The Crown Prosecution Service (CPS) released details regarding the fraud case in a statement on Thursday [March 28]. The criminal prosecution service was given the file on the case by the South Wales Police Department following the initial investigation.
Anthony Smith, 72, pleaded guilty to three counts of fraudulent trading activity on Thursday. Previously he had been awarded up to £4.7m ($6.11m) in government grants from the European Union and Welsh government.
The grant funding was associated with work done by Smith’s companies including Dragon Research Ltd, Dragon Feeds Ltd and Dragon Baits Ltd, relating to the development of ragworms for use in aquaculture, according to CPS.
Ragworms are a farmed polychaete that provide a potential source for fatty acids and protein and can be fed to fish or shrimp.
“Not only did Anthony Smith wildly overstate how much money had been spent, but he made up stories about projects which never existed,” said Janet Potter, deputy head of the specialist fraud division at CPS.
Smith reportedly was awarded the grant funding to support the development of a facility to process ragworms for bait and production ponds in which to raise the polychaete, according to CPS information.
Several “false promises” were reportedly made regarding the amount of prosperity that would come to Port Talbot and Pendine in Carmarthenshire in southwestern Wales from the facility and its work with ragworm, according to case information. The project said it would establish about 120 new jobs but only created seven positions.
“He did this all under the guise of being environmentally-friendly and boosting the local economy,” Potter said of Smith. “He promised to make Wales a world leader in the aquaculture industry, but instead he abused the system and robbed the local community of investment.”
In addition to Smith, two others have pleaded guilty in separate but related cases. Colin Mair, 68, pleaded guilty to one count of fraudulent trading in February and Keith Peters, 72, pleaded guilty to two counts of false accounting on Wednesday [March 27].
Mair ran Dragon Research with Smith, according to case information. They were reportedly “assisted” by Peters – now a retired chartered accountant.
At this time, the case has been adjourned and all three are set to receive sentencing on May 10.
Case background and progression
An important part of establishing the case against Smith was to prove that he “knowingly and willfully” misused the allocated governmental grant funding, said CPS.
That process required the use of specialist software to analyze Welsh Government financial records, CPS said. An additional seven million “items of digital material” were checked to make sure there was nothing to “undermine” building the case.
“A forensic accountant was hired to review financial accounts which enabled the CPS to prove that Smith had deliberately structured the business in order to hide the flow of illegitimate funds,” CPS said.
When asked what brought the misuse of the grant funds to police attention initially, the South Wales Police said they would comment further on the case following sentencing.
Permission to develop the ragworm facility was granted in 2006, according to information reported by The Independent. When completed, the site was to have had more than 270 ragworm breeding ponds. However, the Dragon Feeds facility went into liquidation in 2011.