AN INSOLVENCY PRACTITIONER has been severely reprimanded and fined by the ICAEW for a conflict of interest.
Eric Stonham, of Chichester, was fined £5,000 and ordered to pay £7,000 costs after asking directors of a company of which he was administrator to award themselves a bonus fee which would then pay his pre-appointment fees.
Stonham had acted for two directors of struggling R-Bar & Restaurant Limited prior to his appointment as administrator, and was due a fee of £2,000. Unable to pay him at the time, an agreement was reached where he would be paid when their personal finances improved.
Unable to claw back the fees when acting as administrator for the company, he suggested the directors award themselves a bonus from the company.
The tribunal decided that his suggestion was with the intention that the directors could use the bonus to pay him back. Stonham accepted that a part of his motivation must have been to increase the chances of his pre-appointment fees being paid.
“It appeared to [the tribunal] that Mr Stonham turned a blind eye to the ethics of his actions in the belief that he was entitled to be paid. His conduct however had been improper and brought discredit to the ICAEW, the profession and himself,” said the tribunal in its disciplinary orders statement.
Stonham had previously been fined and reprimanded for a conflict of interest-related issue, and was also issued a penalty for unauthorised remuneration.
Stonham’s counsel put forward mitigation, drawing attention to written testimonials.
Counsel pointed out there was no risk of repetition and no financial loss to anyone had occurred. His practice had made changes to “regularise” his documentation.
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