The case of the phantom millionaire

Dominic Prince finds that the fashionable Tory Ivan Massow isn't quite as rich as people think

Ivan Massow is a homosexual, fox- hunting Tory, a friend of Michael Portillo and Peter Mandelson and a policy adviser to Steve Norris's campaign to be mayor of London, following a decision not to stand on his own account. He is also chairman of the Institute of Contemporary Arts. Charming, good-looking, well-dressed, cultured, broad-minded and a self-made millionaire to boot, he is very much the flavour of our age.

Being homosexual is at odds with the Tory party (see Quentin Letts on the next page). But making money is not. Happily for Massow, the press clippings state that he "made his first million by the time he was 23" and that now, at 32, the shares he owns in his business are "worth about £15 million".

Moreover, Massow made his money in a most admirable fashion, selling pensions and life insurance policies to homosexuals, who had been shunned by the financial services industry in the wake of the HIV epidemic.

Massow is a very good salesman. He cultivated writers on the newspaper personal finance pages when he started out, offering pictures taken during his modelling days as illustration. There is no doubt that he sells financial products. But is he really a multimillionaire?

Massow is a shareholder and director of two companies: On-line Independent Financial Adviser (originally called Ivan Massow Ltd) and Massow Financial Services. The first, according to records at Companies House, recorded a pre-tax profit of £703 in 1997 and a pre-tax profit of £3,864 the previous year. Hardly sums to catapult a man into the millionaire league.

Massow owned all the shares in this company until it was dissolved in 1998. I asked him about it.

"Oh," he said, "it was a little Internet company that was set up in my barn. It was far too ahead of its time and it didn't really work so I wound it up."

The second company was formed in 1998 and registered with the Personal Investment Authority (PIA) to conduct business in July of that year. It has yet to file any accounts.

But Massow was first registered with the PIA ten years earlier when he was 21 years old. He practised as a sole trader from offices in London, Edinburgh and Manchester. For eight years, he was an appointed representative of DBS Financial Management, a company based in Hull which, in 1997, was fined a record £425,000 by the PIA for its part in the mis-selling of pensions. But there is no suggestion that Massow knew anything about this mis-selling: he was not a director of DBS, nor did he own shares and, soon after the fine, the association with DBS was severed.

Now, Massow owns 90,666 shares in Massow Financial Services with others owning around 39,000 ordinary shares. The holder of 500,000 preference shares in the business is a company called European Financial Services Venture Fund (Commercial Partner), which, Massow says, has supplied the company with financing to the tune of £1 million.

So here is Massow with a stake in a company that has never filed accounts and owes £1 million. How, I asked, could he possibly value that at £15 million?

"I've never said that my stake is worth £15 million," he replied. "It has just been said by people - I think it's because they want to make you sound grander than you are."

So I asked him how his new company was doing. "We've just finished our accounts and they show a turnover of £1 million. I know it's not a lot, but it's only our first year and we've spent a lot of money on advertising. Anyway, the best way to value it maybe is that Catalyst Fund Management has just bought 24 per cent for £1million and 3i Group [one of the largest investment companies in the country] was bidding for it as well, and there are lots more people trying to buy shares at the moment."

I asked Massow if Catalyst was the same company as European Financial Services Venture Fund, and he said that it was. Put simply, this means that the company has been loaned £1 million and that it had a 1999 turnover of £1 million. Massow owns just over half of the shares, but the preferential shareholder will want to be repaid the £1 million loan before anyone can realise any money.

So what about the £15 million stake?

"Look," he said, "the independent financial advice market is set to quadruple in the next two years and we are doing something very soon in the Internet and they are talking about a valuation of £19.5 million. I know it's mad, but there we are."

Massow is a charming fellow and we should all applaud his honesty about his homosexuality and his firm stand on gay rights. But he is not, I think, a man whose shares in his own company are worth £15 million - or anywhere near it.

The writer is a former City editor of the "Sunday Express"