DISCIPLINARY COMMITTEE OF THE ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS REASONS FOR DECISION In the matter of: Mr Lee Martin Holberton Heard on: Wednesday, 13 April 2016 Location: ACCA Offices, The Adelphi, 1-11 John Adam Street, London, WC2N 6AU Committee: Mr John Wilson (Chairman, Accountant) Mrs Patricia Craggs (Lay) Ms Lorna Jacobs (Lay) Legal Adviser: Miss Juliet Gibbon Persons present and capacity: Mr Kasir Ahmed (Case Presenter on behalf of ACCA) Mr Lee Holberton (Member, by telephone) Mr Richard Lorkin (Hearings Officer) Observers: Mr Bruce Eastman PRELIMINARY APPLICATIONS 1. ACCA was represented at today s hearing by Mr Kasir Ahmed. Mr Lee Holberton attended the hearing by telephone link. 2. The Disciplinary Committee ( the Committee ) had before it a bundle of papers, numbered pages A-H and 1-28; additional papers, numbered 10-10a; 29; 30 and 31-36 together with a service bundle, numbered pages 1-17. The Committee was not provided with page 30, which related to the costs of Interim Order Committee hearings held on 1 July 2015 and 15 December 2015, until it had to consider what, if any, costs order to make.
3. Mr Ahmed, on behalf of ACCA, applied to amend the allegations against Mr Holberton to reflect the fact that he had been convicted and sentenced in relation to six counts of fraud at Gloucester Crown Court. 4. Mr Holberton did not oppose ACCA s application to amend the allegations. 5. The Committee determined that the proposed amendment to the allegations would not prejudice Mr Holberton in the conduct of his defence and it would be in the interests of justice to allow ACCA s application to amend. 6. Mr Ahmed made an application under Regulation 10(2) to admit the additional papers, numbered pages 10-10a. He informed the Committee that this was a letter written by Mr Holberton to ACCA on 26 October 2015. He submitted that Mr Holberton would not be prejudiced by the Committee admitting the letter in evidence. 7. The Committee determined that the additional papers should be admitted, as should additional papers, numbered pages 31-36, which Mr Holberton wished to put before the Committee. AMENDED ALLEGATIONS Allegation 1 Pursuant to bye-law 8(a)(ix), Mr Lee Martin Holberton is liable to disciplinary action, by virtue of his convictions, having pleaded guilty to six offences of Fraud, contrary to Sections 1 and 2 of the Fraud Act 2006, at the Crown Court at Gloucester on 31 March 2015, which are discreditable to the Association or the accountancy profession. Allegation 2 Pursuant to bye-law 8(a)(i), Mr Lee Martin Holberton is guilty of misconduct in that on 23 October 2015 he was disqualified from holding the position of director of a company for seven years.
8. Mr Holberton admitted Allegation 1 and Allegation 2 and the Chairman announced that the facts of those allegations had been found proved. BACKGROUND 9. Mr Holberton became an ACCA member on 1 November 1997 and a fellow on 1 November 2002. 10. On 30 April 2015 Mr Holberton was arraigned at Gloucester Crown Court and pleaded guilty to six counts of Fraud, contrary to sections 1 and 2 of the Fraud Act 2006. His co-defendant initially pleaded not guilty to four additional separate charges and Mr Holberton was not, therefore, sentenced until 23 October 2015. 11. Mr Holberton notified ACCA that he had been convicted and sentenced for the offences in a letter dated 26 October 2015. 12. The particulars of the six offences of fraud are that Mr Holberton, together with his co-defendant, dishonestly and intending to make a gain for themselves or another, or to cause loss to another or to expose another to the risk of loss, made representations to HMRC which were and which they knew were or might be untrue or misleading, in breach of section 2 of the Fraud Act 2006. 13. Mr Holberton s co-defendant was sentenced to a term of imprisonment of four and a half years for the offences of fraud and was disqualified from being a director for a period of fifteen years. It appears from the sentencing remarks of His Honour Judge Tabor that he accepted there was substantial mitigation in relation to Mr Holberton as follows: a. He entered guilty pleas at an early stage; b. He was the one who informed the police of the corruption within the firm in the knowledge that he would be arrested and charged for his part in it, thereby, in the learned judge s view, showing genuine contrition and regret; c. He volunteered to give evidence against his co-defendant; d. He was of previous good character;
e. His co-defendant, the principal of the firm, was a man who had a powerful and charismatic nature who it was difficult to say no to; f. He would not have committed the offences of fraud had his codefendant not given him the lead and put pressure on him; g. The sums of money involved in his part of the offending amounted to a little over 50,000. 14. The learned judge sentenced Mr Holberton to a term of two years imprisonment, suspended for a period of two years, to reflect Mr Holberton s previous good character and the fact that he had to wait a very long time to be sentenced. Mr Holberton was also ordered to undertake 300 hours unpaid work for the community and was disqualified from being a director for seven years. SUBMISSIONS 15. Mr Ahmed, on behalf of ACCA, submitted that Mr Holberton s criminal convictions for offences of dishonesty were both discreditable to ACCA and the accountancy profession. He further submitted that Mr Holberton s disqualification from holding the position of a director for a period of seven years as a result of his offending was discreditable to Mr Holberton, ACCA and the accountancy profession and amounted to misconduct. 16. Mr Ahmed referred the Committee to the sentencing remarks of His Honour Judge Tabor. Mr Ahmed informed the Committee that the learned judge had referred to Mr Holberton s part in the six offences of Fraud as being not as extensive, nor for so long as period, as his co-defendant but that the sums of money had still involved a little over 50,000. 17. Mr Holberton referred the Committee to a letter that he had written to ACCA, dated 29 June 2015, in which he set out the background to his criminal offending. Mr Holberton joined Firm A in 1994. He stated that despite being a director of the firm his influence and control was minimal and the owner of the firm, his co-defendant, was autocratic and ran the firm as he wanted, which included committing and involving Mr Holberton in offences of criminal fraud. Mr Holberton stated he left the firm in October 2010 and in February 2011 he went initially to ICAEW and then to the police to report that the
owner had been involved in criminal offending. In particular he stated that he had witnessed the owner fraudulently create client tax rebates that would be used to fund the firm s debts. Mr Holberton stated that he would generate the false tax returns and it was this criminal activity that resulted in him being charged with the six offences of fraud to which he pleaded guilty at the Crown Court at Gloucester. 18. In his oral submissions Mr Holberton stated that he had not personally benefitted financially from the frauds and that the monies had gone to the firm and his co-defendant. He told the Committee that he had been under immense pressure at the time he became involved in his co-defendant s fraud. He said that others at the firm were also involved and aware of what was going on. After he left the firm he tried to rectify the situation by going first to ICAEW and then to the police. 19. Mr Holberton told the Committee that he knew what he did was wrong and that he had been weak by staying at the firm. He said his wife would not let him leave but that she had not been aware of the situation. He recognised that as an adult he should make adult decisions. He said that he now wants to get everything resolved and he aims to clear all of his financial debts. He said he was trying to correct the wrongs that have been done as a result of his offending. DECISION AND REASONS 20. The Committee accepted the advice of the legal adviser. Allegation 1 proved 21. The Committee found this allegation proved. The Committee relied both on Mr Holberton s admission and the Certificate of Conviction of the Crown Court at Gloucester on 16 November 2015 as conclusive proof of his convictions for 6 offences of Fraud, contrary to Sections 1 and 2 of the Fraud Act 2006. 22. The Committee was of the view that these were serious offences of dishonesty, committed by an accountant during the course of his
employment within a firm of accountants. The Committee determined that Mr Holberton s criminal convictions are both discreditable to the Association and the accountancy profession. Allegation 2 proved 23. The Committee again relied upon Mr Holberton s admission and the Certificate of Conviction, which shows that he received a seven years directors disqualification on 23 October 2015. 24. The Committee took account of the remarks of the sentencing judge and, in particular, the mitigation that was referred to in those remarks. The Committee determined, however, that the disqualification arose as a result of serious offences of Fraud that took place over a substantial period of time. 25. The Committee was satisfied that Mr Holberton s dishonest criminal offending was deplorable conduct on the part of an accountant and clearly amounted to misconduct. SANCTION AND REASONS 26. The Committee was informed that there were no previous disciplinary findings against Mr Holberton and it took into account that the sentencing judge had referred to him as a man of previous good character. 27. The Committee accepted the advice of the legal adviser who referred it to Regulation 13 of the Complaints and Disciplinary Regulations 2015 ( the Regulations ) and to ACCA s Guidance for Disciplinary Sanctions (01.04.2016). 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 Holberton'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 was of the view that Mr Holberton, together with his codefendant in the criminal proceedings, had committed serious and sophisticated frauds over a substantial period of time. 29. The Committee took into account the substantial mitigation referred to in the remarks of the sentencing judge, as set out above. It also took into account that Mr Holberton had made early admissions to the allegations; he had cooperated fully with ACCA; engaged in these proceedings and he had no previous disciplinary findings against him. 30. The Committee was in no doubt that a sanction was required to mark the gravity of Mr Holberton s misconduct. It determined that the sanctions of admonishment and reprimand would not meet the gravity of his criminal convictions or the misconduct. 31. The Committee also considered that a severe reprimand would not be an appropriate or sufficient sanction. Mr Holberton s dishonest conduct, which led to six convictions for fraud and a subsequent disqualification from holding the position of director of a company, was, in the Committee s view, deliberate and dishonest offending over a lengthy period of time. Dishonesty, especially in the workplace, is not the conduct expected of a professional accountant. 32. In the Committee s determination, Mr Holberton s convictions for offences of dishonesty and his subsequent disqualification as a director for a period of seven years amounted to conduct that was fundamentally incompatible with being a member of ACCA. 33. The Committee, therefore, determined that the appropriate and proportionate sanction was to exclude Mr Holberton from membership of ACCA. In the Committee s view such a sanction was necessary to maintain public confidence in the accountancy profession and ACCA as regulator. ORDER 34. The Committee ordered that Mr Holberton be excluded from membership of ACCA.
EFFECTIVE DATE OF ORDER 35. The Committee considered that in the particular circumstances of this case it was in the public interest for the Committee to order that Mr Holberton be excluded from membership of ACCA with immediate effect and so ordered. COSTS AND REASONS The Committee took into account Mr Holberton s submissions as to his financial means. It ordered that Mr Holberton must pay ACCA the sum of 4,000. INTERIM ORDERS 36. An interim order was imposed on Mr Holberton on 1 July 2015 suspending his practising certificate. This was confirmed on review on 15 December 2015 when an interim order was also made suspending him from membership of ACCA. 37. In accordance with Regulation 12(5)(b) of the Chartered Certified Accountants Complaints and Disciplinary Regulations 2014, as amended, the Committee rescinded both interim orders. Mr John Wilson Chairman 13 April 2016
SCHEDULE OF ANONYMITY Firm A B & P Accounting