The Pensions Regulator (TPR) has banned three pension scheme trustees for life after uncovering "serious and persistent" breaches of investment regulations and legislation.
TPR found the company had been using the pension scheme as a source of income rather than supporting it.
The regulator's determinations panel also found that the relationship of the former trustees with the sponsoring employer of the Hugh Mackay Retirement Benefits Scheme had led to "serious conflicts of interest".
Robert Angus Hill, Nicholas John Halton, and Simon Christopher Ragg resigned from the trustee board last October after admitting the breaches.
The regulator said the scheme's funding position was now "parlous" and it seemed "bound to enter the Pension Protection Fund (PPF)".
TPR chief executive Bill Galvin said the investigation had unearthed some of the most worrying examples of mismanagement of a final salary pension scheme the watchdog had encountered.
"Typically the sponsoring employer supports the pension scheme - here the scheme provided the company's main source of income," he said.
The inquiry revealed the vast majority of the scheme's assets had been invested directly in property or property-related assets in breach of investment regulations.
These investments included commercial property valued by the scheme at £35m, and further investigation revealed the scheme was committed to repay bank loans of more than £21m secured on the property assets.
In two speculative property deals examined by the regulator, the scheme bought land for £1.55m in 2006, and a commercial building for £8.6m in 2007.
In both examples, one of the trustees had a substantial interest in the vendor companies.
The determinations panel found the claim that this conflict was declared and addressed by the conflicted trustee stepping out of the room when the purchase decision was made did not stand up to scrutiny.
The watchdog said: "It is clear that prior to that stage and right up to the point of purchase the conflicted trustee was actively involved in all decisions involving the property. The panel's description is that the trustee's conflict was acute'.
Galvin said: "The risk to members' benefits posed by the investment strategy and borrowings secured against scheme assets was stark; and it is difficult to imagine a more clear-cut conflict of interest than a trustee effectively negotiating with himself as the vendor in a property deal."
The investigation also revealed the scheme paid more than £1.1m to its sponsoring employer Chartpoint for services over a three year period, with the three trustees benefiting through salaries and bonuses from the company.
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