13 Mar 2012

Member stays in ICAEW despite fraud conviction

“Powerful and very unusual” mitigating factors have saved ICAEW member Christopher Mark Ford from being thrown out of the Institute, despite being convicted of conspiracy to defraud

Instead, he received a severe reprimand from an ICAEW disciplinary committee tribunal and was ordered to pay £250 costs.

In January 2011 at Oxford Crown Court, Ford was convicted, together with Edwin Dayan, of defrauding the shareholders of former AIM-listed company Torex Retail plc. The pair, both directors at Torex subsidiary XN Checkout Ltd (XNC), were investigated by the Serious Fraud Office after £1.65m of profits in Torex’s published accounts were discovered to be fictitious.

XNC had lost a contract to IBM to provide a depot repair service to Mitchells and Butlers (MAB), a leading operator of restaurants and pubs in the UK. It was retained as a subcontractor by IBM.

After 2003, IBM renegotiated its agreement with XNC, reducing the amount it paid year on year. This resulted in a shortfall in XNC’s income. When Torex’s 2005 year end accounts were prepared, Dayan and Ford (who was the finance director) made it look as if MAB had agreed to pay the shortfall and so was liable to pay an extra sum to XNC.

They created an invoice and other documentation purporting to show that a debt of £756,000 was due from MAB which they gave to Torex auditors BDO Stoy Hayward.

They continued the fabrication in Torex’s 2006 interim accounts, causing a further £900,000 to be recognised in connection with the purported agreement between XNC and MAB. The fraud was uncovered after whistleblowers contacted the SFO.

Ford was sentenced to six months’ imprisonment suspended for two years and ordered to do 200 hours of community service. This was a comparatively light sentence as the judge recognised that he was in a “much less culpable position” than his fellow conspirator.

The disciplinary committee tribunal said that in all but exceptional cases a member guilty of conspiracy to defraud would be excluded. But there were strong mitigating factors, and not just about the case itself. Ford had no intention to obtain financial gain for himself, his actions did not contribute to Torex’s downfall, he did an extraordinary amount of charitable and other public works and he was highly unlikely ever to repeat the offence.

In the tribunal’s opinion, Ford was not a serious threat to the public.

“The defendant [is] an able chartered accountant, at the peak of his career who found himself embroiled in a situation not of his own making and in which he played a small part," it said. “The tribunal sees no benefit to anyone in the defendant having to drag this matter behind him for the rest of his career, as far as that is possible.”

The trtibunall added that as Ford had already been punished by the court, a fair and proportionate approach would be for ICAEW to acknowledge his wrong and then enable him to get his career back on track.


Julia Irvine