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: Mr Daud Khan FCCA Heard on: Friday, 23 February 2018 Location: The Chartered Institute of Arbitrators, 12 Bloomsbury Square, London, WC1A 2LP Committee: Dr Jonathan Page (Chairman), Ms Susan Gallone (Accountant), Mr Stephen Griffiths (Lay) Legal Adviser: Mr Conor Heaney Persons present and capacity: Mrs Emily Healy-Howell (ACCA Case Presenter); Miss Rachael Davies (ACCA Hearings Officer) Observers: None Summary of Outcome: Excluded from membership effective immediately; ordered to pay 8000 in costs PRELIMINARY/ SERVICE OF PAPERS 1. The Committee met to consider an allegation against Mr Daud Khan FCCA that he was liable to disciplinary action. The Committee had before it a hearing bundle comprising pages A-N and and an adjournment bundle comprising pages The Committee also had a service bundle comprising pages 1-11.

2 2. ACCA was represented by Mrs Healy-Howell. Mr Khan was neither present nor represented. 3. The notice of hearing, together with requisite documentation, was sent in good time to Mr Khan s registered address by way of letter dated 22 January On the same date, an electronic copy of the same documents was sent to Mr Khan to an provided by him and held on the ACCA database. 4. The Committee accepted the advice of the Legal Adviser. 5. The Committee was satisfied that service of the proceedings had been effected in accordance with regulation 22 of the Complaints and Disciplinary Regulations 2017, as amended. APPLICATION TO ADJOURN/ PROCEEDING IN ABSENCE 6. Mr Khan was not present at the hearing, nor was he represented. 7. Mr Khan had stated in s dated 20 and 28 January 2018 that he would not be able to attend the hearing. By way of dated 4 February 2018, Mr Khan advised that he could not participate by way of a conference facility, but that he could attend on a future date in June In written submissions, dated 7 February 2018, ACCA opposed the adjournment of the hearing to a later date. 8. Mr Khan s adjournment request was considered and refused by the Chair, Dr Jonathan Page, in a written determination with reasons dated 13 February Dr Page made it clear in his determination that the matter would be considered afresh if further documentation and information was furnished by Mr Khan. No such further material was forthcoming. 9. At the outset of the proceedings, the Committee reconsidered Mr Khan s request for the adjournment and relisting of the hearing. 10. Mrs Healy-Howell, in her submissions, opposed the matter being postponed and submitted that there was a strong public interest in proceeding with the hearing in Mr Khan s absence.

3 11. The Committee noted the history of the case. 12. The matter had been referred to ACCA in November On 5 June 2017, the Assessor s decision was communicated to Mr Khan in a Case Management Form ( CMF ). On this date Mr Khan was asked to confirm dates for his availability to attend at a hearing. On 12 June 2017, not having heard from him, ACCA wrote to advise Mr Khan setting a provisional hearing date on 16 August Mr Khan wrote to ACCA on 16 June 2017 to request that that date be changed as he was seeking to engage legal representation. As a result of Mr Khan s request, the August hearing date was vacated by ACCA. On 11 August 2017, ACCA received an from Mr Khan s legal representatives to state that they were no longer acting for him. Despite repeated requests by ACCA for the completed CMF, during this time, it was not returned by Mr Khan. As a result, ACCA listed the matter for hearing on 23 November 2017, in the absence of hearing from Mr Khan and wrote to him to confirm the hearing date. 13. Subsequently, Mr Khan requested an adjournment of the November hearing. He stated that he would not be able to attend [due to a family member s health]. Mr Khan requested a relisting date in the New Year and furnished ACCA with a plane ticket for his return journey booked for the end of January Mr Khan s adjournment application was granted by Mr Crawley, a Chair of the Disciplinary Committee. In his written determination Mr Crawley stated: I am granting the application, with the expectation that ACCA will be able to reschedule the hearing for an appropriate early date falling after Mr Khan s return to the UK at the end of January ACCA accordingly ed Mr Khan on 23 November 2017 and 16 January 2018 to advise that the matter had been listed on 23 February In response, Mr Khan wrote to ACCA by dated 20 January He stated that he did not have internet access in his village and had read ACCA s s when he came to the city, some 2.5 to 3 hours drive away. Mr Khan stated that he had been required to extend his stay in Pakistan, longer than he had anticipated [redacted]. He indicated that he would return to the UK in April/ May ACCA wrote to Mr Khan in an dated 23 January 2018, to advise that his application to adjourn would be

4 opposed and that he could participate at the hearing by telephone or video link. On 28 January 2018, Mr Khan ed to confirm his inability to attend the hearing because of his stated commitments in Pakistan. He ed again on 4 February 2018 to indicate that, owing to the poor infrastructure, he would also be unable to participate at the hearing by telephone or video link. Mr Khan asked for the hearing to be rescheduled to a date in June The Committee noted the reasons given by Dr Page in his determination to refuse Mr Khan s postponement application. Dr Page had noted Mr Khan s difficult circumstances. Further, at paragraph 13 of his determination, he stated: I note that [Mr Khan] is able to send and receive s. Also, difficulties that arise are due to his [family member s] ill-health. [Redacted]. At the moment, I cannot assess why Mr Khan is unable to travel somewhere for the day where he can have uninterrupted access to a telephone and engage with the process on 23 rd February. 18. The Committee further noted that Dr Page did not close his mind on the question of Mr Khan s application. At paragraph 14, he gave directions on which he would reconsider Mr Khan s application. These were: a. Medical evidence setting out Mr Khan s [family member s] current medical condition; b. His mother s full address so that the remoteness can be assessed; c. The reasons which Mr Khan states he is unable to travel to a local town and engage with the hearing by telephone on 23 February 2018; d. What type of flight ticket Mr Khan had to bring him to the UK; e. The date by which Mr Khan intended to fly to the UK; and f. The completed CMF. 19. The Committee noted that there had been no further response from Mr Khan. 20. The Committee accepted the advice of the Legal Adviser. 21. The Committee considered that, from its detailed consideration of the listing and adjournment history, considerable latitude had been afforded to Mr Khan. He had engaged extensively with ACCA, by , in relation to the February listing date but

5 had not responded, since 13 February, to those matters highlighted for him by Dr Page. The Committee considered that, given his previous contact about and awareness of the listing date, Mr Khan would have been expected to be alive to the need to address urgently those matters set out for him by Dr Page if he desired to adjourn the hearing further. He had not done so. The Committee had no explanation from Mr Khan to explain that failure. 22. While careful consideration was to be given to Mr Khan s interests, the Committee also needed to be mindful of, and give appropriate weight to, the public interest. The Committee observed that this matter had been listed previously with the hearing date vacated, owing to the ill-health of Mr Khan s [family member] and his need to attend to [them]. The Committee did not attach fault to Mr Khan for the previous adjournment. The Committee considered, however, that the allegation against him was of a serious nature. The conviction dated back to 2016 and resulted in Mr Khan receiving a 14-month sentence of imprisonment, which had since been served. The offending itself went back to The regulatory proceedings, to the Committee s mind, had been outstanding for a significant period of time. The conviction also related to dishonest conduct on Mr Khan s part and was directly related to accountancy. 23. The Committee decided, in balancing the interests of Mr Khan and the public interest, to refuse Mr Khan s application. There was a strong public interest in proceeding with the hearing which outweighed Mr Khan s interests. 24. The Committee next considered whether it was fair and appropriate to proceed in Mr Khan s absence. 25. The Committee accepted the advice of the Legal Adviser. 26. Mr Khan had engaged with ACCA on the question of the listing of the hearing. He had known about the February date and took steps, as noted above, to have the hearing adjourned. Mr Khan had corresponded extensively with ACCA in the time leading up to the hearing date. He had not, however, acted on the directions made by Dr Page on 13 February. As a result of this omission by Mr Khan, the Committee had insufficient information on which to determine whether he had waived his right to appear.

6 27. The Committee observed that there would be some disadvantage to Mr Khan in not being present at the hearing or participating remotely. He would not be able to give evidence or make submissions. However, the Committee considered that the extent of the disadvantage was mitigated by the nature of the allegation under consideration. A certificate of conviction was considered, without more, to be conclusive proof of the conviction and the facts underlying it. The Committee determined that any written material provided by Mr Khan, contained in the hearing bundle to explain the circumstances surrounding the conviction, would be considered carefully by the Committee at the appropriate stage in the proceedings. 28. The Committee was also satisfied that, in the balancing exercise, Mr Khan s interests were outweighed by the public interest. The conviction dated back a considerable period. It was for a serious offence, for which Mr Khan had served a period of imprisonment and was related directly to Mr Khan s profession as an accountant. In all the circumstances, the Committee concluded that it was fair, appropriate and in the public interest to proceed in Mr Khan s absence. ALLEGATION 29. Mr Khan was admitted as a member of ACCA in December 2005 and a Fellow of ACCA in December Mr Khan faced the following Allegation: Allegation 1 (a) On 1 August 2016 Mr Daud Khan was convicted of: (i) Two counts of fraud by abuse of position contrary to section 1 of the Fraud Act 2006; and (ii) Three counts of false accounting contrary to section 17(1) of the Theft Act 1968 at Leeds Crown Court.

7 (b) By reason of his conduct at 1(a) above, Mr Khan is liable to disciplinary action pursuant to bye-law 8(a)(ix). BACKGROUND 31. Mr Khan was convicted on 1 August 2016 in the Crown Court at Leeds of two counts of fraud by abuse of position and three counts of false accounting. He was sentenced, on 30 September 2016, to a total of 14 months imprisonment. 32. ACCA was informed, on 1 November 2016, by West Yorkshire Police about Mr Khan s convictions, arising out of his involvement with the Kings Science Academy, a free school in Bradford. 33. KIFSA Limited was set up in July 2010 in order to establish the Kings Science Academy. Records at Companies House showed that from 1 August 2010 until 9 December 2012, Mr Khan was a director of KIFSA Limited. At the relevant time, he was also the school s Finance Director. 34. On 1 August 2016, Mr Khan was convicted in connection with his handling of public money and the processing of bogus invoices during the setting up of the Kings Science Academy and during the first 15 months of its operation. 35. It was confirmed by the Crown Prosecution Service that Mr Khan, in correspondence with his solicitors, did not profit personally from the fraud of which he was convicted. Rather his role, as the Finance Director involved the processing of inflated or fabricated invoices which were submitted in order to obtain public money. In so doing, Mr Khan facilitated others, including the school principal, in fraudulently obtaining approximately 59,000, to which they were not entitled. 36. Mr Khan s actions were the subject of an investigation by ACCA. SUBMISSIONS 37. Mrs Healy-Howell reminded the Committee that Mr Khan had pleaded not guilty at the Crown Court and had been convicted by a jury. She submitted that the case involved discreditable conduct on Mr Khan s part over a prolonged period, and that his offending was related directly to his occupation as an accountant.

8 DECISION ON FACTS/ ALLEGATION AND REASONS 38. The Committee was satisfied that, in accordance with bye-law 8(a)(ix), Mr Khan was liable to disciplinary action. The Committee reminded itself that, in accordance with the bye-law 8(e), the certificate of conviction was conclusive proof of the conviction and the underlying facts. The only question which the Committee had to determine, in its judgement, was whether Mr Khan s conviction was discreditable to the Association. Mr Khan had been found guilty of a very serious offence. His actions were deliberate and dishonest. Mr Khan had procured for others a significant fraudulent gain as a direct consequence of his occupation as an accountant as the school s Finance Director. For these reasons, the Committee had no hesitation in finding that Mr Khan s actions and resulting conviction were discreditable to the Association and the accountancy profession. SANCTION AND REASONS 39. The Committee listened carefully to the submissions made by Mrs Healy-Howell on the question of sanction. The Committee accepted the advice of the Legal Adviser. 40. The Committee was informed that Mr Khan had no previous disciplinary findings against him. 41. The Committee had due regard to ACCA s Guidance for Disciplinary Sanctions (effective from 1 January 2018) and in particular, paragraphs E1 and E2 dealing with convictions and dishonesty. In considering what, if any, sanction to impose, the Committee had regard to the principle of proportionality and the need to balance the public interest against Mr Khan s interests. The Committee was also mindful that the purpose of any sanction was not to be punitive but to protect members of the public, maintain public confidence in the profession and ACCA and to declare and uphold proper standards of conduct and performance. 42. When considering the appropriate sanction, the Committee carefully considered the aggravating and mitigating factors in the case. 43. The Committee accepted that Mr Khan had engaged, to a considerable degree, in the regulatory proceedings brought against him by ACCA. Prior to his conviction, the

9 Committee accepted that he was a man of previous good character. There was evidence to suggest that Mr Khan was not the dominant force in the fraudulent enterprise undertaken at the school. However, set against that and given his role, Mr Khan was instrumental in the misappropriation of public money by dishonest means. 44. The Committee observed that Mr Khan s offending involved numerous dishonest acts. He had exploited the public purse for gain and had used his position as an accountant and Finance Director in order to procure that gain. Mr Khan had demonstrated minimal, if any, insight into his offending behaviour. In an to ACCA dated 2 February 2017, Mr Khan confirmed that he had pleaded not guilty to the offences of which he was convicted. He also stated, My feeling toward the offence and conviction total shock, horror and dismay that my life has been ruined by principals actions I had done nothing wrong. The Committee was left with an abiding sense that Mr Khan considered that he ought not to have been convicted. He had demonstrated no understanding of the seriousness of his actions or how public trust in the accountancy profession could be undermined by them. For those reasons, the Committee considered that the scope and gravity of Mr Khan s offending behaviour and conviction was too serious to conclude the case by taking no further action or applying the sanctions of Admonishment or Reprimand. 45. The Committee next carefully considered whether it would be appropriate to apply a Severe Reprimand. The Committee observed that the factors outlined in the Guidance which would justify such a course were largely absent in this case. Mr Khan had conducted himself in a calculated and intentional manner. He had caused a loss to the public purse by his actions. While it was accepted that he had not benefitted personally, his key position as a Financial Director had allowed others to do so. He had failed to demonstrate insight and remorse. 46. The Committee further noted the sentencing remarks of the Crown Court in which the judge observed of Mr Khan: you were the Financial Director. As such, you had a position of responsibility and trust. You were involved in this fraud over a protracted period of time. I am satisfied that you are not a strong and forceful personality and I am satisfied that [the school principal] was very much the dominant force in the school. He called the shots. You obeyed the orders. I am satisfied, from the evidence of the way he treated others as well as the

10 evidence of how he treated you that he brought pressure to bear upon you to comply with his wishes. You played a vital role in the defrauding of the money intended to provide an education for children in this country. Whilst I accept you had some pressure brought to bear, you could have walked away and yet you chose to stay for the best part of 19 months and these practices continued with your connivance throughout. 47. The Committee was satisfied that Mr Khan s dishonest actions had facilitated the defrauding of the public purse. They ran counter to the fundamental tenets of honesty and probity which the public rightly expect of the accountancy profession, and were fundamentally incompatible with membership of ACCA. The Committee reminded itself of the judgment of the Court of Appeal in the case of Bolton v Law Society, in which it was said that, the reputation of the profession is more important than the fortunes of any individual member. Membership of a profession brings many benefits, but that is part of the price. That guidance, to the Committee s mind, was entirely apt in the circumstances of this case. 48. The Committee was satisfied that Mr Khan s actions represented a profound and serious departure from the standards to be adhered to at all times by members of ACCA and that exclusion was the only proportionate and appropriate sanction in this case in order to uphold and protect the public interest. ORDER 49. The Committee therefore ordered that Mr Khan be excluded from membership of ACCA. EFFECTIVE DATE OF ORDER 50. Having regard to its findings the Committee directs that, in the public interest, its order of exclusion should have immediate effect. COSTS

11 51. ACCA applied for its costs in the sum of 10, Mr Khan had not provided ACCA with a financial statement which meant the Committee had no knowledge about his means. The Committee had sight of the detailed schedule of costs submitted by ACCA. The Committee considered that some reduction in ACCA s costs was warranted. The hearing had taken half a day. The Committee also considered that the figures claimed for the preparation of the case generally, and the costs incurred in previous interim order proceedings, were somewhat on the high side. The Committee considered that a reduction in the overall figure to 8000 was fair and reasonable having regard to those factors. 52. The Committee therefore orders Mr Khan to pay ACCA s costs in the sum of Dr Jonathan Page Chairman 23 February 2018