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 Ioannis Andronikou Heard on: Tuesday, 25 July 2017 and Wednesday, 26 July 2017 Location: The Chartered Institute of Arbitrators, 12 Bloomsbury Square, London, WC1A 2LP Committee: Dr Jonathan Page (Chairman) Mr Jonathan Beckerlegge (Accountant) and Dr Pamela Ormerod (Lay) Legal Adviser: Mr Leighton Hughes Persons present and capacity: Ms Sarah Cawley-Wilkinson (ACCA Case Presenter) Mr Richard Lorkin (Hearings Officer) Observers: None Summary: (i) Exclusion from membership. No application for re-admission to membership may be considered before the expiry of five years from the effective date of this order. (ii) Costs 3, EFFECTIVE DATE OF ORDER: Immediate 1. The Committee had before it hearing bundles numbered pages and , together with a service bundle numbered pages ACCA was represented by Ms Cawley-Wilkinson. Mr Andronikou was neither present nor represented.

2 SERVICE OF PAPERS 3. Mr Andronikou was sent the notice of hearing, a copy of the hearing bundle and accompanying documentation on 12 June The documents were sent to his ACCA registered address. The Committee noted that the notice was also sent by to the address which Mr Andronikou had been using to contact ACCA for some time. 4. The Committee determined that Mr Andronikou had been properly served with the notice and case papers in accordance with Regulation 10 of the Chartered Certified Accountants' Complaints and Disciplinary Regulations 2014 ("the Regulations"). PROCEEDING IN ABSENCE / MR ANDRONIKOU'S APPLICATION FOR AN ADJOURNMENT 5. The Committee went on to consider whether to proceed in the absence of Mr Andronikou. It bore in mind its discretion to do so, in accordance with Regulation 10(7). The Committee noted that it should approach the exercise of its discretion with the utmost care and caution. It had regard to all the information before it in order to determine whether Mr Andronikou had voluntarily absented himself from today s proceedings. 6. Mr Andronikou had contacted the ACCA by on a number of occasions since receiving notice of the hearing. He had contended that the hearing should not take place on 25 July 2017, but should await the determination of an outstanding civil case as well as an application that had been made on his behalf to the European Court of Human Rights ("The European Court"). On 20 June 2017, in an to ACCA, Mr Andronikou wrote "I believe it is pointless and futile for me to participate in a hearing at present. It will be a sheer waste of money... I will not participate in the Disciplinary Committee hearing since the outcome has already been decided." The same day the ACCA Hearings Officer sent an to Mr Andronikou inviting him to indicate whether he consented to the Committee proceeding in his absence or whether he would be seeking an adjournment of the hearing. On 21 June 2017 Mr Andronikou replied "I have no intention of repeating myself... not

3 only do you not have my consent to the panel proceeding in my absence, but I also strongly object to the whole process." 7. The Committee considered it implicit in Mr Andronikou's correspondence that he was seeking an adjournment of this hearing pending the final resolution of his case in the European Court and the outcome of the civil case. 8. The Committee considered that any potential disadvantage to Mr Andronikou as a result of his decision not to participate in this hearing was mitigated by consideration of the substantial material that he had already submitted. Furthermore, the Committee considered that any disadvantage was limited, having regard to the nature of the case, which arose from criminal conviction that Mr Andronikou acknowledged were recorded, albeit he said, 'wrongly.' 9. The Committee was concerned by the time that had already elapsed since the conviction that gave rise to these proceedings and was satisfied that further unnecessary delay would be contrary to both good practice and the interests of justice. 10. The Committee was satisfied that Mr Andronikou was aware of today s hearing and that he had voluntarily decided not to participate in the hearing. The Committee was not persuaded that an adjournment today would lead to Mr Andronikou participating in a hearing arranged at any future date. 11. The Committee had regard to ACCA's guidance on requests for adjournments of Disciplinary Committee hearings, but bore in mind that this guidance is that and no more, it is not the source of legal obligation. 12. The Committee acknowledged there is no obligation on the part of a regulator to await the outcome of all avenues of appeal before dealing with a conviction case, and the Committee noted that the domestic appeals process was concluded unfavourably for Mr Andronikou in the Supreme Court of Cyprus as long ago as 15 July Furthermore, the Committee concluded that the number of imponderables inherent in awaiting the promulgation of the decision of European Court and its effect, if any, upon

4 Mr Andronikou's conviction were such that an adjournment to await the outcome of the application to the European Court would be inappropriate and disproportionate. On the material before the Committee it was not possible to see how the outcome of the civil case could impact upon these disciplinary proceedings. 13. The Committee also bore in mind that Regulation 15(2) of the Chartered Certified Accountants' Appeal Regulations 2014 provided an absolute discretion to amend, vary or rescind any order or decision where new evidence came to light which fundamentally invalidated a finding. This provision was capable of being invoked in the event of a successful appeal against a member's conviction for a criminal offence. 14. Accordingly, the panel determined to proceed with the hearing in the absence of Mr Andronikou. It further refused his application for an adjournment for the same reasons. It was satisfied that the public interest in proceeding with this matter outweighed any interest of Mr Andronikou in the adjournment of the hearing. ALLEGATIONS Allegation 1 Pursuant to bye-law 8(a)(i), Ioannis Andronikou is guilty of misconduct by reason of his committing two offences of Stealing by Agent contrary to Section 270(c) of the Cyprus Criminal Code and four offences contrary to the Cyprus Prevention and Suppression of Money Laundering Activities Law 61(1)/96. Allegation 2 (a) Pursuant to bye-law 8(a)(i), Ioannis Andronikou is guilty of misconduct by reason of his failure to bring promptly to the attention of the Secretary matters indicating that he may have become liable to disciplinary action, namely that he had been convicted of two offences of Stealing by Agent contrary to Section 270(c) of the Cyprus Criminal Code and four offences contrary to the Cyprus

5 Prevention and Suppression of Money Laundering Activities Law 61(1)/96. Or (b) Pursuant to bye-law 8(a)(iii), Ioannis Andronikou has breached byelaw 10(b) by reason of his failure to bring promptly to the attention of the Secretary matters indicating that he may have become liable to disciplinary action, namely that he had been convicted of two offences of Stealing by Agent contrary to Section 270(c) of the Cyprus Criminal Code and four offences contrary to the Cyprus Prevention and Suppression of Money Laundering Activities Law 61(1)/96. BRIEF BACKGROUND 15. Mr Andronikou was admitted as a member of ACCA on 5 October 1989 and subsequently as a Fellow of the Association on 5 October The factual background is helpfully set out by Person A, Counsel for Mr Andronikou, within the application to the European Court, at pages of the hearing bundle. 17. At all material times Mr Andronikou was a shareholder in Suphire Securities and Financial Services Ltd ("SSFS"), which itself was a licensed stockbroker dealing with transactions on the Cyprus stock exchange. SSFS was a member of a group of Cyprus-based companies which was collectively known as the "Suphire Group" of companies. Mr Andronikou was a licensed stockbroker who was in overall charge of the Suphire Group and he conducted transactions and negotiations on behalf of its clients, one of which was the [PRIVATE] of Company A "the Company A pension fund." 18. On 28 September 2007 Mr Andronikou was convicted by the Nicosia Permanent Assize Court of six criminal offences of Stealing by Agent and money laundering. He was sentenced to a term of seven years' imprisonment.

6 19. ACCA was made aware of Mr Andronikou's conviction in November 2007 by a representative of the Institute of Certified Public Accountants in Cyprus (ICPAC). 20. On 15 July 2008 Mr Andronikou's appeal against his conviction and sentence was dismissed by the Supreme Court of Cyprus. 21. On 13 January 2009 an application was made on behalf of Mr Andronikou to the European Court. The application contended, in short, that the proceedings before the Nicosia Permanent Assize Court violated Mr Andronikou's right to a fair trial enshrined in Article 6 of the European Convention on Human Rights. The application was at pages of the hearing bundle. 22. The application to the European Court has not yet been determined by the Court. 23. The offences of which Mr Andronikou was convicted were summarised by Person A (at pages of the hearing bundle) as follows: i. Mr Andronikou and SSFS was alleged to have stolen 4.8 million Cyprus Pounds which they had received from the sale of shares belonging to the Company A pension fund, which they transferred into a current account in the name of SSGS which was a various relevant time in deficit. The essence of the prosecution case was that by transferring the funds into a current account with an overdraft facility. rather than holding the funds in a separate client account, Mr Andronikou and SSFS had co-mingled funds belonging to the pension fund with funds belonging to SSFS and therefore dishonestly appropriated the funds for themselves. The alleged conduct was charged as two forms of theft and four forms of money laundering. References to Counts are references to Counts on the indictment faced by Mr Andronikou before the Nicosia Permanent Assize Court. ii. Count 21: Stealing by Agent, contrary to sections 225, 270(c), 20 and 29 of the Criminal Code. The particulars alleged that on various

7 dates between 11 November 2003 and 15 March 2005 Mr Andronikou and SSFS stole funds which had been received by them on behalf of the Company A pension fund, by transferring them into an overdraft account belonging to SSFS and thereby appropriating them; iii. Count 22: Money laundering by possession of criminal funds, contrary to sections 2, 4(1)(a)(ii)(2), 5 and 7 of the Concealing, Investigation and Confiscation of Income from Certain Criminal Activities Law 61(1)/96 (as amended) and sections 225, 270(c) and 20 of the Criminal Code. The particulars alleged that between 11 November 2003 and 15 March 2005 Mr Andronikou and SSFS were in possession of funds which they knew to be the proceeds of a crime (i.e. Count 21); iv. Count 23: Money laundering by use of criminal funds, contrary to sections 2, 4(1)(a)(ii)(2), 5 and 7 of the Concealing, Investigation and Confiscation of Income from Certain Criminal Activities Law 61(1)/96 (as amended) and sections 225, 270(c) and 20 of the Criminal Code. The particulars alleged that between 11 November 2003 and 15 March 2005 Mr Andronikou and SSFS made use of funds which they knew to be the proceeds of a crime (i.e. Count 21); v. Count 24: Stealing by Agent, contrary to sections 225, 270(c), 20 and 29 of the Criminal Code. The particulars alleged that on various dates between 11 November 2003 and 15 March 2005 Mr Andronikou and SSFS stole funds which resulted from the sale of securities of public companies which belonged to the Company A pension fund, by transferring them into an overdraft account belonging to SSFS and thereby appropriating them; vi. Count 25: Money laundering by use of criminal funds, contrary to sections 2, 4(1)(a)(ii)(2), 5 and 7 of the Concealing, Investigation and Confiscation of Income from Certain Criminal Activities Law 61(1)/96 (as amended) and sections 225, 270(c) and 20 of the Criminal Code. The particulars alleged that between 11 November 2003 and 15

8 March 2005 Mr Andronikou and SSFS made use of funds which they knew to be the proceeds of a crime (i.e. Count 24); vii. Count 26: Money laundering by possession of criminal funds, contrary to sections 2, 4(1)(a)(ii)(2), 5 and 7 of the Concealing, Investigation and Confiscation of Income from Certain Criminal Activities Law 61(1)/96 (as amended) and sections 225, 270(c) and 20 of the Criminal Code. The particulars alleged that between 11 November 2003 and 15 March 2005 Mr Andronikou and SSFS were in possession of funds which they knew to be the proceeds of a crime (i.e. Count 21) 24. The first contact between ACCA and Mr Andronikou himself regarding the conviction was on 6 August 2012, when he responded to a letter sent by ACCA on 24 July DECISION ON ALLEGATIONS AND REASONS 25. The Committee carefully considered all of the documents before it, together with the submissions advanced on behalf of both ACCA and Mr Andronikou, orally and/or in writing. 26. The Committee reminded itself that the burden of proving this Allegation rested upon ACCA. Mr Andronikou did not have to prove anything. The standard of proof to be applied was that applicable to civil proceedings, usually referred to as the balance of probabilities'. Allegation 1 - Found Proved 27. The Committee was satisfied that on 27 September 2007 Mr Andronikou was convicted by the Nicosia Permanent Assize Court of two offences of Stealing by Agent and four offences of money laundering, brought under the Cyprus Criminal Code and the Cyprus Prevention and Suppression of Money Laundering Activities Law. 28. The Committee had regard to the judgment of the Permanent Assize Court of Nicosia, dated 24 October 2007, and the judgment of the Supreme Court

9 of Cyprus, dated 15 July It was satisfied that these judgments provided clear evidence of the conviction recorded against Mr Andronikou of six criminal offences. The Permanent Assize Court has a clear criminal jurisdiction and is a competent Court for the purposes of these proceedings, giving rise to an avenue of appeal to the Supreme Court of Cyprus and, subsequently, to the European Court. The Committee was satisfied that the findings of facts in those courts can be taken to be conclusive for the purposes of any disciplinary proceedings. 29. Furthermore, the Committee bore in mind that Mr Andronikou's case was not that he denied the fact of the conviction, but rather that he was wrongly convicted. This was also clear from the detailed submissions made by Person A on behalf of Mr Andronikou in his application to the European Court. 30. The Committee found that Mr Andronikou's convictions represented very significant breaches of his positions of trust and responsibility. His criminal conduct involved very large sums of money and took place over a sustained period. When discovered, it developed into a number of concerted and criminally sophisticated attempts to cover it up. 31. The Committee was in no doubt that this conviction for extremely serious financially related criminal offences demonstrated clear dishonesty and was discreditable to Mr Andronikou, ACCA and the accountancy Profession. The Committee was in no doubt that right thinking members of the public and ACCA members would find Mr Andronikou's convictions to be serious departures from the standards expected of an ACCA member and amounted to misconduct. To conclude otherwise would fail to declare and uphold proper standards of conduct and behaviour on the part of ACCA members and would both undermine public confidence in the profession and public confidence in the regulatory function of ACCA. Accordingly, the Committee found Allegation 1 proved.

10 Allegation 2(a) - Found Proved 32. The Committee found as a fact that the first time Mr Andronikou admitted to ACCA that he had been convicted of the six criminal offences was in August 2012, after ACCA had written to him asking about it. ACCA became aware of the conviction through a third party. 33. The Committee reminded itself of Mr Andronikou's obligation to notify ACCA that he may become liable to disciplinary action, in accordance with Bye- Law 10(b) and was satisfied that this obligation plainly was triggered by his criminal conviction, as alleged by ACCA in Allegation 2(a). 34. Mr Andronikou should have been aware of his responsibility to notify his regulator, and this must have been all the more apparent once he had been removed from the register of the Institute of Certified Public Accountants in Cyprus in November 2007 on the basis of his criminal conduct. 35. The Committee was satisfied that Mr Andronikou failed to bring to the attention of the Secretary [ACCA] his conviction, and that failing to do so amounted to misconduct that was serious and that was likely to bring discredit upon Mr Andronikou, ACCA and the accountancy profession. It undermined the process of regulation which relies upon members to selfreport. 36. The Committee accordingly found Allegation 2(a) proved. 37. Allegation 2(b) was pleaded by ACCA as an alternative and accordingly, in light of its findings in relation to Allegation 2(a), the Committee did not need to determine this allegation. SANCTION AND REASONS 38. The Committee had regard to ACCA's "Guidance For Disciplinary Sanctions." The Committee was cognisant of the fact that the purpose of sanctions was not to punish Mr Andronikou further, even though it may have that effect. It had at the forefront of its considerations the public interest, which includes not only the protection of members of the public, but also the

11 maintenance of public confidence in the profession and in ACCA, and the declaring and upholding of proper standards of conduct and behaviour. 39. The Committee acknowledged that any sanction must be proportionate and that it should consider sanctions starting with the least restrictive and moving upwards. 40. The Committee considered that Mr Andronikou's conviction for offences involving significant dishonesty demonstrated disgraceful behaviour that amounted to very significant departures from the standards expected of an ACCA member. His position is further aggravated by his failure to notify ACCA as his regulator for almost five years. 41. The Committee found no other aggravating factors beyond the fact of the extremely serious conviction, however it noted that Mr Andronikou has demonstrated little insight into or appreciation of the potential impact of his conviction upon the reputation of ACCA and the Accountancy Profession. 42. By way of mitigation, the Committee acknowledged the following: Mr Andronikou's age, personal circumstances [PRIVATE] The absence of any previous regulatory findings That the Permanent Assize Court found no evidence that Mr Andronikou derived any personal financial benefit from his criminal conduct The time that has passed since the conviction in The Committee first considered taking no further action in this case. It was in no doubt that to do so would fail to mark the gravity of Mr Andronikou's behaviour and convictions and would undermine confidence in ACCA as a regulator. 44. Having decided that it was necessary to impose a sanction in this case, it considered the question of sanction in ascending order, starting with the least restrictive.

12 45. The Committee considered carefully whether the appropriate and proportionate sanction in Mr Andronikou's case would either be an Admonishment, Reprimand or a Severe Reprimand. It considered each of these individually, in turn. In light of the gravity of Mr Andronikou's offending the Committee was in no doubt that none of these sanctions was sufficient. The Committee determined that to impose any of these sanctions would not adequately reflect the seriousness of this case, nor would it suitably declare and uphold proper standards of conduct. 46. The Committee considered that Mr Andronikou's conduct that resulted in his conviction represented such a serious departure from the standards expected of a member of ACCA that it was wholly incompatible with him being a member of ACCA. The Committee was mindful that the reputation of a profession and professional body such as ACCA is more important than the fortunes of any individual member. Membership brings many benefits, but comes at the price of liability to sanctions to maintain the reputation of the profession. 47. The Committee concluded that no sanction short of exclusion from membership of ACCA was appropriate in his case. The Committee considered that a failure to exclude Mr Andronikou from membership would fail properly to declare proper standards of professional behaviour and would seriously undermine public confidence in the profession and in ACCA as its regulator. Accordingly the Committee ordered that Mr Andronikou be excluded from membership of ACCA. 48. Furthermore, the Committee was satisfied on the facts of this case that it was appropriate to direct that any future application by Mr Andronikou for readmission to ACCA may not be considered until the expiry of five years from the effective date of this order. EFFECTIVE DATE OF ORDER 49. The Committee was satisfied in light of its findings above that it is necessary in the public interest that this order shall have immediate effect.

13 COSTS 50. ACCA claimed costs in the sum of 3, This figure had been specified in hearing bundle, a copy of which was sent to Mr Andronikou by post and on 12 June 2017, when he was also advised of the Committee's power to award costs in the event of the allegations being proved. 51. The Committee considered that the sum claimed by way of costs was fair and represented a reasonable sum for work reasonably undertaken. Mr Andronikou had not provided ACCA with detail of his current means and accordingly there was no evidential basis upon which the Committee could reduce the sum claimed on the grounds of his inability to pay. The Committee therefore directed that Mr Andronikou pay 3, by way of costs to ACCA. Dr Jonathan Page Chairman 26 July 2017