ADMISSIONS AND LICENSING COMMITTEE OF THE ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS

Transcription

1 ADMISSIONS AND LICENSING COMMITTEE OF THE ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS REASONS FOR DECISION In the matter of: Mr Jude Okwudiri Nzeako Heard on: Wednesday, 24 January 2018 Location: The Chartered Institute of Arbitrators, 12 Bloomsbury Square, London, WC1A 2LP Committee: HH Suzan Matthews QC (Chairman), Mr Robert Clarke (Accountant) and Mr Grahame Owen (Lay) Legal Adviser: Mr Richard Ferry-Swainson Persons present and capacity: Ms Rachael Davies (Hearings Officer) and Mr Mohammed Ismail (Case Presenter on behalf of ACCA), Mr Jude Okwudiri Nzeako (Applicant) Observers: None PRELIMINARY APPLICATIONS 1. The Admissions and Licensing Committee ( the Committee ) convened to consider an application by Mr Nzeako for readmission to membership of ACCA. Mr Nzeako attended and represented himself.

2 2. The Committee had a bundle of papers together with some additional tabled papers the total running from page A, plus 1 to page At the outset of the hearing Committee member Mr Owen informed all parties that he had been a member of the Admissions and Licensing Committee in 2010, that had considered the eligibility for continued audit registration of KPM Coopers, the sole practice of Mr Nzeako. Mr Owen had no memory of the case and did not feel that he was in any way conflicted from sitting on this application. Mr Nzeako did not object, nor did Mr Ismail on behalf of ACCA. Accordingly the Committee was content to consider the application. APPLICATION/BRIEF BACKGROUND 4. On 27 February 2006, an Employment Tribunal ordered Jon Associates Limited, to pay 15, to a previous employee following complaints of sexual discrimination. Mr Nzeako was the sole director of Jon Associates Limited. 5. On 5 February 2009 a number of allegations were brought against Mr Nzeako (who as well being a qualified accountant was also a solicitor) by the Solicitors Regulation Authority ( SRA ), including, for the purposes of ACCA s subsequent hearing below at paragraph 7, the failure to pay the amount due to the previous employee and misleading another member of the solicitors profession. The SRA found that these two complaints were made out and Mr Nzeako was severely reprimanded by the SRA. 6. On 27 October 2009, the Disciplinary Committee found that, pursuant to bye-law 8(a)(i), Mr Nzeako was guilty of misconduct in that, by the judgement of the Employment Tribunal of 27 February 2006, complaints of sexual discrimination brought by an employee were well founded against Jon Associates Limited, based wholly or in part on the conduct of Mr Nzeako, as sole director of the company, contrary to the Fundamental Principle of Integrity (as applicable in 2006). The Disciplinary Committee directed that Mr Nzeako be severely reprimanded and to pay a fine of 5,000, together with costs.

3 7. On 8 March 2011, the Disciplinary Committee found that, because Mr Nzeako had been disciplined by another regulatory body (the SRA) (see paragraph 5 above), he was liable under bye-law 8(a)(vi) to disciplinary action by ACCA. Accordingly, he was reprimanded by the Disciplinary Committee for that matter and ordered to pay costs. 8. On 13 July 2012, Mr Nzeako was removed from ACCA s register due to the non-payment of the 5,000 fine imposed by the Disciplinary Committee on 27 October He had arranged to pay the fine by instalments of 500 a month. On 9 February 2012, Mr Nzeako was declared bankrupt. At the time of his bankruptcy only one monthly payment of 500 had been paid to ACCA. 9. On 7 August 2012, Mr Nzeako sent a letter to ACCA stating that he had recently discovered that he had been suspended from the ACCA membership register for non-payment of fines. He pointed out that because of his bankruptcy he was estopped from making any financial commitment without the permission of the Trustee in Bankruptcy, especially where it exceeds 500. He went on to state that, Given the circumstances therefore, my suspension is in error. I would appeal to you to please revoke or re-instate my membership. 10. On 21 July 2015, a judgement, obtained by ACCA against Mr Nzeako in respect of the outstanding fine, was set aside by consent as the debt predated Mr Nzeako s bankruptcy. Mr Nzeako was subsequently discharged from his bankruptcy on 9 February In a letter dated 18 February 2016, Mr Nzeako enclosed his completed reinstatement application. He repeated that he should not have been removed from the register for non-payment of the fine because the fine was a provable debt that pre-dated his bankruptcy. 12. On 30 May 2017 the Admissions and Licensing Committee convened to consider Mr Nzeako s application for reinstatement of his ACCA membership. That Committee stated as follows:

4 The Committee carefully considered the documents before it which included the application form, documents relating to Mr Nzeako's bankruptcy, evidence of completion of CPD and two testimonials. The Committee had regard to the eligibility criteria for membership set out in the Membership Regulations (MR)(3), in particular that an applicant has to satisfy the Committee as to their general character and suitability. The Committee considered that it had insufficient information regarding the circumstances giving rise to the previous disciplinary findings against Mr Nzeako. The Committee was not provided with any representations from ACCA as to whether, in its view, the fine remained outstanding or whether it was extinguished as a result of Mr Nzeako's bankruptcy. The Committee also had regard to the references in the papers as to Mr Nzeako s dual qualifications as a solicitor and accountant and his membership of other accountancy bodies. The Committee considered that further clarification ought to be provided as to which other professional bodies Mr Nzeako belonged and whether any disciplinary action against him had been taken, particularly by the Solicitors Regulation Authority. The Committee noted the information provided by Mr Nzeako in relation to his current employment and work. The Committee considered that it required further clarification of his current positions, roles and responsibilities. The Committee considered that the provision of all of the above information and representations was essential in order for it to make a decision, bearing in mind its duties to protect the public and uphold the reputation of ACCA. The Committee further considered that it was in the public interest for this application to be considered at a hearing which Mr Nzeako could attend and provide documentary evidence in relation to the issues referred to above. 13. Following the hearing on 30 May 2017, ACCA confirmed that Mr Nzeako had a debt of 5457 with ACCA that still remained to be paid. Correspondence to that effect was provided to the Committee. However,

5 that position appeared to have changed by December 2017 (see paragraph 16 below). The Committee was also provided with an from the SRA who indicated that there is currently no solicitor on the roll in the name of Jude O Nzeako. 14. Mr Nzeako, in response to a request from ACCA, stated in an dated 5 July 2017, Please be informed that I am an associate member of the Institute of Chartered Accountants of Nigeria and I have not been disciplined by any other professional body other than that already communicated to you. To refresh. For the same reason and facts that i was disciplined (fined) by ACCA, i was also disciplined (fined) by the Solicitors Regulation Authority. I have not been disciplined by any other professional body other than the Solicitors Regulation Authority. Am currently self employed providing book keeping and training services I provide training to AAT students up to level 3, level 3 Diploma Business (NCFE) and BTec National. 15. On 12 July 2017, ACCA wrote to Mr Nzeako requesting a copy of the SRA s outcome and proof that its fine had been paid. In response, on 19 July 2017 Mr Nzeako sent an enclosing the judgment of the SRA dated 5 February 2009, confirming that he was severely reprimanded. In his , Mr Nzeako stated that, The related fine was not fully paid before my bankruptcy but was however caught by the provisions of insolvency act As the debt predates my bankruptcy, it was proved against my Trustee in Bankruptcy and therefore I no longer owe any money to SRA or to anyone. 16. In an dated 12 December 2017, ACCA confirmed that there is a note on Mr Nzeako s account stating that, No fines & costs due to be paid as member was made bankrupt before debits raised., this is not a decision we would have made without clear confirmation from a suitable person/team. So I would suggest that ACCA is not requesting that the Fines & Costs be paid as part of the restatement process. 17. In his application for reinstatement Mr Nzeako provided two references one from a practising accountant and one from a client and both of whom were aware of Mr Nzeako s removal from membership and the circumstances

6 that led to the removal. They both recommend that his membership be reinstated. A further reference in a similar vein was tabled on the day of the hearing, although the author of that reference referred to Mr Nzeako s membership of ACCA having lapsed, rather than knowing that he had been removed by a Disciplinary Committee. 18. At the hearing Mr Nzeako addressed the Committee and explained about his difficult background and the challenges he faced in becoming professionally qualified, which included qualifying as an accountant and a solicitor and also obtaining a PhD. With reference to the employment tribunal matter relating to the sexual discrimination claim, Mr Nzeako said that he did not believe there had been discrimination and unfortunately he was not around at the time that he could have appealed the decision. Consequently, the company was stuck with the decision and that had impacted the rest of his life and was why we were here today. The company was unable to pay the fine, nor was Mr Nzeako. He then decided to do a PhD. His legal practice had to close down because he was let down by others. He lost his audit qualification but he did not appeal that decision because he was travelling doing projects overseas. He said that since 2010 he had been through the worst period of his life. He asked the Committee to give him back what he cherished most in his life, namely his ACCA membership. 19. ACCA had originally adopted a neutral position on the application. However, at the hearing they raised a number of issues that they had recorded in an to Mr Nzeako date 14 December 2017, and which were repeated by Mr Ismail in his closing submissions to the Committee. They related to: the nature of his bankruptcy; the way on which he dealt with his law firm when deciding to go to Nigeria to study for his PhD; the reasons why he did not settle ACCA s fine in the two years and four months before he became bankrupt; his current employment; the lack of payment of the Employment Tribunal award, ACCA s fine and costs and also that of the SRA. 20. Accordingly, Mr Nzeako was asked questions by Mr Ismail. Mr Nzeako denied being reckless in the way that he abandoned his legal practice when deciding to go to Nigeria to study for his PhD. He was unable to provide

7 any evidence in support of the way in which he had arranged for another firm to take over from his firm. He also denied not taking responsibility for paying ACCA s fine and costs. He said he had expected some funds to be available to pay the fine and costs when he went back to Nigeria to study for his PhD. However, those funds did not materialise and he found he was unable to pay the fine and costs. He then contacted ACCA who agreed that he pay by instalments. He said he had only managed to pay one instalment of 500 before he was declared bankrupt. He denied putting his PhD before his debts because he believed his PhD would enable him to earn a better living and to be better able to honour his debts. Mr Nzeako reminded the Committee that the Employment Tribunal (Sexual discrimination case) debt was to the company not him. The lady in question took him personally to court to try and make him personally liable for the debt and was unsuccessful. He acknowledged that the debt was never paid. He denied having a cavalier attitude towards awards and orders made against him. He said the only debt he had not paid was the one to ACCA and he would have carried on paying had he been able to do so. 21. In answer to questions from the Committee Mr Nzeako said that he did not get any money from any properties that he owned at the time of his bankruptcy. He said he believed the Trustee in Bankruptcy had received sufficient money from the sale of his assets to satisfy the bankruptcy debts, but he did not know for sure. If re-admitted, Mr Nzeako said that he wished to re-commence an ACCA accountancy practice and to utilise his accountancy knowledge and experience. He also said that he was still on the roll of solicitors and had re-applied for his certificate to practise, although this was not supported by the documentation from the SRA who were unable to find a solicitor on the roll in the name Jude O Nzeako. Mr Nzeako explained this by stating that it is only those solicitors in legal practice who appear on the roll. He said he is not in legal practice at the moment and that is why he is not on the roll, but he has now applied for his practising certificate. DECISION ON THE APPLICATION AND REASONS

8 22. The Committee has considered with care the application by Mr Nzeako and all he said about his current position. It has accepted the advice of the Legal Advisor and taken into account the Guidance for Regulatory Orders insofar as it related to applications for re-admission. The Committee took into account the three references provided by Mr Nzeako, although it noted that one of them referred to his lapsed membership, suggesting the author was unaware that Mr Nzeako had been removed from membership, rather than that it had simply lapsed. 23. The Committee noted that the reason Mr Nzeako had been excluded from membership was because of the non-payment of the 5000 fine levied on 27 October The Committee also noted the subsequent confusion about whether this fine remained outstanding and the confirmation in December 2017 that it did not. In light of the dated 12 December 2017, the Committee was satisfied that Mr Nzeako owed no outstanding debts to ACCA and that at the time of his removal from the register the debt was not owing due to his bankruptcy. 24. However, the Committee noted that Mr Nzeako had a period of two years and four months in which he should have paid the fine and costs to ACCA before he was declared bankrupt. His explanation for his failure to do so was wholly unsatisfactory and unconvincing. It was apparent to the Committee that he had chosen to put his PhD studies ahead of his duty to pay the fine and costs he owed to his regulatory body. This undermined his repeated assertions to the Committee about how much ACCA meant to him and how honoured he was to have been a member. 25. When considering whether Mr Nzeako was a suitable candidate for readmission to membership of ACCA, the Committee considered his general character as reflected in the history recorded above, and the evidence he gave at the hearing, and was concerned about a number of matters. During that evidence there were a number of inconsistencies and areas of vagueness which led the Committee to believe that Mr Nzeako was being economical with the truth and, on occasion, adjusting it to fit the facts as he was confronted by them, for example with reference to his position with being on the roll of solicitors.

9 26. The Committee noted that on three occasions he, or the businesses that he was responsible for, had been found wanting. First in relation to a successful claim for sexual discrimination by a potential female employee. Secondly, in a successful case of constructive dismissal by an employee in his law firm. Thirdly, in relation to the way in which he mis-managed the shutting down of his law firm. Mr Nzeako s explanation for what happened with reference to his law practice, which he blamed on others, suggested a lack of insight into the problems he had, by his own choices, created. It was his responsibility to ensure the smooth transition of his law firm having made the decision to close it down and move abroad. It was clear he did not manage the transition effectively and competently. 27. In addition, Mr Nzeako had twice appeared before a Disciplinary Committee at ACCA and been sanctioned, and once before an Admissions and Licensing Committee where his firm s audit registration was withdrawn because he had not been spending a material amount of time working in the firm. He had also appeared before the SRA and been sanctioned. The Committee did not accept Mr Nzeako s explanation that all his troubles stemmed from the one employment tribunal decision and were concerned about his lack of insight into his regulatory history. 28. The Committee was surprised that, although Mr Nzeako provided the Committee with an explanation of how it was that he became bankrupt, he was unable to explain what had happened to his assets and the realisation of those assets and the resulting monies raised. As a professional accountant, the Committee expected Mr Nzeako to have known rather more detail about his bankruptcy and the course it took, even with the passage of time. 29. The Committee was particularly concerned about Mr Nzeako s assertion that he was not currently working in public practice. It noted that on page 11 of his application for readmission Mr Nzeako, in answer to the heading Please indicate your current employment category, had ticked the box that he is in public practice as a chartered certified accountant. On page 8 of the application he had provided details of his company name as KPM Coopers, with an office address in Stratford. At page 106, ACCA highlighted a number of issues of concern. At number 5 it stated, There is

10 a lack of clarity as to your work with KPM Coopers. In apparent response to that concern, Mr Nzeako provided a written explanation headed My Work with KPM Coopers LLP which stated as follows, Preparation of personal and business tax returns, self-assessment, set up of book-keeping and business systems, providing book-keeping services, payroll services, budgeting and cash-flow advice, IT series and Training. 30. In light of this evidence the Committee was not persuaded by his assertion that he was not in fact in public practice and had not been since Accordingly, if the Committee were to allow the application for readmission, Mr Nzeako would immediately be in breach of the Global Practising Regulations since he would be in public practice without a practising certificate. On this ground alone the Committee decided that the application must fail. However, even putting this matter aside, the Committee concluded that in all the circumstances described above, it was not satisfied as to Mr Nzeako s general character and suitability to be a member of ACCA. 31. Mr Nzeako s application was therefore refused. HH Suzan Matthews QC Chairman 24 January 2018