UK damaged by ‘dodgy directors’ says trade body

British businesses are being put at risk because the Government is failing to investigate "dodgy" directors, the insolvency trade body R3 warned today.

The group informed the Insolvency Service of 7,030 cases of directors' behaviour it believed warranted further investigation in the 2009-10 financial year, but only 1,387 cases were examined.

That means the rate of director disqualifications by the Insolvency Service halved from 40% in 2004 to 20% in 2010, despite fraudulent activity rocketing over the past year.

R3's president, Steven Law, 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.

"These are serious infringements that damage the reputation and success of UK plc. It is important that the more serious offences are punished appropriately."

The most common reasons for insolvency practitioners to report "dodgy" directors are failure to pay tax debts, taking personal benefits from the company and appropriating assets to other companies.