Welcome to part two of the Norton story. If you haven’t read part one of the Norton fraud story please read that before you get into this next piece. This second part is an investor interview with Steve Murray, a biker and a businessman who got involved with Norton back in 2010.
When the opportunity to invest in Norton came along, on paper it looked perfect. Steve made what I believe is the largest single investment from anyone and would eventually work very briefly at Norton. Steve is a good guy going through an incredibly difficult time at the minute. In my opinion the straw that broke this camel’s back wasn’t necessarily investment related, not some decision made after a heated investor meeting in the boardroom at Donington Hall. It was a decision made based on trust. Trust and the theft of a motorcycle, but mostly trust.
JH: Is there a point in time, a month or a year that you realised that things weren’t as you invested?
SM: I think very early on. I got introduced by an independent financial advisor, I was sent the file to look at an opportunity to invest in a motorcycle brand and sat on a flight thinking I was about to read about a motorcycle accessory company or a retailer. Part of my situation was the want to work within the business. I was looking for a change of career, I’ve been a director of various companies since I was 26 and it was stressful, I needed a break. I opened the file and to my amazement it was the great Norton! I was very excited, I thought the planets had aligned as the chance to be involved with building motorcycles in Britain was too good to be true.
JH: So ten years ago you invested one million pounds in return for ten percent of the equity in Norton Motorcycles Ltd?
JH: And you also loaned Stuart Garner a further £500k?
SM: No, I loaned Norton Motorcycles £500k. My charge, which Stuart fought very hard against, was in the top holdings company above where the brand IP is held.
SM: I like to think I’m trustworthy and I try and do the right thing. I’m not perfect but who is? I’m also not completely stupid, I went into the deal with lots of legal agreements. I spent seventeen thousand pounds on legal fees, predominantly on shareholders and loan agreements. I believe in progressive company cultures, I like the idea of working in real teams and people who support one another. Within months I realised Norton was a dictatorial Victorian style place, which didn’t work for me.
SM: So to answer your question I started to get concerned within weeks. Stuart gave me a title early on as marketing and operations director. I introduced R&D tax credits, I saved them half a million when they desperately needed it with supplier discount financing. I’d comment on reference bikes in the market and tried to help with strategic business plans. Stuart never acknowledged any contribution though.
I was completely taken in by Stuart’s enigmatic character and work ethic, he appeared to be a visionary and was excellent with PR and good at brand positioning. The staff turnover was amazingly high though, I put this down to Stuarts approach of “my way or the highway”
JH Staff turnover?
SM: Yes, most businesses pride themselves on a low one, I think Stuart prided himself on what he called the ‘revolving doors’. After about three months Stuart said that things weren’t working and I agreed. I’d already committed the money so I stepped out of the business and maintained contact via a quarterly pep talk.
SM: I realised I was dealing with a very strong character. People in the business referred to him as a ‘satanic mill owner’ Stuart’s management style is autocratic, you either complied or you were history.
JH: Hmmm, that doesn’t work.
SM: It doesn’t and it certainly doesn’t work in a sophisticated business. So it started in the early days, things just weren’t my style. I had no idea about any underhand, unethical or illegal stuff. The relationship I had with Stuart turned into one where every three months over the last ten years I’d pop in and he’d spend an hour and a half with me. We had a cordial relationship, not least because there was always lots of good news and interesting anecdotes about motorcycling, racing and celebrities.
SM: During these meetings I’d ask him questions and he’d answer them in a vague way. Knowledge is power, he had all the knowledge. He’d never told anyone that I was a shareholder, he kept that under wraps because he wanted everyone to believe that he owned Norton lock, stock and barrel. The charismatic, enigmatic and charming Stuart would come into play and I’d get all the propaganda. I suppose I’ve never been subject to a confidence trickster before. Whenever I met him, which was fairly frequently over the ten year span, he was always a good news oracle. He was at the centre of everything and kept a lot of things private, he was the only voice on a lot of things. There were lots of inconsistencies, I could see that bikes weren’t going out, there were problems with this parts supply and that, but there were so many positive stories. I came to the conclusion some years ago that the only buyer for my shares was Stuart because who else would come in knowing half of what people now know and buy them.
JH: Any due diligence would show this.
SM: Precisely. I was a seed investor at the ground floor.
SM: Stuart Garner had a habit of dropping explosive comments as if they were just weather reports. He told me that I needed to drop my charge (the half million pound loan to Norton) to make space for the bank to come in. I’m guessing the year, but I think this would have been in around 2014. I said I wasn’t prepared to do that as I’d put my life savings in. I’m a self made man and I’ve worked bloody hard for this money. It was a lot of money and a lot of faith and I didn’t see anybody else putting in that kind of money. I said that I perceived Norton as being a global brand with a lot of appeal and value and that I thought Stuart was the man to drive it forward. Not long after somebody got in touch with me and said “I think you ought to know your signature has been forged on a Santander charge.” This is alleged and without prejudice, I have no proof, however I imagine that banking freedom of access, can prove or disprove this. If it is true, then presumably, someone had to witness the signature.
JH: Ah, not the first time there’s been talk of signatures being forged. Who was that? Where did that come from?
SM: Indeed. I think It came from someone at the bank. Now, I’m ashamed to say this but you have to bear in mind that I’d committed one and a half million pounds and I’m not that wealthy, this was a very significant proportion of my total net assets. I very foolishly went into denial. It shocked me in a number of ways. Firstly that I’d lost any influence over the business that I thought I had and secondly that somebody could do this to me. It would have been difficult to prove and by merely broaching it with Stuart, would crater our relationship.
JH: Indeed. In my simple outlook, if there’s a document that has been submitted with a forged signature, then there’s a chance that the responsibility to carry out due diligence sits with the bank that has accepted that paperwork. They might be responsible for getting your money back?
SM: Yes, but I repeat that this is alleged and without prejudice, I have no proof.
JH: Right, but I would see the bank’s responsibility as possibly being a lifeline for you?
SM: Potentialy yes as banks have to be seen to do the right thing.
JH: And there would be copies of this paperwork with Stuart’s solicitor and with Santander?
SM: I’d be amazed if there weren’t copies at the bank, unless they’ve been misappropriated. Again this is alleged and without prejudice. I suppose there’s been a degree of denial because my interest is so vested in the business and what happens with it.
JH: Not just financially you mean?
SM: Well I’m emotionally attached to motorcycles and British brands in particular, but also Hondas and Ducatis for a variety of different reasons. Yes, there’s a financial interest and of course I care about all the staff and anyone involved with the Norton brand. All stakeholders need to see the right thing is done.
JH: But let’s not ignore the money you have in there as well.
SM: Precisely. I have £170,000 in unpaid loan repayments owed to me. In the early days Stuart Tiller used to phone me on an adhoc basis, I thought he was a bit bitter and might have been blowing things out of proportion. Latterly I realised that this wasn’t the case, hence the reason why you and I are talking now.
SM: I also rationalised that if I confronted Stuart with it, he would only lie. All I would do is make myself unpopular with him and then any favour with him I may or may not have had would have been gone. I now know that he doesn’t tend to broker favours with anyone under any circumstance. Everything is conditional.
JH: That’s logical.
SM: As you know there is quite a complex structure involving Norton holdings in America and I think there’s something in the Isle of Man.
JH: Ah yes, TTorpa Ltd, now known as Norton Motor Cars Ltd.
SM: Yes, all this stuff is a complex web. I started a conversation with Stuart two years go to sell him my shareholding as I wanted to exit when he broached the subject of removing the Norton properties. I’ve recently learnt so much about Norton’s idiosyncrasies regarding group structure, inter company loans and cross charges, all of it seems so unusually complex in what should be a pretty straightforward business building motorbikes.,
JH: Indeed, that’s fair.
SM: I’ve come to the conclusion that I cannot afford to stand in the road and become completely taken for a ride, I am more than happy to help anyone recover losses if I can.
JH: Again, that’s fair.
SM: I think the tipping point for me was the loss of my Domiracer, he volunteered to sell it for me and actually did last year, however he and Kay (Garner’s PA) were maintaining it hadn’t been sold until she admitted in January to me that it had been sold. Allegedly the cash went to purchase a new kitchen at Donington Hall.
SM: He told me that he’d pulled the crowd funding situation because a big investor had come in but we know that the crowd funding was pulled by the crowd funding platform because they didn’t want to be associated with the social media toxicity, they have their own reputation to preserve. Now, having seen why the crowd funding was pulled, having had my motorcycle stolen off me on top of all the other things I’m learning, I’m just one of many people who are starting to tell their story.
JH: Indeed you are.
SM: Of course with Stuart I would get my quarterly update when we caught up, I was never shown any finances. I was far too polite and he’d minimised my scant minority shareholder rights, I’d asked for them in the past, not demanded them just asked for them. All I would get is a commentary. Obviously I’m capable of looking on Companies House, I have an accountant who would pull things off there for me occasionally and things didn’t look so great. Some things were clearly off balance sheet, I began to realise that it (Norton) was getting very indebted. Then I realised a few months ago there was a pension problem as the receptionist resigned because she couldn’t cope with the people that were chasing for their money, some in tears.
JH: Plus the assumption that he was using deposits for bikes as working capital within the business?
SM: In my world, deposits show a necessary sign of commitment and should be held in an escrow account. I heard mutterings and when the V4 and twin derivative were so late coming to the market, it wouldn’t have surprised me. I think Norton sales were encouraging buyers to place monies in order to secure early bikes or special numbers given limited editions.
JH: What was your earliest concern having joined Norton in 2010.
SM: In the early days of the business when I was around he came in looking very ashen. I said “You look worried Stuart!” He said “Well you’d be worried, we’ve lost the engine supplier!” That was devastating to me, the engine being quite significant in a motorbike!
JH: I would agree with that. Please do expand.
SM: MCT were the original outsourced supplier of the engines at Norton, they’re a high calibre outfit that were working with Aston Martin at the time, building their One 77 V12 engines. The MD there had been charged with finding new business and they were put in touch with Norton. I offered to help Stuart. There was a chap that worked at Norton back then that was ex Triumph, I think his name was Peter. He was a nice guy, solid and honourable. Clearly you could see he was stressing as he realised that things weren’t as he expected. He trots in and says “Stuart said you’ve asked to see the supply and purchase agreement for the engines?” It was basically a one page document, of which half was the fax header. I naturally became alarmed as I had drafted 20 page supply and purchase agreements for less sophisticated commercial transactions in the past.
JH: Oh God.
SM: It was like two paragraphs, basically along the lines of ‘we will buy engines and you will supply engines and this is the price.”
JH: And that was that?
SM: That was it, it really surprised me. I expected to have to wade through a 30 page document while I tried to help find a solution. Anyway, clearly the two companies had fallen out. Stuart went to court, represented himself against a billionaire’s barrister and won the case!
John Menard Jr, billionaire owner of MCT.
JH: He won the case?
SM: He won the case. He won some damages, a settlement and all the supply list and drawings.
JH: Bloody hell, I wonder if the court case notes are available?
SM: That would be good to see. But, to try and answer your question, when did I first realise things weren’t right? It was very early days for a number of reasons.
JH: And it sounds like initially the alarm bells were to do with the management style and day-to-day operations of the business?
SM: Yes, because he wouldn’t provide any conventional management information to anybody. Everybody had a nickname, which I felt a little odd.
SM: He’s never pretended to be an engineer or anything other than an entrepreneur. I come from an engineering background, not a high level but I did an engineering apprenticeship.
JH: Yes, me too.
SM: There you go. I think you and I could perceive some of the difficulties of scaling and productionising for sophisticated products. I think an entrepreneur’s mind doesn’t worry about things like that and that’s where certain problems happened with the V4 and the 650 twin. They’re so late to the market, I can acknowledge that there were lots of other issues but I think this is where things went wrong with Stuart’s plan.
SM: We can all remember when they were ‘launched’, it’s just taken forever. I’m in a very difficult position because obviously I’ve got an awful lot to lose and I’m trying to save that.
JH: I saw a couple of emails to someone trying to get their pension money back, they contained details of the crowd funding seed dates, the crowd funding cash clearance date, a couple of dates from big rounds of investment that were due in with a view to that providing the liquidity to repay the top tier of people owed money. Then there was a plan from Stuart to float the business with some kind of IPO in late 2020 which would provide huge working capital for him to repay anything owed and lift the business like some kind of Phoenix from the flames. What do you think of that?
SM: I don’t know anything about that. He doesn’t discuss that kind of thing with me. I have been involved with other businesses that have IPO’d and I have close experience of it. I asked Stuart a few years ago if he’d considered an IPO. I said not to do it on the FTSE, but to look at somewhere like NASDAQ because it’s the biggest single market and it’s American. Stuart only ever tells me what he thinks I want to hear. His motive appears to be to appease me and keep me away from anything that might give him a problem. I don’t think you’d get an IPO off in this era given the amount of adverse information there is around the company. I think the only way the company will survive is with Stuart out of it.
SM: How that happens, God only knows. I have to give him credit in some respects for taking it from that terrible prototype, which was a monstrosity to the model range that there almost is now.
JH: I’ve got it at less than one and half bikes a week coming out of the factory and they’d have been lucky to get any bikes out this year (prior to administration) because the debt with supply lines appeared so sizeable that Norton couldn’t afford to pay anyone to supply anything.
SM: It can’t carry on and of course he’s waiting for one of these ‘investors’ to come good. Well there either are or aren’t investors and they either will or won’t come good.
JH: But until they do, they should absolutely be discounted as irrelevant. There’s no point spending money you don’t have yet. I have the debt at approximately 26 million, where would you have it?
SM: Well I tend to deal in big numbers, I was at twenty million and that’s only because of a conversation I had with him fairly recently which relates to my divorce. The reason I’ve been asking more probing questions than I normally do is because I need to prove my assets in court. I said to Stuart that I have to ask these kinds of questions. He said well you need to know and there’s a debt of this size.
JH: Wow. And that debt that he’s referenced of twenty (million) is he attributing that to the pensions debt or Norton Motorcycles running costs?
SM: Well he never expands on anything and when I ask probing questions, he doesn’t answer them. There’s a reason why he needs to shoot off or I just don’t need to know that because it’s his business etc. I’m bloody naive John, in certain ways. I thought that since Robert Maxwell pensions had to be run by a collection of people who are controlled. My only inclination was when the nice receptionist left, I asked someone where she’d gone and I was told she couldn’t cope with people asking for there pension money back. The person I asked wasn’t someone that would normally tell me anything and they too were clearly coming to the realisation that something wasn’t right.
JH: So let’s talk about the best possible outcome for you, the best outcome for the brand and for Stuart. How do those three look?
SM: Okay for me personally, clearly I want the company to survive. It’s got to have a significant amount of money pumped into it. I cannot see that without somebody else taking over the business completely because, frankly, who would take a minority or non controlling stake in a business when somebody (Stuart) has this kind of reputation. In my humble opinion a lot of progress has been made in the business. Yes, there’ll be all sorts of issues of course. I understand the supply chain issues but there’s a compelling brand and an attractive range of products there. For me, I think it can be rescued but I don’t see how Stuart can soldier on with it. Under what circumstances does Stuart let it go?
JH: I’m seeing parallels with other motorcycling manufacturer buyouts, it appears to be pride that gets in the way. In my head the reason why you grow a business is because you want to put better bread on a bigger table for your family. I’ve given up trying to figure out the headspace of people in these positions, that seem to make decisions to go down certain paths when they’re in this position.
SM: I’ve been in a similar position to you, yes egos often get in the way, Stuart uses the term ‘haters’ a lot, I think he is fighting the world for some reason.
JH: Ah okay.
SM: I’ve come across big egos before. Some of them seem to buy their own PR, some are in so much trouble they don’t have any alternative and pride, as you said earlier. Business is a strange place. I don’t know what his masterplan was when I first talked to him because my view like yours when it comes to business is to have an exit plan. It might be three years or ten years and you might pass it on to your children or whatever, but it’s about growing value in something. Stuart never talked about selling it. He’s been propelled from obscurity to rock and roll stardom. He must have got to the point where he was wondering what he’d do after it all. He’ll know his limitations. What could he do other than Norton? He clearly loves the limelight.
JH: He is living his best life!
SM: Totally. Norton and especially the diverse range of Norton funders have afforded Stuart an amazing lifestyle
JH: So consider the worst case scenario. If you step back and look at your situation from afar, are you already living the worst case scenario?
SM: I’ve literally been an angel to that business. You can ask anyone in that business that knows me and and I don’t think you’d find a single person that has a bad word against me. They may think I’m foolish for committing so much money but I believed in the brand and the opportunity. I love motorcycles and fell for Stuart’s charisma, vision and story. I’ve done nothing wrong. I should have perhaps been more assertive with him but I don’t think that would have got me anywhere anyway. I shall investigate the alleged forged bank signature.
JH: Good luck with that!
SM: Thank you.
Editors note: This interview was conducted in the weeks leading up to BDO being called in to Norton as administrators. In the fullness of time, the reasons why it hasn’t been published until now will become apparent.