BusinessCompany NewsThe JDS: Taking law into its own hands

The JDS: Taking law into its own hands

The Queen's Moat House saga, which saw former deputy chairman Martin Marcus fined a record £250,000, was just the latest in a long line of cases that have seen the Joint Disciplinary Scheme play a crucial role in dealing with some of the biggest scandals in UK financial history.

The list of hearings and rulings reads as a history of big financial failure. Barings, Robert Maxwell, Polly Peck and Resort Hotels are all on the JDS inventory of cases, which have seen accountants (both auditors and within the businesses) taken to task for their behaviour and failure to act with probity.

It’s the big cases that attract attention though. In the Barings case, JDS hearings resulted in the exclusion of deputy chairman Andrew Tuckey from membership of the ICAEW for abdicating his responsibility for the Barings Singapore subsidiary where Nick Leeson brought disaster on the bank.

It didn’t stop there. The JDS also fined auditors Coopers & Lybrand £250,000 and the engagement partner Gareth Davies £25,000.

Asil Nadir, former chairman of Polly Peck, may remain at large in Northern Cyprus, but the JDS has taken action elsewhere over the company’s collapse.

In 1998, former group accountant John Turner was excluded from ICAEW membership for failing to take steps to verify what was going on during the transfer of money from Polly Peck to the Jersey bank account of a subsidiary.

Polly Peck’s auditors Stoy Haywood were also investigated, fined £75,000 and ordered to pay £250,000 in costs for their shortcomings while working for Nadir, who is still wanted for questioning over the scandal.

Perhaps the most notorious case of all, however, is the Maxwell affair.

Once again Coopers & Lybrand was in the frame. The firm was fined £1.2m and ordered to pay costs of £2.1m after admitting 35 complaints relating to the audits of three ‘entities’ associated with Mirror Group Newspapers and Robert Maxwell.

Four senior Coopers staff also found themselves in trouble over the affair.

Accountants working directly for Maxwell were also dealt with. Michael Stoney, managing director (finance) at Mirror Group, was excluded from ICAEW membership.

Today, the JDS remains in the thick of scandal. It has work on the go in relation to BCCI, outstanding issues relating to Polly Peck and Transtec.

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