A company director tried to buy an airline using forged documents that purported to show the Manx government would underwrite the deal, a jury was told.

Jason Scales is standing trial at the Court of General Gaol Delivery accused of fraud in relation to his company Ettyl Limited’s attempted purchase of Stobart Air in 2021.

The defendant, 30, of The Bretney, Jurby, denies one count of fraud and two counts of supplying an article for use in a fraud.

He is accused of using two forged documents in his negotiations to buy the airline in an attempt to provide comfort that the government supported the deal and were underwriting a loan of £13m.

In fact the government at no stage provided any financial backing to Ettyl or had ever given the impression that it would do so, the jury heard.

As shareholder and director of Ettyl, Mr Scales ‘took centre-stage in disastrous failed negotiations to buy Stobart Air’, prosecutor James Robinson told the court.

‘He did not have the funds to purchase the airline. While it appeared he may initially have had the backing of a local company - Knox Trust/Doug Barrowman - this seems to have quickly fallen away. What is clear is then he was scrambling for funding to keep the deal alive,’ he said.

The two documents in question include a letter dated April 12 purporting to be from the Department for Enterprise, with the digital signature of its chief executive Mark Lewin, which referred to the department’s assistance in securing a £13m loan facility.

A second document, a letter of guarantee and indemnity dated April 17 purportedly from then chief secretary Mr Greenhow, made out that the government would underwrite a loan facility taken out with finance firm Paradigm VL Group Ltd.

The defendant had approached Paradigm and another investment finance firm Ellanstone in early April 2021, suggesting, say the prosecution, that the proposed funding from Knox Group had fallen away and Mr Scales knew at this point there was no financial assistance forthcoming from the government.

Taking the stand on the third day of the trial, Mr Lewin insisted he had not written or authorised the letter.

He said providing financial support of this size would have been ‘almost impossible in the circumstances’ and no application for any funding in relation to the proposed airline purchase was ever made by Ettyl to the DfE.

Jonathan Brown, who was non-executive director for Stobart Air and legal adviser to its parent company Esken, told the jury it came as ‘bolt out of blue’ when it emerged that the documents may not be genuine and initially believed it was just a misunderstanding.

This revelation had come in a text message sent to Aer Lingus which cast doubt at whether the Manx government was involved in the deal.

The deal collapsed and on June 14, 2021, Stobart Air went into liquidation with the loss of 480 jobs.

‘The lies of the defendant then came to light and he was arrested and sought to lay the blame at the feet of others involved in the failed transaction,’ said Mr Robinson.

Tynwald president and former Enterprise Minister Laurence Skelly is due to appear as a prosecution witness this week as is former MHK Paul Quine and former chief secretary Will Greenhow.

The defence’s case is expected to start on Thursday afternoon.

The trial continues.