Lifeboat's former chairman David Kitchen is demanding an explanation of what happened to the £3m funding facility which the IFA and nonregulated network rec-eived in February.
Kitchen is asking Life-boat's directors to explain what went wrong since a facility to draw down £3m in funding was secured in February when the board was promising sales of £30m and a profit of £1m by March 2005.
In a letter to Money Marketing, Kitchen says £2m of the funding provided by Bank of Scotland was spent by Lifeboat in the four months since March. He asks where the money went and how much of it was spent on salaries and bonuses for directors.
Kitchen says he wants to know why Lifeboat failed to achieve its targets, why it failed to ens-ure the survival of the firm and why there was a zero return to shareholders in the four months since “this very upbeat public promise”.
Former Lifeboat chief executive Bill Wynn says after FSA concerns over its capital adequacy – the £2m spent was debt, not equity – Bank of Scotland withdrew its funding and Lifeboat went into administration.
Kitchen says: “I, like other shareholders I am sure, am looking forward to a full explanation.”
Wynn says no directors have received equity stakes in Destini and refused to comment on spending on salaries and bonuses for Lifeboat directors.