FCA FINANCE DIRECTOR FRAUD-ICAEW ACTION

DISCIPLINARY COMMITTEE TRIBUNAL ORDERS1. Michael Colin Clark FCAThe
tribunal of the Disciplinary Committee made the decision recorded
below having heard a formal complaint on 13 September 2011Location of
MemberCanterburyType of MemberMemberTerms of complaintThat the
defendant is liable to disciplinary action under Disciplinary Bye-law
4(1)(a), namely he has:‘…in the course of carrying out professional
work or otherwise he has committed any act or default likely to bring
discredit on himself, the Institute or the profession of
accountancy’In thatBetween 13 March 2001 and January 2010 Mr M C Clark
whilst Financial Director of SBS Worldwide Limited misappropriated
£1,012,669 from his employer.Hearing date13 September 2011Previous
hearing date(s)NonePre-hearing review or final hearingFinal
HearingComplaint found provedYes on the defendant’s own admissionAll
heads of complaint provenYesSentencing orderExclusionProcedural
matters and findingsParties presentThe defendant was not presentThe
Investigation CommitteeRepresentedThe Investigation Committee was
represented by Mr Fin O’Fathaigh of the ICAEWHearing in public or
privateThe hearing was in publicDecision on serviceIn accordance with
regulations 3-5 of the Disciplinary Regulations, the tribunal was
satisfied as to serviceDocuments considered by the tribunalThe
tribunal considered the documents contained in the Investigation
Committee’s bundle together with documentation in mitigation provided
by the defendantFindings on preliminary applicationsThe defendant was
not present and the Tribunal, being satisfied as to service, decided
to proceed in his absenceIssues of fact1. Mr Clark was employed as a
company finance director for 14 years. Early in 2010, the company
became aware of some irregularities surrounding the use of company air
miles and engaged BDO LLP to assist with the forensic investigation of
the company’s financial records. BDO LLP produced a draft report dated
8 April 2010 with detailed supporting appendices. They discovered that
Mr Clark had perpetrated a fraud of multiple layers and methods. The
report states on page 1 that ‘Michael Clark withdrew funds from the
company’s UK and US bank accounts and paid his own personal expenses,
each time using different payment methods and using different nominal
ledger accounts. He uses various methods to hide the fraud, for
example by using other employee logins into the accounting system and
posting journals which moved the transactions around the accounting
ledgers multiple times’.2. Following the conclusion of these
investigations and the return of £750,000 to the company by Mr Clark,
BDO LLP reported the matter to ICAEW. The draft report prepared by BDO
LLP identified and verified to supporting documentation that Mr Clark
had misappropriated monies totalling £1,012,669.16 in a variety of
different ways and hidden through several nominal accounts. It also
identifies a potential further £64,339.68 which has not yet been
verified to supporting documentation. The report states that Mr Clark
used the following methods to misappropriate the corresponding
amounts: Payroll £303,054.94; Pension £64,313.16; 2131 account
(this appears to be an employee expenses control account)
£141,183.23; Duplicate payments account £43,643.97; Cheque payments
to credit cards £330,446.10; Cheque payments to ‘M C Clark’
£67,727.19; and US$ transfers £62,300.57.3. Following a review of the
report the complaint wording was amended slightly and Mr Clark was
informed of this in a letter dated 14 February 2011.Conclusions and
Reasons for Decision4. The Tribunal found the complaint proven on the
defendant’s own admission.5. Mr Clark has perpetrated a complex and
lengthy fraud against his employer which has led to the loss of at
least £1,012,669 to his employer.6. Mr Clark is in breach of
Disciplinary Bye-law 4(1)(a), in that he has, in the course of
carrying out professional work or otherwise, committed an act or
default likely to bring discredit on himself, the Institute or the
profession of accountancy.Matters relevant to sentencing7. Mr Clark
had stated during the investigation that he began taking monies
because shares in the company were promised to him approximately 11
years ago which were not provided and Mr Clark felt aggrieved; Mr
Clark stated that he did not start to take the monies until a couple
of years later when he was suffering from depression and he saw the
other directors getting their larger payments and bonuses; Mr Clark
accepted that these were criminal actions; Mr Clark did not know how
much he had taken over the years and he had not kept any records; Mr
Clark admits in this that he has taken monies from the company but
thought that the amount was around £200,000; Mr Clark stated that he
was still suffering from depression.8. Mr Clark did not have any
previous disciplinary record.9. Whilst appreciating that Mr Clark has
repaid £750,000 of the monies taken, he was in a position of trust and
repeatedly abused this trust throughout the last 9 years of his
employment. This conduct is wholly contrary to the high standards
maintained by the profession of chartered accountancy and
significantly undermines the confidence held by the public in the
profession.10. Mr Clark is currently serving a custodial sentence and
the Tribunal was satisfied that he does not now have the financial
means to pay a fine or the costs of the Investigation
Committee.Sentencing order11. The Tribunal took into account its
Sentencing Guidance and decided that no lesser sanction than exclusion
was warranted.Decision on publicity12. Publicity with names.13.
Although not part of the Sentencing order, the Tribunal recommended
that no application for re-admission to membership be entertained by
the ICAEW within 10 years of the date of this Order.Chairman (Lay
Member)Mr Paul BrooksAccountant MemberMr Sohail Choudhry ACAAccountant
MemberMr Ian Walker FCALegal AssessorMs Melanie CarterD6841
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CA Ramachandran Mahadevan,M.Com.,F.C.A.,