A Joint Disciplinary Tribunal last week found ‘the professional or business conduct, efficiency or competence of Mr Hart fell below that which was reasonably to be expected’.
Hart, 69, former partner in Essex-based chartered accountants Bird Luckin, had been audit partner for QMH from 1972 to 1991. On his retirement from practice he became a director of QMH.
News last year that the Joint Disciplinary Scheme was undertaking an investigation prompted Hart to resign with immediate effect as chairman of Chelsea Building Society to ‘clear his name’.
In 1991 Bird Luckin signed off QMH’s accounts with a reported pre-tax profit of £94.1m as ‘a true and fair view… of the profit of the group’.
The tribunal found that in fact the profit was the result of ‘inappropriate accounting policies or the misapplication of the accounting policies stated in QMH’s accounts’.
Other devices used to inflate profits included capitalising interest on the acquisition of hotel assets and managing the group’s hotels through separate companies and paying QMH an annual fee.
Investigators found 67% of the company’s profits for 1990 ‘could not be justified on a true and fair basis’.
In March 1993, QMH’s listing was suspended at the company’s request. Its market capitalisation at that date was £728m. Under new management, the accounts for that year reported a loss of £1,040.5m.
The tribunal found Hart, who attended QMH board meetings, had been aware that it was provided with ‘inadequate information to oversee properly the financial affairs of QMH, but he did nothing to address that inadequacy’.
In addition to the audit work, Bird Luckin undertook tax and accountancy advisory work for QMH. In 1990 just under half the firm’s London office’s fee income came from the group and in 1991 it was over half.
A spokesman for Chelsea, the UK’s eighth largest building society, said: ‘We regret that that is the decision. But it doesn’t really involve any of his dealings with the Chelsea Building Society.
‘People can only really judge him on his work while here. And that was excellent.’
An investigation into Bird Luckin and a current partner is ongoing, while other former QMH directors and chartered accountants are also still under investigations.
In 2000 the group reported an operating profit of £67m.
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