A fraudster who flew round the world and splashed out on fine art despite owing taxpayers £73 million is to have much of his debt written off after pleading that he is too poor to pay.
The total write-off is likely to be even greater once a court battle over his outstanding assets concludes. Vast legal costs accumulated over many years also appear certain to deplete further any sums eventually recovered on behalf of the taxpayer.
The let-off for Smith was agreed during a commercial court hearing in London over the ownership of tens of millions of pounds of assets obtained in deals conducted by him and others, including the Formula One investor Andy Ruhan.
The Serious Fraud Office is seeking to win the right to some of the money, which includes millions of pounds worth of homes in London and elsewhere, and the remaining proceeds of a series of complex property deals carried out via a web of transactions involving offshore companies and intermediaries.
The court had already heard how Smith, 65, has enjoyed a lavish lifestyle since his conviction in 2006 for stealing £34 million in an IT company fraud.
Documents show Smith has taken a succession of private jet flights, including trips with his former wife Gail Cochrane to the Cote D’Azur, Majorca and Geneva.
A previous hearing was also told how Smith took first or business class flights to Dubai, Hong Kong, Buenos Aires, Vancouver and the Maldives, and stayed in top-of-the-range hotels on at least some of the trips.
The court was also shown email exchanges negotiating his purchase from the Halycon Gallery on New Bond Street of $10.1 million of art including works by Renoir, Rodin and Matisse.
A deal to buy a glass sculpture by the American artist Dale Chihuly, whose work was exhibited in Kew Gardens last year, was also revealed.
But as the commercial court proceedings continued, Kennedy Talbot QC, for the Serious Fraud Office, said that extensive investigations had shown no possibility of Smith gaining enough from the case to clear his £73 million debt.
Mr Talbot said that meant that prosecutors were willing to agree to a certificate of inadequacy which will pave the way for a crown court hearing to write off much of Smith’s debt.
The judge, Mr Justice Foxton, agreed, saying the maximum the SFO could seize from Smith, a former GP, from the assets at stake in the current case was £42 million, even if it was successful in every one of the numerous contested issues still to be determined.
The judge said the only other money that would be available to pay Smith’s confiscation was another £1 million not at stake in the current case and he was satisfied as a result that “Dr Smith’s realisable property is inadequate for the payment of the remaining amount to be recovered in respect of the confiscation order.
“It requires no elaboration that as a matter of mathematics £42 million and just over £42 million come to considerably less than the £73 million outstanding.”
The judge added that his assessment was based on evidence from “large teams of highly qualified lawyers” who “have explored every single possible proprietary claim that might be open”.
Smith was first convicted in 1993 over the theft of £2 million from a pension fund and again in 2006 for plundering £34 million from an IT company. He was jailed for 11 years and ordered to pay a confiscation order of just under £41 million with a deadline to pay of 12 months. Interest charges mean the debt is now more than £73 million.
A Crown Court hearing will be scheduled to determine how much of Smith’s debt will be written off. Smith could still be sent back to prison if he fails to pay the revised sum.