Dishonest ICAEW member excluded for lying

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A former high-flying finance director has been expelled from ICAEW membership after he lied about his wealth to the courts during divorce proceedings

Simon Kingdon, former finance director to the Kensington Group and once voted one of the top 100 FDs by institutional shareholders, failed to disclose a valuable shareholding to the court and to his then wife when completing a financial statement as part of a consent order. As a result, his wife’s entitlement was lower than it should have been.

When she later discovered that he’d sold some of the shareholding for £1.633m, she took him back to court and won an additional £481,000. His appeal against the order was dismissed.

In the judgment, the Court of Appeal said that he had been guilty of deliberate, substantial and protracted non-disclosure. It referred to his “lies” in the earlier proceedings, stressing that “were there to be a second, updated, enquiry into all the matters specified in the subsection, no assertion on his part in relation to his financial circumstances…would be likely to be accepted unless clearly established following protracted and costly examination”.

“In the words of Thorpe LJ in Williams v Lindley…the procedure needed to reflect the degree of the husband’s turpitude.”

Kingdon separated from his wife in 2003 while he was Kensington’s FD. In December that year Kensington and a group of individual investors set up a joint private venture, Money Partners Holdings Ltd (MPH), to make sub-prime mortgage loans.  

By March 2004, divorce proceedings were started and in August Kingdon swore an affidavit that purported to give “full, frank and clear disclosure of his financial circumstances”. However, it failed to mention that in July 2004, he had acquired 10% of MPH’s issued shares (200,000 £1 ordinary shares) with an undocumented loan from Barclays Bank. The shares came with various conditions, including a two-year option for Kensington to buy some of them.

In October 2004, Kingdon left Kensington and became FD of MPH. In a questionnaire from his wife, he denied having any share options in MPH and again failed to disclose his share-holding. In March 2005, his counsel filed a position statement stating that all the shares in MPH were held by Kensington and the investor group and that he would “not have access to shares or share options”.

In November 2006, after a year of successful trading at MPH, Kensington decided to exercise its option to purchase around half of his shareholding for which he received £1.633m. After repaying the Barclays loan and taking into account tax and tax relief, he made a net gain on the disposal of £1.268m.

His ex-wife only found out about the shares in January 2008 when the sub-prime bubble burst and MPH collapsed. Its share capital was sold for £2 and Kingdon resigned as a director. He was made redundant from the company in July 2008.

Although Kingdon admitted the non-disclosure to the ICAEW disciplinary committee tribunal, he tried to argue that he had not been dishonest. Rather, he said, the shares and the loan to acquire them represented neither a positive asset that required disclosure nor a liability that he was “subject to”. In financial terms, the position was effectively zero.

The ICAEW disciplinary committee tribunal was unimpressed. “It is implausible,” it said, “that this defendant, in the midst of highly contentious divorce proceedings, assisted by solicitors and counsel and aware from the face of the document that he is completing that he must give full, frank and clear disclosure of all his financial and other circumstances, would take it upon himself, without taking any professional advice, to decide, for the reasons he has given in his evidence, not to disclose the acquisition of 200,000 shares at a par value of £200,000 and a personal loan from a bank of that amount to acquire them.

“It is implausible because to a reasonable and honest mind this is the sort of substantial transaction which the court, and the other spouse, would clearly be entitled to be told about when considering ancillary relief.”

 A more credible interpretation of events was that Kingdon did not want his wife or the court to know about the acquisition of shares which he hoped would increase in value, and so he deliberately did not disclose it. “Such conduct is dishonest. The tribunal places significance on the evidence that the defendant deliberately did not tell his solicitors about the share acquisition or seek advice in relation to it. His explanation that he had made the ‘nil value’ decision and thus considered he did not have to seek legal advice, is incoherent and unpersuasive.”

The tribunal added that lying in court proceedings was “objectively dishonest”, as any honest and reasonable person would say.

Kingdon was excluded from membership and ordered to pay £20,000 in costs.

 

Julia Irvine

 

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