HEARING DISCIPLINARY COMMITTEE OF THE ASSOCIATION OFCHARTERED CERTIFIED ACCOUNTANTS

Transcription

1 DISCIPLINARY COMMITTEE OF THE ASSOCIATION OFCHARTERED CERTIFIED ACCOUNTANTS REASONS FOR DECISION In the matter of: Mr Mebrahtom Kidanemariam Melese Heard on: Thursday, 1 March 2018 Location: ACCA Offices, The Adelphi, 1-11 John Adam Street, London, WC2N 6AU Committee: Mrs Lubna Shuja (Chairman) Mrs Judith Glover (Accountant) Mr John Walsh (Lay) Legal Adviser: Miss Juliet Gibbon Persons present and capacity: Mr Ben Jowett (Case Presenter on behalf of ACCA) Ms Pamella Ramphal (Hearings Officer) Observers: None OUTCOME: Removal from Student Register with immediate effect Costs in the sum of 5000 to be paid to ACCA PRELIMINARY APPLICATIONS 1. ACCA was represented by Mr Ben Jowett. Mr Mebrahtom Kidanemariam Melese did not attend the hearing and was not represented.

2 2. The Disciplinary Committee ( the Committee ) had before it a bundle of papers, numbered pages A-J and 1-57 and two tabled additional bundles, numbered pages and 60-64, together with a service bundle, numbered pages 1-34 and an additional page 35. DECISION AND REASONS ON SERVICE 3. Written Notice of the Hearing, dated 24 January 2018, containing all the requisite information, was sent to Mr Melese by both ordinary post and recorded delivery post to his address in Ethiopia as shown on ACCA s register. The Royal Mail track and trace document confirmed the notice had been passed to the overseas postal service for delivery in Ethiopia but did not show the notice has been delivered. However, a notice is deemed delivered within 72 hours of despatch (excluding Saturdays and Sundays under Regulation 22 of the Chartered Certified Accountants Complaints and Disciplinary Regulations 2014, as amended on 1 January 2018, ( the Regulations. The notice was sent by ACCA on Wednesday 24 January 2018 and would have been deemed served on Monday 29 January ACCA has, therefore, given more than the 28 days notice required under Regulation 10(a). 4. The Committee accepted the advice of the Legal Adviser. It was satisfied that ACCA had sent the Notice of hearing to Mr Melese at his address on the register in accordance with Regulations 10 and 22 of the Regulations. 5. The Committee was satisfied that service had been effected in accordance with the Regulations. APPLICATION TO PROCEED IN ABSENCE 6. Mr Jowett submitted that Mr Melese had waived his right to be present at the hearing by his recent failure to engage with ACCA. The Notice of Hearing had been sent to his address on the register. He submitted that it was unlikely that Mr Melese would attend on a future date if today s hearing were to be adjourned. He reminded the Committee that Mr Melese had previously provided details of his defence to the allegation in writing.

3 DECISION AND REASONS ON PROCEEDING IN ABSENCE 7. The Committee considered whether it should proceed in Mr Melese s absence. It accepted the advice of the Legal Adviser. The Committee bore in mind that whilst it had discretion to conduct proceedings in the absence of a member, it should exercise that discretion with the utmost care and caution. The Committee had regard to the factors set out by Lord Bingham in the case of R v Jones 2002 UKHL The Committee was mindful that there is a public interest in dealing with regulatory matters expeditiously. Mr Melese had previously engaged with ACCA and had attended at ACCA s offices in Ethiopia. He had also been offered the opportunity to attend the hearing by video or telephone link but had not replied. He was clearly aware that these proceedings were ongoing as he had provided documents to ACCA. The Committee noted that Mr Melese had not asked for an adjournment and given his recent lack of communication and engagement with ACCA, there was no evidence before it to suggest that an adjournment would be likely to result in his attendance on a future occasion. 9. Having balanced the public interest with Mr Melese s interests, the Committee determined that he would be unlikely to attend a future hearing if this hearing were adjourned. In all the circumstances, the Committee determined that there was no good reason to adjourn the hearing. The Committee determined that it was fair, reasonable and in the public interest to proceed in the absence of Mr Melese, particularly given the seriousness of the allegation in this case. ALLEGATION 1 Pursuant to bye-law 8(a)(i), Mr Mebrahtom Kidanemariam Melese is guilty of misconduct in that, along with another, he committed an act of aggravated breach of trust contrary to Article 676(2)(a) of the Criminal Code of Federal Democratic Republic of Ethiopia 2004.

4 BACKGROUND AND SUBMISSIONS 10. Mr Melese became a student member of ACCA on 2 December On 15 June 2012, Mr Melese wrote to ACCA requesting that the fee that he had paid for the F3 examination that he was due to sit on 19 June 2012 be recredited to him because he was in jail. 11. In response to ACCA s enquiries, Mr Melese stated that he had applied for a loan from the bank where he was employed that had been approved by his branch manager (his co-defendant in the criminal trial). The bank s head office had later queried the loan, as according to them, the branch manager had not had the authority to disburse a staff loan because this was the responsibility of the loan section committee. Mr Melese stated that the bank had taken proceedings against him and the outcome was pending. 12. ACCA s investigation was deferred pending the outcome of the criminal proceedings. 13. ACCA wrote to Mr Melese on 18 March 2016 and 1 April 2016 requesting the outcome of the criminal trial. On 24 May 2016, Mr Melese sent an to ACCA stating: The outcome of the investigation was against me; though I didn t accept it. The office doesn t come up with its duties & responsibilities. (It has abused its power) There was no any ground for the final result happened to me except personal conflict with my boss in office [sic]. Mr Melese stated that he would send a copy of the trial documents to ACCA s office in Ethiopia, which he subsequently did. He also stated that he would continue to appeal to assure my innocence before law and, at last, I want to express that my desire is to continue my ACCA studies. 14. ACCA received a translated copy of the decision in the criminal proceedings from ACCA in Ethiopia on 14 July On 19 July 2017, ACCA wrote to Mr Melese asking him to clarify if he was Defendant 1 or Defendant 2 but received no response. 16. The documentation showed that Mr Melese was convicted of an offence of Aggravated Breach of Trust, contrary to Article 676(2)(a) of the Criminal

5 Code of the Federal Republic of Ethiopia ( the Criminal Code ). He was sentenced to six years imprisonment for the offence. The offence involved the misappropriation of approximately 1,043,351 Ethiopian Birr (approximately 34,000) by Mr Melese from the bank where he worked as Chief Cashier. 17. The Committee also saw a document that indicated Mr Melese had been granted early release by the Pardon Board having served the term of three years in prison. The decision indicated that Mr Melese had expressed regret and showed insight into his offending behaviour. 18. Mr Jowett submitted that it could be inferred from the translated documents received from ACCA Ethiopia that Mr Melese is Defendant 1 and had received a sentence of six years imprisonment. 19. Mr Jowett referred the Committee to bye-law 8(c) of the 2012 Rulebook that provides: For the purposes of bye-law 8(a), misconduct includes (but is not confined to) any act or omission which brings, or is likely to bring, discredit to the individual or relevant firm or to the Association or to the accountancy profession. Mr Jowett also referred the Committee to the provisions of bye-law 8(e) that provides: the fact that a member, relevant firm or registered student has pleaded guilty to, or been found guilty of, any offence discreditable to him or, as the case may be, it, or derogatory to the Association or the accountancy profession, before a court of competent jurisdiction in any other country where such court s judgments are in the opinion of Council (or relevant committee of Council) relevant. 20. Mr Jowett submitted that in committing a serious offence of dishonesty, Mr Melese had brought discredit on himself, the Association and the accountancy profession.

6 DECISION AND REASONS ON MISCONDUCT 21. For the purposes of bye-law 8(e), the Committee did not consider that it was in a position to determine whether the Ethiopian Court was a court of competent jurisdiction in any other country where such court s judgment are in the opinion of Council (or relevant committee of Council) relevant. ACCA had not provided evidence that Ethiopia was included in that definition and there was not sufficient evidence before the Committee to determine the issue. 22. The Committee accepted the advice of the Legal Adviser. The Committee was satisfied that ACCA had proved on the balance of probabilities that Mr Melese had committed a serious offence of dishonesty involving an aggravated breach of trust against his employer. 23. The Committee noted that Mr Melese was employed as the bank s Chief Cashier when he misappropriated a substantial sum of money from the bank for his own use. The offence came to light following an audit report into the bank, dated 11 May In addition to this, Mr Melese had provided some information himself to ACCA which verified much of the detail contained in the translated decision of the Ethiopian Court. 24. The Committee was satisfied that Mr Melese had misappropriated the monies in aggravated breach of trust as he was in a position of trust at that time. The Committee noted that Mr Melese had disengaged with ACCA and, although he had provided details of the court s decision, he had not provided any documentary evidence to the Committee in relation to his defence or any appeal. 25. In all the circumstances, the Committee determined that Mr Melese s conduct in misappropriating a substantial sum of money from the bank was an aggravated breach of trust in his position as Chief Cashier and had brought discredit to himself, the accountancy profession and ACCA and amounted to misconduct pursuant to bye-law 8(a)(i) and 8(c).

7 SANCTION AND REASONS HEARING 26. The Committee was informed by Mr Jowett that there were no previous disciplinary findings against Mr Melese. 27. The Committee accepted the advice of the Legal Adviser who referred it to Regulation 13(4) of the Complaints and Disciplinary Regulations 2014, as amended on 1 January 2018, ( the Regulations ) and to ACCA s Guidance for Disciplinary Sanctions. In considering what sanction, if any, to impose the Committee bore in mind the principle of proportionality and the need to balance the public interest against Mr Melese s own interests. It reminded itself 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 behaviour. 28. The Committee considered that the following could be considered aggravating features of Mr Melese s misconduct: a. he had deliberately committed an act of Aggravated Breach of Trust; b. he had been employed as Chief Cashier in the bank and was one of only two people with access to the money that he misappropriated; c. the misappropriation of funds from the bank was a breach of one of the core obligations of the accountancy profession; d. a substantial sum of money had been misappropriated; e. the seriousness of the offence was reflected in the significant period of imprisonment imposed by the sentencing court and Mr Melese served three years of that term before receiving an early release; f. Despite the Pardon Board referring to Mr Melese s regret and insight into his offending, he informed ACCA that he intended to appeal his conviction and the Committee therefore considered this to be a lack of insight and an aggravating feature to the case.

8 29. The Committee considered the following to be mitigating features of the case: a. On 15 June 2012, Mr Melese had informed ACCA that he was in custody; b. Mr Melesse had provided the decision of the Ethiopian Court to ACCA; c. Mr Melese had no previous disciplinary findings against him; d. This was a single incident of misconduct. 30. The Committee was in no doubt that a sanction was required to mark the gravity of Mr Melese s misconduct. It determined that the sanctions of admonishment and reprimand would not meet the gravity of his misconduct which involved an offence of dishonesty and a lengthy custodial sentence. 31. The Committee also considered that a severe reprimand would not be an appropriate or sufficient sanction as there was no evidence that the monies had been repaid, nor were there any genuine expressions of regret or apology from Mr Melese. Furthermore, his conduct had caused harm to the bank which should be a safe custodian of public money. Mr Melese s conduct was extremely serious and he could not be trusted. In the Committee s view, his conduct was fundamentally incompatible with him being a student of ACCA. 32. The Committee, therefore, determined that the appropriate and proportionate sanction in the particular circumstances of this case, where Mr Melese had abused his position of trust by misappropriating a substantial sum of money from the bank, was to remove Mr Melese s name from the student register of ACCA. In the Committee s view, such a sanction was necessary to protect the public and maintain public confidence in the accountancy profession and ACCA as regulator. ORDER

9 33. The Committee ordered that Mr Melese s name be removed from the student register of ACCA. EFFECTIVE DATE OF ORDER 34. The Committee considered that Mr Melese was a risk to the public. It was in the public interest for it to order that Mr Melese s name be removed from the student register of ACCA with immediate effect and it so ordered. COSTS AND REASONS 35. ACCA applied for costs in the sum of 10, Although Mr Melese had stated I can t afford any expense in relation with my case, the Committee had no other information as to his financial means. It did not consider that the costs sought by ACCA were reasonable or proportionate given that this was a relatively straightforward case where Mr Melese had been convicted of an offence. The Committee was of the view that the claims for 45 hours for the investigation of this matter were too high. It was also clear that this hearing had not taken six hours as claimed. The Committee made reductions for these items. 36. The Committee took into account that Mr Melese had been imprisoned between 24 May 2012 and 12 September 2015 when he was granted early release by the Pardon Board. However the Committee balanced this information with a lack of any detail about the 34,000 that had come into Mr Melese s possession. Taken as a whole, therefore, the Committee placed limited weight on Mr Melese s previous financial means in assessing costs. 37. In all the circumstances the Committee considered that it was fair, reasonable and proportionate to reduce the costs to be paid to ACCA to 5,000. The Committee ordered Mr Melese to pay ACCA the sum of 5,000 by way of costs. Mrs Lubna Shuja Chairman 1 March 2018