MORE “dodgy” directors are getting away without being punished, an insolvency expert in West Yorkshire has claimed.

Figures from the Government’s Insolvency Service show that the percentage of reports taken forward – disqualifications – fell by half from 40% in 2033-2004 to 20% in 2009-2010.

Andrew Walker, Yorkshire regional chairman of insolvency industry body R3, said fraudulent activity was known to increase during tough economic times.

Last year, insolvency practitioners submitted 7,030 reports on directors’ behaviour which they believed warranted further investigation. However only 1,387 cases were concluded that year by the Insolvency Service.

Mr Walker said: “This mechanism is in place to protect the general public and other businesses from dishonest directors. Not punishing directors who are blameworthy sends out a dangerous message to others.”

He said the most common reasons for insolvency practitioners reporting directors were failure to pay tax debts (35%), obtaining personal benefits from the company (28%), and appropriating assets to other companies (24%).

Said Mr Walker: “These are serious infringements that damage the reputation and success of UK plc.

“R3 is offering to assist the Insolvency Service in implementing an effective system which ensures that it is not just the easier cases that are pursued. It is important that the more serious offences are punished appropriately.”

Mr Walker said R3 would like to see blameworthy directors fined and wants to work with Government to establish a financial and corporate education programme for disqualified directors.

He said: “This would help prevent the sequential failures from directors which are so damaging to public confidence – as would increasing the percentage of insolvency practitioner reports taken forward by the insolvency service.”

Cases when directors have not been disqualified despite the insolvency practitioner reporting obvious misconduct include a retail company in Yorkshire where there was evidence of misappropriation of funds, wrongful trading, preferential payments to a connected company, failure to co-operate with the insolvency practitioner, non-payment of Crown debts to finance trading and failure to keep proper accounts.

The insolvency practitioner involved said: “I received a three-page letter from the Disqualification Unit explaining why each of the six major failings were not enough on their own to merit a disqualification.

“Apparently, they were unable to add up!”