INVESTIGATION - When the Penny drops

Following the collapse of Omni Solutions, PC Dealer investigates the fall from grace of its former MD Mike Penny, once dubbed Britain's favourite boss.

Mike Penny was the darling of the 90s new age business. National the fall from grace of its former MD Mike Penny, once dubbed Britain's favourite boss. newspapers were rushing to print him waxing lyrical about Feng Shui office layouts, the ancient art of T'ai Chi and homeopathic remedies.

During the time he was managing director of Slough-based Omni Solutions, Penny received The Express Britain's Best Boss and The Big Issue Britain's Best Employer awards. He had a waterfall in reception, looked after the 'energy cultivation' of his staff and believed inner happiness lay in putting crystals and rocks on office desks.

Penny was unorthodox, inspirational and confident. As he said in one interview in March: 'When people come here they think it is great. We are now like a beacon. People beat a path to our door.'

However, behind the facade of Britain's most caring boss, Omni's beacon was beginning to dim. Less than six months after that newspaper interview, the company fell into administrative receivership on 3 August (PC Dealer, 19 August).

Staff were made redundant. The promised redundancy cheques failed to arrive. Creditors were screaming for payment as debts, believed to be at least £350,000, remained unpaid. Staff found Feng Shui was powerless against receivers. Office kit was removed for unpaid debts.

A cash injection weeks before it fell into administrative receivership was unable to save Omni. Penny saw his new age dream crash and Britain lost its best boss.

Or did it? A new company, Tilven Computers, which has bought Omni's trading arm and name, has been set up out of the ashes of the old and Penny has taken on a consultancy role there. Tilven will continue to service Omni's existing customer service contracts in the London area.

But many of Omni's former staff and its creditors - which include Ideal Hardware, ETC and Computacenter, owed about £100,000 between them - have still not been paid.

Based in Fleet, Tilven was set up on 11 June, less than two months before Omni collapsed. Companies House lists Tilven's directors as Helen Yarranton and accountants Pryor and Company Nominees.

Yarranton joined Omni as finance manager in mid-July and says she was brought in to keep overheads down because the reseller was in financial trouble.

Pryor and Company Nominees lists two directors, one of whom is Robert Binfield. According to sources, he is a friend of Penny's. The Tilven registered office address is also the same as a home address registered for Binfield at Companies House.

Yarranton says Binfield is an accountant and admits he has a 'professional relationship' with Penny. She adds that she doesn't know if he is a friend of Penny's.

PC Dealer has seen evidence that the move to set up a new business from the ruins of the old was a calculated one, despite denials from Yarranton that she knew Omni was set to go under.

According to sources, prior to the collapse of Omni, there were plans to set up a new operation, which would be headed by Binfield, Yarranton and Penny, and would continue to do business with Omni's existing client base. When the adverse publicity had subsided, the company would be absorbed into Omni and there would be moves made to ensure it was protected from creditors.

Although Tilven Computers is not a carbon copy of the proposed business, sources say it is broadly based on the outlined plans.

Creditors were also angry to discover that a debenture that pushed them lower in order of priority to gain payment in the event of the company being wound up, had been granted less than one month before Omni went into administrative receivership.

Companies House documents reveal that the debenture, in favour of recruitment agency Everstreet, was granted on 16 July. Companies House listed Everstreet's company secretary and joint shareholder as Ismail Mustofa Ismail. He is also an accountant at Ismail Sharp, accountant for Omni until it went into administrative receivership.

Ismail claims a loan of about £40,000 was given to Omni out of 'personal friendship' for Penny. He adds that Everstreet offered the reseller the loan in June, 'on the basis that the charge be drafted'.

At the time of the collapse, Penny refused to comment on the relationship between himself and Ismail but said he had 'no connection with Everstreet', and that 'I don't know what his (Ismail's) connection is with it'.

Some former employees say they are still owed considerable amounts of money in salaries and redundancy pay. One source adds that a significant number of staff, owed amounts in the thousands, have still not been paid.

Yarranton verifies Tilven has kept on about 10 Omni employees, while others have left voluntarily or been made redundant.

Former employee Ken Hill joined the reseller at the beginning of July, as project manager at Omni's Exeter office. He was made redundant at the end of the same month. He believes he was brought in to lend credibility to the company, as a public face of reassurance for customers and workforce alike.

At least two others were made redundant on Friday 31 July. They included Sidney Benton, quality control manager, and software engineer Andrew White.

Hill says he left on that day, the date on which he should have been paid, after being promised payment by cheque the following Monday. However, on the following Tuesday, he was told by the receiver, Poppleton & Appleby, that he would not be paid and later received a letter saying he would have to apply to the receiver for any financial compensation.

That week, Hill decided to take matters into his own hands. He went into the Exeter office and took equipment as compensation: 'I repossessed some property - motherboards, hard drives - and acted as bailiff on my own behalf.'

He adds that the police were called, but they said there was nothing they could do. Hill and other former employees claim the police said he was within his rights to take products back for wages owed.

However, Hill says he returned the kit a day later for fear of reprisals by Omni against staff remaining at the reseller. He says he has still received nothing, adding: 'And I don't think I'm likely to.'

One former employee believes Omni never intended to make the redundancy payment, and that despite denials to the contrary, some of the management were aware it was about to go into administrative receivership. 'By mid-July we were told it was going to be wound up,' the employee claims.

Yarranton insists Omni intended to honour the redundancy payments, but could not do so after its fall into administrative receivership. She denies she knew Omni would collapse before it happened.

Some staff also believe the entire T'ai Chi and Feng Shui aspect of Omni was just a publicity stunt. One source says: 'In my opinion, it was just for the press.'

Former employees say Penny's reputation earned him a slot on the This Morning television show last year. Others talk of the first time the press came to Omni's offices. Staff were given brief T'ai Chi training - their first session - just before the press photographed them. They say this preparation was supposed to create the illusion that the T'ai Chi had been going on for longer than it actually had.

In addition, former staff claim the new age attitude towards the office environment was confined largely to just one of Omni's business sites.

One says: 'The holistic attitude to business was mostly in Langley. It was promised to Exeter, but was hardly seen there.'

Yarranton admits there was heavy press coverage of the new age goings on at Omni, but says she has faith that Penny does believe in the holistic attitude.

Former staff describe Omni as a company in which the managing director was trying to run before he could walk. They say many areas, such as the sales department, were not sufficiently equipped to handle a business growing too fast.

One industry source describes Penny as a: 'very controlling, very emotional, very manipulative person', especially around the time Omni went into administrative receivership.

But Yarranton backs Penny: 'This is a comment from someone who's taken something personally. It's a harsh statement.'

Omni wasn't Penny's first directorship. He was listed as a director of Penny & Evans, based in Kingston-upon-Thames, Surrey. According to Companies House, it was liquidated on 8 September 1993 by Pannell Kerr Forster.

Penny & Evans left a string of channel creditors, with debts totalling more than £1 million. Omni Solutions was incorporated less than a year later.

Penny refused to be interviewed for this investigation, but previously told PC Dealer that Omni had taken some serious hits in June. He added he had been looking at partners that could help prior to the receivership.

In August, Penny admitted he had a rescue plan for Omni, but refused to elaborate.

Omni's factoring company, Singer and Friedlander, confirms it is continuing to collect money from Omni's debtors. It is also the factoring company for Tilven.

Yarranton verifies that Penny is working on a consultancy and marketing basis at Tilven, but stresses he is not a shareholder or director, and is employed on a transition basis.

When asked if Tilven will approach the same creditors that lost money with Omni, she says: 'We'll be trying to get a credit relationship with suppliers. If they feel the association, I'm sure they'll stay well clear.'

WHAT THE PAPERS SAID

The Express, 3 November 1997

Penny: 'As an employer I feel a need to take on a parental role. While I cannot live their lives for them, I can allow (staff) to experience things that they would not normally do. But if people cross me, I don't forget in a hurry.'

The Times, 23 April 1998

Penny: 'I do have a strong sense of caring for others. I wouldn't say I was a soft touch; I believe that if you create a positive environment, the majority of people will respond to that.'

He adds: 'We can't change the world, but we can change the little part of it where we work.'

Sunday Times, 8 March 1998

'Penny believes that business success emanates from a good atmosphere in the office, a policy that has won him the unofficial title of Britain's most caring boss.'

The Daily Telegraph, 26 September 1997

'Several of the employees, most of whom are still in their 20s, confess that, initially, they found it all "a little over the top - even wacky".

But Penny, 39, a self-made man who left school at 17 with only a few O-levels, is no crank. Behind his open smiles and fashionable wire specs is a razor-sharp approach to business.'

The Guardian, 1 June 1998

Tracee Chapman, PA to Penny: 'You feel the company is taking an active interest (in its staff), which does no end to your loyalty.'

This article is part of a campaign by PC Dealer to raise standards and create an air of professionalism among resellers. If you have a story you would like us to investigate, call 0171 316 9518.