A BUSINESSMAN who persuaded more than 400 residents of a North-East town to became directors of companies involved in online pornography and gambling has said he was ‘100 per cent’ upfront.

People in Consett, County Durham, were paid to forward post delivered to their addresses, but otherwise had no involvement in the companies.

Details of the operation masterminded by Simon Dowson, 35, from Shotley Bridge, were revealed as part of an investigation by Reuters news agency.

Mr Dowson said: “They were aware of what they were doing. If you walked up to someone in the street and they were the director of a porn company it might not be something they would promote, but they welcomed the fees from us at Christmas and at holiday times, whatever it might have been for supplemental income.

“They were quite happy to receive said funds in the knowledge of what they were doing but that is not to say they would like to promote that to an third parties.”

Mr Dowson formed the ‘shell entities’ to provide a UK address, directors, company records and tax returns to meet UK requirements so overseas online businesses could trade in Europe.

They included pornography, gambling, dating and travel websites on the internet.

The investigation found at least 429 people were paid £50 to become directors, and £150 a year for forwarding letters as well as fees for extra paperwork.

One director, Andrew McBride, 46, said: “I realised maybe a year and a half later when certain mail was coming in. I was opening it and it was for adult entertainment or gaming or casinos and I was none the wiser. I just cut ties all together.”

Reuters said Mr Dowson, who runs Brinken Merchant Incorporations (BMI) and EMB Management Solutions, was paid between £2,500 and £3,000 per shell company, administering 1,200 at his peak.

Mr Dowson has been investigated by the Insolvency Service, part of what is now the Government’s Department for Business, Energy and Industrial Strategy.

No criminal charges or sanctions brought against Mr Dowson or any of the directors.

A spokesman for The Insolvency Service said winding up petitions were presented in the High Court Chancery Division Manchester District Registry on December 23, 2013, and winding-up orders were made on March 14, 2014.

He said: “We continue to work closely with a number of partners such as Companies House to prevent the abuse of the corporate regime.”