DISCIPLINARY COMMITTEE OF THE ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS

Transcription

1 DISCIPLINARY COMMITTEE OF THE ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS REASONS FOR DECISION In the matter of: Stephen Jeremy Bache Heard on: 27 July 2015 Location: Committee: Legal Adviser: Persons present and capacity: Observers: ACCA offices, 29 Lincoln's Inn Fields, London WC2A 3EE Mrs Lubna Shuja (Chairman), Mr Jonathan Beckerlegge (Accountant), Mr Philip Jewell (Lay) Mr David Marshall Ms Kayleigh Long (Case Presenter), Mr Bache, Ms Celeste Alexander-Allen (Committee Officer) and Mr Michael Salter (disciplinary assessor) None 1. The Committee met to consider two allegations of misconduct against Mr Bache. Ms Kayleigh Long appeared for ACCA. Mr Bache was present and represented himself. 2. The background to this matter is that Mr Bache was convicted on 1 August 2013 of two counts of conspiracy to cheat the public revenue and two counts of conspiracy to launder money. He had denied the charges. On 10 September 2013 he was sentenced to a term of three and a half years in prison. The Attorney-General sought permission to have that sentence reviewed on the basis that it was too lenient but that application was refused by the Court of Appeal on 19 November Mr Bache applied for permission to appeal his conviction, but that application was refused by the Court of Appeal on 29 October Mr Bache considers that he is the victim of a miscarriage of justice and has applied to the Criminal Cases Review Commission ( CCRC ). PRELIMINARY APPLICATIONS 4. At the outset of the hearing Ms Long applied to amend Allegation 1. As originally drafted, the Allegation was that Mr Bache conspired to cheat the public revenue and launder money. However, it is not and never has been

2 ACCA s intention to call all the evidence necessary to establish a conspiracy involving Mr Bache. Rather, ACCA relies on the criminal convictions. Those convictions in themselves are conclusive proof of misconduct under Bye- Law 8. Ms Long therefore applied to amend the Allegation to add the words was convicted of conspiring. Mr Bache accepted that he had understood the case against him to be on the basis of the convictions themselves. He had no objection to the amendment. 5. The Committee considered that the allegation as drafted was misleading as to the nature of the case to be advanced by ACCA and that it should be corrected to reflect what had always been intended. The Committee was satisfied that no injustice would be caused to Mr Bache. Indeed it could be an advantage to him if he succeeds in getting the convictions set aside as it will make it clear that any order that may be made subsequently was solely on the basis of those convictions. 6. The Committee therefore allowed the amendment. 7. Mr Bache then applied for the hearing to be adjourned until such time as the outcome of his application to the CCRC had been determined. He submitted that if his application was accepted it could lead to his conviction being quashed, in which case an order excluding him from membership would be a further injustice. On the other hand, if his application was refused, the outcome of these proceedings would be a formality. He informed the Committee that he was currently subject to an interim order suspending his membership and his practising certificate so he was not entitled to practise as an accountant. He said that he was complying with the interim order and submitted that because of the interim order there would no risk to the public during the period of any adjournment. 8. Ms Long opposed the application. 9. The legal adviser advised that if an order was made on the basis of the convictions, and those convictions were subsequently overturned, a future Committee would have the power to set aside that order. He referred to the case of R (Jenkinson) v NMC [2009] EWHC 1111 (Admin). 10. The Committee noted that Mr Bache had exhausted the formal appeal process. He must be treated as having been duly convicted and sentenced.

3 It considered that it was bound to act on those convictions so long as they remained intact. An enquiry by the CCRC, if one took place, would take a lengthy period and the outcome would be uncertain. An adjournment would have to be for an indefinite time and could be very lengthy. Mr Bache s application is at a very early stage. He produced a letter dated 3 July 2015 stating that his case was being passed to a Case Review Manager who would probably be in contact within 8 weeks. 11. The Committee considered that while the interim order protected the public from direct harm as a result of Mr Bache practising, it did not address the wider public interest in ensuring that those who are on the register are fit to be members. The public would expect the Committee to reach a final determination within a reasonable time about the effect of the convictions on Mr Bache s registration. 12. The Committee therefore refused the application to adjourn. ALLEGATION(S)/BRIEF BACKGROUND 13. Mr Bache faced the following Allegations, as amended: Allegation 1 Pursuant to bye-law 8(a)(i), Mr Bache is guilty of misconduct in that he was convicted of: 1. conspiring to cheat the public revenue on two counts 2. conspiring to launder money on two counts. Allegation 2 Pursuant to bye-law 8(a)(i), Mr Bache is guilty of misconduct in that on 10 September 2013 he was disqualified from holding the position of director of a company for a period of seven years pursuant to section 2 of the Company Directors Disqualification Act DECISION ON FACTS/ALLEGATIONS AND REASONS 14. Mr Bache admitted the facts as set out in the amended Allegations, namely that he had been convicted and disqualified but he did not accept misconduct. The Committee recognised that his position is that the

4 convictions and consequent disqualification order were a miscarriage of justice. However, at this stage, the only issue for the Committee was whether Mr Bache was guilty of misconduct as a result of the admitted facts. Allegation The Committee was in no doubt that offences of conspiring to cheat the public and to launder money were highly discreditable to Mr Bache as an accountant, and to the profession as a whole. The legal adviser advised that under Bye-Law 8 such offences were conclusive proof of misconduct. The Committee therefore found Allegation 1 proved. Allegation For a practising accountant to be disqualified from acting as a director for 7 years because of convictions of the kind referred to above is an extremely serious matter. It brings discredit to him, to ACCA, and to the accountancy profession as a whole. The Committee was in no doubt that the matters alleged amounted to misconduct. The Committee therefore found Allegation 2 proved. SANCTION(S) AND REASONS 17. Having found both allegations of misconduct proved, the Committee considered what sanction, if any, to impose having regard to the Guideline Disciplinary Sanctions. 18. The Committee first considered the nature of the offences for which Mr Bache was convicted and disqualified as a director. A press release from HMRC dated 30 July 2014 stated that his conviction was one of 20 convictions resulting from a major investigation into a sophisticated tax fraud. The essential facts of Mr Bache s conviction were summarised by the Court of Appeal, Criminal Division, in its judgment given on 19 November 2013 dismissing the Attorney-General s application for the sentence to be reviewed. The conspiracies about which evidence was given at the trials involved the evasion of tax due under the Construction Industry Scheme. The following extracts are sufficient to indicate the nature of the conspiracy, and the extent of Mr Bache s involvement in it: 5. In summary, the conspiracy involved the provision of payroll services to main contractors by which the need for those companies to retain tax was

5 avoided. For the purposes of illustration: if the building [contractor s] or civil engineer s customer was A and the contractor was B, the conspirators would create a layer of subcontractors called C who purported to provide the workforce to contractor B. Subcontractor C would invoice contractor B for those services, notwithstanding it had done no work and the arrangement was a sham. Subcontractor C further pretended to subcontract to a third layer of companies, called for the purposes of illustration D. The C companies created false invoices which they pretended emanated from D. The D companies had been hijacked for the use of their VAT registration. The workforce was paid net, in cash, from money made available by the B company. No account was made to the revenue by the C company. The C company reclaimed VAT on the false D invoices. The loss to the revenue was over 5.5 million during a conspiracy that operated in the Midlands between 2007 and That conspiracy was linked to a similar operation discovered to be operating in the northwest of England. 6. Bernard Harper was introduced to the jury which convicted him and described by the judge as the architect and organiser of the fraud. He created the C companies that were used to operate it. 8. The evidence was that the offender, Stephen Bache, worked as Harper s accountant for three C companies in the Midlands and a fourth in the northwest. He was an accountant advising several of the individuals who were involved in this fraud in connection with their personal tax affairs. It was not contended that the offender handled any of the day-to-day affairs of the companies, it was asserted by the prosecution that he must have known of Harper s fraudulent activities and nevertheless continued to give advice to Harper and the companies when it became clear that there was an investigation into their dishonest affairs. 13. It was the view of the trial judge that no evidence had emerged to demonstrate what specific role the offender played in the conspiracy overall, save that he acted as the accountant to companies when he knew that they were being used dishonestly and that he acted as a front man in the interface between those companies and HMRC officials....

6 19. The Committee first considered the aggravating factors. As already stated, the convictions and subsequent disqualification as a director were each of a nature that is extremely serious for an accountant. In this case the convictions related to involvement in a very large scale fraud which continued for a substantial period. The seriousness of the offences is indicated by the fact that he received a sentence of 3 and a half years imprisonment and was disqualified as a director for 7 years. 20. There is some mitigation in this case. The Committee took into account that Mr Bache did not handle the day-to-day affairs of the fraudulent companies and that no specific role in the conspiracy was proved against him. It took into account that he had not profited from the fraud, except in the form of the fees charged for his accountancy services. Mr Bache submitted that he had at all times acted in accordance with ACCA s rules and guidance and that he was unable to resign from his appointments with the fraudulent companies because he would then have been in breach of the tipping off rules. However, the Committee cannot go behind the convictions. They establish that Mr Bache conspired with the fraudsters. As the Court of Appeal said, he continued to act as the accountant to companies when he knew that they were being used dishonestly. 21. The Committee took into account that Mr Bache was of previous good character. He told the Committee, and it accepted, that he had been a member of ACCA since 1986 with an untarnished record. It took into account that he is now suffering considerable financial hardship. The Committee took into account that Mr Bache reported the matter himself to ACCA and has cooperated with the investigation. 22. Given the seriousness of this matter the Committee considered it essential to impose a sanction. The Committee was required to go through each available sanction in order of seriousness, and did so. However, it was clear that neither admonishment, reprimand or severe reprimand would be sufficient to reflect the seriousness of the misconduct. The same applies to the sanction of a fine, with the additional consideration that Mr Bache would be unable to pay a significant fine. 23. Mr Bache submitted that the present suspension of his membership should be continued until his application to the CCRC was dealt with. However, that

7 suspension was an interim order which ceased to be relevant once the case reached a final hearing. The sanction of suspension was not available to this Committee. 24. The remaining relevant sanction was exclusion from membership. The Committee had no doubt that in a case of this seriousness, exclusion was the necessary and proportionate sanction. Offences of the kind that Mr Bache was convicted of destroy the trust that the public is entitled to place in an individual accountant and in the profession generally. 25. The Committee noted that Mr Bache s disqualification as a director will continue until September The Committee considered that Mr Bache should not be permitted to apply for readmission while he is under that order of disqualification. It therefore ordered that no application for readmission may be considered until the expiry of five years (the maximum period permissible). 26. Should Mr Bache s application to the CCRC be successful the Committee would expect the orders made today to be reviewed. COSTS AND REASONS 27. Ms Long informed the Committee that ACCA had omitted to serve notice of a costs application on Mr Bache and in the circumstances she accepted that it would be unfair to seek costs. The Committee therefore made no order as to costs. EFFECTIVE DATE OF ORDER 28. Given the seriousness of the misconduct in this case, the Committee determined that it was necessary for the protection of the public and to maintain public confidence in the profession for its order to take immediate effect. PUBLICITY 29. ACCA s regulations require ACCA to publish the Committee s findings and orders by way of a news release naming the relevant person, as soon as practicable. The Committee has discretion as to which publications the news release should be sent to, and discretion in exceptional circumstances to direct that the relevant person is not named. Mr Bache did not make any

8 submissions in this regard. 30. The Committee concluded that there were no exceptional circumstances in this case. It ordered that a news release be issued to ACCA s website and to the local press referring to Mr Bache by name. INTERIM ORDER 31. The existing interim order is rescinded. Lubna Shuja Chairman 27 July 2015