down on the 3900 tonnes of claims received valued at around £1.95m.

Farmers were unsecured creditors and only in line for a payout after government agencies and secured creditors such as Macquarie Bank, the main lender. The bank as a secured creditor has a hold over the assets and would rank first in the queue when payments are made to those owed money.

At the start of the administration among the farmer creditors, there were 23 businesses owed more than £50,000, and their claims alone totalled £2.924m. Others are owed more than £100,000 and some more than £200,000.

In June, 2021 the firm’s complex at Ormiston, East Lothian including ten grain storage sheds was put up for sale at offers over £7m. Other sites in the Scottish Borders, Perthshire and Northumberland were on the market for nearly £9m.

But in the following August the National Farmers Union in Scotland warned about delays to the sale of grain storage sites owned by AIS with some deals stalling at a time when a spring barley harvest was underway.

In the September, a Northumberland farming co-operative North East Grains bought the Swarland Grain Store from the administrators for £1.78m.

A Police Scotland spokesman said: "Three men aged 75, 48 and 49 years, and a 76-year-old woman have been arrested in connection with a fraud following a police enquiry relating to a business registered in the Ormiston area of East Lothian. A report will be submitted to the Procurator Fiscal.”

The administrators of the company FRP said they could not comment.