Called to account: the best of 2016

Accountancy brings you a selection of cases involving members of the accounting profession – and a few others – who did not escape the long arm of the law during 2016

Jail for ex-FD of Anglo Irish bank over €7.2bn ‘sham’ transactions

William McAteer, former finance director of Anglo Irish Bank, was given a three-and-a-half year jail sentence for his part in a 7.2bn (£6.07bn) accounting fraud following the conclusion of the longest criminal trial in Irish legal history into three men accused of artificially shoring up the bank’s value at the height of the financial crisis.

Former Anglo executive John Bowe received a two-year sentence and former group chief executive of Irish Life and Permanent (ILP) Denis Casey a term of two years and nine months. The judge at Dublin Circuit Criminal Court described their actions as ‘reprehensible’.

The three took part in a fraud involving circular transactions, designed to disguise the true state of the bank’s financial health and mislead investors, depositors and lenders between March and September 2008.

Under the scheme, Anglo loaned ILP 7.2bn which then returned the money to the bank via its insurance arm, Irish Life Assurance. Anglo accounted for the transactions as customer deposits rather than an inter-bank loan.

In passing sentence, Judge Martin Nolan described the sham transactions as ‘dishonest, deceitful and corrupt’.

The judge also said it ‘beggared belief’ that auditors EY could have signed off on the bank’s accounts. He said that as a global accountancy firm it should have known the true situation at least by the end of October 2008.

In a statement, EY said that it was not a party to the proceedings. ‘EY fully cooperated with requests from the prosecution for witnesses and documentation in this matter.’

Little Wing film scheme fraudsters land in jail

Accountant Keith Hayley and London-based financial advisers Robert Bevan and Anthony Savill created the scheme which was disguised as a film development venture marketed under the name of Little Wing Films.

More than 275 investors between them deposited more than £76m. The men told investors that for every £100,000 invested, higher rate taxpayers would get £130,000 in tax repayments from HMRC.

Norman Leighton, an accountant and corporate services provider based in Monaco, helped the trio create the pretence that more than £250m was being spent on pre-production and development activity, and creating film packages in Monaco. However, an HMRC investigation discovered that these packages had in fact cost only £4m and had been created in Little Wing Films’ London offices.

Hayley, Bevan and Savill, together with Leighton, falsified paperwork to mislead HMRC. They established offshore companies registered in the British Virgin Islands that supposedly operated in Monaco, Geneva and the Channel Islands. These companies were in turn fronted by family friends in the Philippines and Kolkata.

Each of the companies did little more than pass investor funds through their bank accounts, from one to another and back again, sometimes several times, to give the appearance that more money had been invested, inflating the scheme’s losses.

Overall, the gang falsified expenses of more than £275m to increase the scheme’s financial losses, which enabled investors to collectively claim around £100m in tax repayments.

The four men were found guilty of cheating the public revenue at Birmingham Crown Court. As well as the nine-year jail terms for Hayley, Bevan and Savill, Leighton was given a two-year suspended sentence.

Accountant steals £268k from golf club’s account

Accountant James Cassidy stole £268,000 from his place of work by providing false graphs and bank statements to fund his gambling addiction. The 30-year-old accountant stole the money from Greenway Hall Golf Club, in Stockton Brooke, so he was able to afford to gamble online.

Police discovered that he had put a wager of £242,156 with online gambling site, Paddy Power. However, he only won £44,904 of this. His actions meant that the golf course was struggling financially and the staff were worried about the status of their jobs.

Cassidy was given a three-and-a-half year prison sentence.

Gold club director, Deborah Burton said: ‘He was the ultimate con man who abused his position of trust.

I personally signed off every invoice and receipt. That did not stop him transferring money to himself.’

Businessman faces six years in jail for £4.75m VAT fraud

An Essex businessman was jailed for six years and banned from being a director for 10 years after creating a fake trade to fraudulently claim £4.75m in VAT repayments.

Robert Waterman, 43, was investigated by HMRC who found he had created a fake trade in computer memory sticks to claim back VAT between April 2013 and March 2015.

Waterman, who had been banned from being a company director, claimed to be exporting memory sticks to Dubai through his company Asset Innovations UK Ltd. He would then reclaim VAT as they were being exported outside of the EU.

Instead, he was faking purchase invoices for the goods and sending empty parcels to a address in Dubai.

He used the fake trade to file monthly VAT returns with a further £530,000 being withheld as HMRC became aware of the fraud before arresting him in June 2015.

Waterman used the £4.75m proceeds from his fraud to buy a £1.15m house with no mortgage, drive a Range Rover Sport and fund a holiday home. He also bought a £310,000 property outright.

HMRC secured a restraining order worth £4m on his assets as it looked to recoup the full proceeds of Waterman’s crime.

HMRC puts freeze on £1.6m ice cream VAT fraudster

An ice cream franchisee’s plans for a £1.6m VAT fraud went into meltdown following an HMRC investigation, and the London-based company director scooped an eight-year jail sentence.

Mohammed Shareef, from Harrow, was a director of two companies: Acme Foods Ltd and Orion MG Ltd, and franchisee of nine Baskin Robbins ice cream shops in London.Baskin Robbins was not subject to this criminal investigation or court proceedings.

HMRC’s investigation found he had submitted false VAT repayments claims for £1,669,463 over a six-year period between September 2009 and August 2013. In total he claimed VAT repayments of £1,542,842 for Acme Foods and £126,621 for Orion MG.

Investigators found he had used false paperwork to support his claims for shops that had already closed, had yet to open, or did not exist.

PwC and ex RSM Tenon chief rapped over Group audit

The accounting regulator fined the ex-CEO of the former RSM Tenon Group and issued a formal disciplinary complaint against the firm’s auditor, PwC over the audit of the accounting firm, and its former finance director in relation to the preparation, approval and audit of the financial statements for the year ended 30 June 2011.

The Financial Reporting Council (FRC) alleged that Nicholas Boden, PwC’s senior statutory auditor and audit engagement partner, and the firm failed to act in accordance with the fundamental principle of professional competence and due care contained in the ICAEW code of ethics.

In addition, the FRC has agreed a settlement with Andrew Raynor, the ex-CEO of RSM Tenon, following an admission of misconduct.

Raynor admitted that he failed to obtain the necessary level of assurance in relation to the accounting treatment of bonus accruals and a lease, to sign off on the financial statements of RSM Tenon on the basis that they were in accordance with applicable accounting standards and represented a true and fair view of the state of affairs of the company.

The FRC fine of £40,000 was reduced to £26,500 after mitigation and a settlement discount. Raynor was also given a reprimand and must pay £50,000 as a contribution to the FRC’s executive counsel’s costs.

Entrepreneur jailed for £500k VAT fraud

An entrepreneur from London has been jailed for three years after he was found guilty of stealing £500,000 in VAT. Gurkirpal Singh Bance, known as Dave Bance, 54, was owner of the Bance Group, which claimed to have business ventures including its own airline.

He publicly stated that his businesses were worth £80m, yet he never registered the companies for VAT or even made minor contributions to avoid HMRC’s suspicions.

HMRC’s suspicions were raised when checks revealed that after  Bance purchased two restaurant bars in London, the Cuban and Beauchamp bars, he was charging customers VAT using the previous owner’s VAT number.

In an bid to conceal his earnings, Bance hid his income offshore by transferring funds to a company based in the British Virgin Islands.

Bance was arrested in July 2013 and charged with cheating the public revenue. He was sentenced to three years in prison on 14 June 2016.

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