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CASE STUDIES IN CORPORATE
POLLY PECK INTERNATIONAL
SUBMITTED TO:SIR ISHFAQ
SUBMITTED BY:RIFAT HUMAYUN
RIPHAH INTERNATIONAL UNIVERSITY FAISALABAD CAMPUS
INTRODUCTION OF POLLY PECK
Founded in 1940
Headquarters in London , UK
CEO Asil Nadir
Bankrupt & broken up in 1990
ASIL NADIR’S EARLY LIFE
Born on 1st May 1941 in Lefka, Cyprus.
Turkish Cypriot former businessman
Studied economics at Istanbul University
Returned to Cyprus before graduation to set up
In 1970’s he purchased a small British textile
Which he turned into a portfolio company with
which to make various corporate raiding
purchases in fruit packing , clothing, and
In 1980’s he was tycoon and CEO over 24,000
LATER CAREER OF ASIL NADIR’S
Business in northern Cyprus Kibris media group
Publishes the newspaper-weekly bi “Cyprus today”
Owns radio and TV station
Published articles Republican Turkish Party.
Nadir was listed at 36th on Sunday Times Rich list in 1990.
At that time he was the wealthiest individual in the Turkish Republic of
Northern Cyprus and holds business assets in the Republic of Turkey and
Early in 1980 Restro Investments, a company Nadir controlled bought 58% of the
company for £270,000.
Nadir took over as Chief Executive on 7 July 1980. On 8 July 1980 Polly Peck
launched a rights issue to raise £1.5m of new capital for investments abroad.
In 1982 Nadir began the early ventures. These included Uni-Pac Packaging Industries
Ltd, Voyager Kibris Ltd, and Sunzest Trading Ltd, three companies incorporated in the
Turkish Republic of Northern Cyprus.
Uni-Pac was a corrugated box manufacturer and packaging company formed to take
advantage of surplus citrus fruit being grown in Cyprus, which was forecast to produce
a minimum of £2.1 million profit. Voyager Kibris Ltd was used to purchase the
Sheraton Voyager Hotel in Turkey and to build resort hotels in Northern Cyprus.
In September 1982 Nadir acquired a major stake of 57% in a textile trader, Cornell
Cornell rose from 26p to over 100p as soon as Nadir's interest was confirmed. Nadir
had Cornell sell a rights issue, raising £2.76 million.
This capital, plus a further £6 million from Polly Peck, was used to set up the 'Niksar'
mineral water bottling plant in Turkey. Niksar subsequently sold an estimated 100
million bottles of water to the Middle East.
In 1983, Nadir also began expanding PPI's textile business by purchasing a 76 percent
stake in Santana Inc. in the United States, and a majority stake in InterCity PLC in the
Nadir then extended PPI's textile operations into the Far East, acquiring a majority
stake in Impact Textile Group in 1986, and by increasing PPI's existing stake in Sansui
Ltd. to 90 percent.
In 1987 PPI acquired a majority interest in Palmon (UAE) Ltd., a manufacturer of
In April 1984, PPI also diversified into the electronics business by acquiring 82 percent
ownership of Vestel Electronics, one of the largest publicly traded companies in Turkey.
Vestel manufactured colour televisions, air conditioning units, audio
equipment, microwave ovens and washing machines.
PPI's success in the electronics business was substantially enhanced in early 1986
when Akai of Japan decided to join Ferguson, Salora, and GoldStar as licensors to
Vestel. Subsequently, PPI also acquired housewares manufacturer Russell Hobbs.
By 1989 Polly Peck had become an international player by acquiring a 51% majority
stake in Sansui. Also in 1989, Polly Peck bought the former Del Monte canned fruit
division for $875 million from RJR Nabisco, which had previously acquired it.
Polly Peck then gained the ultimate award of being admitted to the FTSE 100Share
Index in 1989.
In less than ten years, under this growth-by-acquisition strategy, PPI's market
capitalization went from only £300,000 to £1.7 billion at its peak.
It became a holding company for a world wide group of over 200 direct and indirect
Trading in the company’s shares was suspended on 20 September 1990.
PPI’s problems became apparent from the structure of the group’s debts.
The company had over £100 million in short-term revolving lines of credit. Even more
debt consisted of long term loans for which Nadir had offered Polly Peck’s shares
In October 1990,Polly Peck ,a large UK quoted company, was placed into
administration. At the beginning of August 1990 the share price was 418p,but by
September 1990it had fallen to 108p.
This represented a loss of nearly 75% of their value in under two months.
Trading of the shares was suspended by the London stock exchange and Polly Peck
collapsed with debts estimated at £1.3bn.
In August 2012 the serious fraud office(SFO) prepared a case against Asil Nadir ,CEO
accusing him of theft and false accounting of £34m. But he was found guilty on stealing
of £29m from Polly Peck.
He was sentenced to ten years imprisonment.
Actually it was a scandal of corporate governance which also includes liquidity
problems, agency problem due to diversification ,acquisitions and mergers of different
companies and long term debts.
SCANDAL OF CORPORATE GOVERNANCE AGAINST ASIL
NADIR,CEO OF POLLY PECK INTERNATIONAL
Corporate governance is the set of processes, customs, policies, laws, and
institutions affecting the way a corporation (or company) is directed,
administered or controlled. Corporate governance also includes the
relationships among the many stakeholders involved and the goals for which
the corporation is governed.
Corporate governance is the system by which business corporations are
directed and controlled. The corporate governance structure specifies the
distribution of rights and responsibilities among different participants in the
corporation, such as , the board, managers, shareholders and other
stakeholders, and spells out the rules and procedures for making decisions on
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