Steve Sampson's TalentNation put into provisional liquidation by Scottish Enterprise
Scottish Enterprise has successfully petitioned the courts to have a Provisional Liquidator appointed to TalentNation PLC, a company in which it invested £1m in December 2009.
The economic regeneration body say that it was forced to make the move because of concerns about the financial affairs and governance of the business.
The online operation, which was set up by former Daily Record director and Sun Scottish editor Steve Sampson, is also the subject of court action from ex-staff including former Olympic Athlete Brian Whittle.
Said a Scottish Enterprise spokesperson: "We have had grave concerns in relation to the affairs of the company for some time. After substantial investigation and professional advice we feel we have no choice but to ask the Court to appoint a liquidator to take all appropriate action in the interests of the taxpayer and those dealing with the company.
“Pursuing this court action is unprecedented for Scottish Enterprise. It is not a decision which we have taken lightly and comes after several unsuccessful attempts to resolve matters through more conventional routes.”
The development body invested the money for a 20% stake in the organisation as part of a £2.6m funding round. However, within weeks according to former insiders TalentNation had stopped paying staff, leading to the court actions and employment tribunals as well as questions about what had happened to the money.
Other investors include well known Premiership and SPL footballers such as Gary Naismith, Gary Caldwell, Kenny Miller and Scott Brown.
TalentNation offered them packages priced at £25,000 for 0.5% stakes.
The website aimed to combine the best in social networking with a safe way of allowing talented youngsters to upload sports videos of themselves in the hope of being spotted by talent scouts. Its revenue model was to be based on advertising and sponsorship.
The company was registered in 2007, but has not filed accounts for two years. However, for the year to October 2008 it has clocked up losses of around £500,000.
The company currently has three directors. Apart from Steve Sampson they include his wife Elizabeth and Dennis McGuinness of Carswell Securities. A fourth director James MacDonald stepped down in February, shortly after The Drum first reported concerns about the company's finances.
Questions will now no doubt be asked about the due-diligence Scottish Enterprise carried out in advance of this deal. However, the organisation will defend its investment track-record. Said the spokesperson: “Scotland’s risk capital market is the healthiest in the UK and this model of investing in Scottish companies is widely recognised as being a key factor in this.
"Our investments have helped to generate more than £500m for some of Scotland’s most ambitious growing businesses since 2003.”