A court has heard evidence of secret payments involving a collapsed island-based investment fund - and minutes of board meetings never held.

Closing submissions have been heard in disqualification proceedings against the head and former directors of Louis Group IoM.

The high court ordered the group to be wound up in 2013. Total losses of investors’ money in island-based entities in the Louis Group have been estimated at £50m by the liquidator.

Dr Alan Louis, chief executive officer of the collapsed Louis Group 2IoM, and two former directors, John McCauley and Lukas Nakos, are facing disqualification in proceedings brought by the regulator, the Financial Services Authority (FSA).

Outlining the case against them, Charles Davies, for the FSA, said Dr Louis was responsible for creating a structure in which money was moved between different entities with ’minimal documentation and minimal regulation’.

Dr Louis used the structure, which had BVI-based Louis Group SP Investments (LGSP) at its centre, to bring about improper payments to other parties, including himself, to his benefit, the FSA alleges. Investors were given false assurances and Dr Louis ensured the structure as a whole was under his control by employing ’pliant individuals who were able to do his bidding’, Mr Davies said.

He told the high court: ’He was responsible for creating a culture in which all records and financial documents if at all tended to be drawn up after the event, where accounting records were altered and documents created with a view to legitimising past transactions.’

Mr Davies said Dr Louis ’habitually’ acted as a ’shadow’ director, failed to comply with statutory regulations and ’ignored or over-rode’ the interests of investors and creditors.

The court heard how one director, Dirk Mudge, who has given a voluntary undertaking of disqualification to the FSA, used to put tape around his door when he had meetings with Dr Louis so other people could not hear their conversation.

Mr McCauley, Mr Davies said, ’was and remains wholly unqualified’ for the role of director.

He was director of LGSP while it was trading ’insolvently or in the realms of insolvency’ and was responsible for inappropriate payments for Dr Louis’ benefit and had sought to justify the secret payments.

The FSA alleges Dr Nakos signed board minutes which he knew to be false and had failed to monitor accounting records.

Despite claiming to be a whistleblower, he did nothing to stop the flow of capital, said Mr Davies.

He added: ’He may seek to distance himself but the evidence is that he knew what he was doing and he was a willing participant in the improper flow of funds.’

Dr Louis, in his summing up, said he was witness to a ’grave injustice’ and did not consider himself unfit to be a director.

He pointed out he was the third generation of a family business with a 100-year history.

Dr Louis said that the group had employed 40 people in the island, on whose expertise he could reasonably have relied.

He said the structure was buoyant enough to overcome any obstacles and with the support of creditors could have held up without the need for a liquidation.

Deemster Rosen is due to deliver his judgment at a later date.