As the FT notes this morning:
The former head of the company behind Farepak, the failed Christmas hamper savings club, has been fined by an accountancy tribunal over his conduct in the affair.
William Rollason, who was chief executive of European Home Retail, Farepak's parent, was issued with a severe reprimand, fined £15,000 and told to pay £50,000 towards the cost of bringing the disciplinary action.
The sanctions against Mr Rollason stem from a settlement between him and the Financial Reporting Council, the UK's lead accounting regulator, late last week, in which he accepted that he had acted recklessly and contrary to professional ethics.
Mr Rollason, who had also been a Farepak director, falls under the FRC's power as a member of the Institute of Chartered Accountants in England and Wales. The admission of recklessness related to his drafting and distribution of a memorandum to his fellow EHR directors that “did not reflect the financial position of EHR” and could have been misleading, the FRC said.
It also related to his signing of a letter stating EHR would continue to help Farepak meet its liabilities as they fell due, knowing the letter would be relied on by Farepak's auditors.
As has been well recounted over an extensive, Farepak represented what was, in my opinion, a massive fraud (even if not in any criminal sense) on a lot of ordinary people who lost what was, to them, a substantial sum when it failed.
And candidly, that my professional body only thinks recklessness in that regard is only worth a reprimand and, in the context, relatively limited financial loss is wholly inadequate. If that was not a case where the appropriate sanction was withdrawal of membership I am not sure what was.
I am, as is often the case, disappointed by the Institute of Chartered Accountants in England and Wales.
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The financial loss is more considering that his name has been “marked” and it’s unlikely that he will ever work again in any highly paid financial position. Shelf stacking is probably all he can be hired for now.
I think that very unlikely – the City re-hires those it knows
Bernard Jenkins, now CEO of Barclays- got promoted after presiding over the mis -selling of PPI – these people find a way of returning after damaging the lives of struggling people. There is a sort of mystique in the world of finance that seems that inures people to the nature of what is going on.
It depends on how egregious the behaviour is. I’ve never really heard John Mayo’s name mentioned since Marconi fell apart, and he was similarly reckless.
Richard
You would have to take this up with the FRC not us as they decided to take this one on as a public interest case. Once the FRC does this, ICAEW’s jurisdiction as a regulator ends. We cannot take any further action as the FRC’s decision is final. This ensures that serious cases in which the FRC takes an interest are investigated independently.
With best wishes
Lucia Graves (ICAEW Comms team)
I am quite sure the ICAEW can impose its own sanctions if it wishes
Are you saying it no longer has any control over who is, or is not, a member?
Just reading about the role of CAs in The Great Tax Robbery – it really is jaw dropping.
Perhaps it is time for civil society to ask what is the role of business and what are the duties of consultants etc.
This won’t happen due to the corporate takeover of the state.
Richard,
ICAEW can and does impose sanctions on its members on those disciplinary cases it considers. However for those cases where the Financial Reporting Council has made a decision to consider it under its disciplinary scheme, it is for them to determine what the appropriate sanctions are. More details on the FRC’s scheme and how this works can be found at http://www.frc.org.uk/Our-Work/Conduct/Professional-discipline.aspx
With best wishes
Lucia Graves, Comms Team ICAEW