Off the back of a recent BBC investigation, Disclosure: Hunting the Whisky Bandits, we are taking a look at the pitfalls and dangers of investing into whisky casks.
The hour-long documentary compiled research and a thorough investigation into fraudulent cask investment companies. Some of the victims, who had used life savings of tens of thousands of pounds, were left with nothing when it was discovered that they had purchased casks at highly inflated value or, in many cases, casks that didn’t even exist! One victim, Jay Evans, was a terminal cancer patient who invested £76,000 so she could provide long-security for her family and loved ones.
These scam companies look to prey on the vulnerable and promise them returns that are at best misleading and at worst downright lies and never achievable. In the documentary, a company named as Cask Whisky Ltd was being run by people using fake names and with a history of convicted fraud and directorship disqualification. These charlatans don’t have any morals or thought for anyone else and their personal situations, it is all about pure greed.
If you have access to BBC iPlayer, the documentary is well worth a watch and the findings from the team, including the presenter Sam Poling, are insightful and thought provoking, so much so that the police are now actively looking into the likes of Cask Whisky Ltd and similar rogue traders.
Considering Cask Investment?
- Consider the Broker/Seller: Do they have a good reputation? Look for reviews or case studies upon them.
- Study what you are Purchasing: Is the price realistic? Are the returns achievable? What are the contents (i.e. single malt Scotch whisky, grain whisky, Irish whiskey)? Established whisky brokers, retailers and auction houses can help you with understanding this.
- Check Location: Ensure the casks are being stored in a verified warehouse and that the warehouse keeper actually have a facility for cask storage and WOWGR, this can be verified on the HMRC website here. WOWGR is the 1999 act that stands for Warehousekeepers and Owners of Warehoused Goods Regulations.
- Read the Terms and Conditions Thoroughly: Sellers may introduce clauses such as minimum/maximum length of storage or that the whisky can only be used for personal consumption.
- Get your Paperwork in Order: Always insist on a copy of the contract of sale and receipt for the price of purchase – this should include cask type, distillery, fill date and the warehouse/warehousekeeper details. Consider the appropriate insurance, such as what covers for excessive loss of spirit due to a cask malfunction or leak. Ensure the transfer of ownership to you is fully recorded and acknowledged by the warehousekeeper.
There are of course good guys out there too, which is why if you were considering investment into casks it is vital to do your own due diligence and research, but as this program highlighted there are also bad eggs out there looking to take your hard earned money for their own benefit.
Disclosure: Hunting the Whisky Bandits is now playing on BBC iPlayer.