Polly Peck International
(PPI) was a small and barely profitable United Kingdom textile company
which expanded rapidly in the 1980's and became a constituent of
the FTSE 100 Index before it
collapsed in 1991.
Company was founded by Raymond Zelker and his wife Sybil in 1940 as
a small fashion house operating in London.
The new Chief Executive
Early in 1980 Restro Investments, a company controlled by Asil Nadir
, a Turkish
, 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
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
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
In September 1982 Nadir acquired a major stake of 57% in a textile
trader, Cornell, whose shares were considered penny shares
. 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
1983, Nadir also began expanding PPI's textile
business by purchasing a 76 percent stake in Santana Inc. in the
States, and a majority stake in InterCity PLC in the
Nadir then extended PPI's textile operations into the
, acquiring a majority stake in
Impact Textile Group in 1986
, and by increasing
PPI's existing stake in Shuihing Ltd. to 90 percent. In 1987
PPI acquired a majority interest in Palmon (UAE)
Ltd., a manufacturer of casual shirts.
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 color televisions
Betamax video recorders
, air conditioning
units, audio equipment, microwave
, and washing machines
PPI's success in the electronics business was substantially
enhanced in early 1986 when Akai
decided to join Ferguson, Salora, and GoldStar
as licensors to Vestel. Subsequently, PPI
also acquired housewares manufacturer Russell Hobbs
Polly Peck had become an international
player by acquiring a 51% majority stake in Sansui
(a Japanese electronics company on hard
times). This was one of the first foreign acquisitions of a major
Japanese company listed on the Tokyo Stock Exchange. Also in 1989,
Polly Peck bought the former Del Monte
fresh fruit division for $875 million from RJR Nabisco
, which had previously acquired it.
Polly Peck then gained the ultimate accolade of being admitted to
the Financial Times 100 Share Index in 1989.
five firms had emerged as the dominant
actors in fresh fruits and vegetables in western Europe and North
America. These were the ex-banana giants: Chiquita
, Dole, and Del Monte
Tropical; and the two new upstarts: Polly Peck International and
Albert Fisher. The move was part of a larger planned restructuring
under which Polly Peck developed its electronics, foods and leisure
businesses into three largely independent companies.
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 subsidiary companies.
With pre-tax profits of £161.4 million, net assets of £845 million
and 17,227 employees, the Polly Peck group was one of Britain's top
one hundred quoted companies. Polly Peck and its subsidiaries were
the largest employer in Northern Cyprus (after the state) with
7,500 employees there.
Attempt to take the Company private
In August 1990 Nadir came to the view that the Company was
undervalued and then announced that he was taking it private.
Almost as suddenly later that month he announced that he had
changed his mind.
On 20 September 1990, the Serious Fraud Office
South Audley Management, the company that controlled the Nadir
family interests. The raid triggered a run on Polly Peck shares
with the price practically in free fall.
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 as collateral
On 25 September 1990 the Company was placed in administration
Ultimately the company collapsed, and charges were brought against
Asil Nadir for 70 charges of false accounting
and the theft, which he denied.
In 1991, Polly Peck Group transferred all of its Vestel Electronics
shares to one of its subsidiaries, Collar Holding BV, which was
based in the Netherlands. In the same year, following the collapse
of the Polly Peck Group, PPI was placed in administration. In
November 1994, Ahmet Nazif Zorlu acquired PPI from the
administrator by buying the entire share capital of Collar Holding
BV, which at the time held 82% of the Polly Peck's issued share
Leaving the UK
Nadir left the UK just after his £3.5 million bail had lapsed,
while the detectives who were watching him were off duty to save
overtime pay on a bank holiday
remains a fugitive in Northern Cyprus, which has no diplomatic
relations. Peter Dimond, the pilot who flew him out of Britain, was
convicted of aiding a fugitive, but the conviction was quashed once
it was determined that the bail had lapsed.
At the end of the controversy, the Serious Fraud Office and the
British political establishment were both discredited. A government
minister resigned, denouncing prosecuting authorities. A high court
judge and a QC
were accused of a
'plot' to pervert the course of justice. The Attorney General had
to apologise for misleading Parliament.
- Nadir fights for British pension fund
- Cases in Corporate Governance by Robert Wearing,
Pages 41 to 53
- Increased stake in Sansui Electric
- Stoys faces fine and lessons over Polly
- Asil Nadir hires top criminal barrister for
- Zorlu Holding acquires Collar Holding
- 'Angry' Asil Nadir pilot freed
- How Asil reached his Nadir
- Zelker, Raymond, The Polly Peck Story: A Memoir,
Strathearn, 2001. ISBN 978-0953979400
- Wearing, Robert, Cases in Corporate Governance, Sage
Publications, 2005 ISBN 978-1412908771