Whose money?
Richard was a senior manager for a small international group of companies, with offices in the UK. He was concerned that a very large sum of money borrowed from the group by the Chairman was going to be continually rolled over and never repaid. The Chairman seemed to treat company money as his own and had the habit of sacking anyone who questioned his conduct. He would even hire and fire the company’s professional advisers around the world to ensure he got his way.
After considering the evidence and the history of the Chairman, we advised Richard that the only realistic option was to contact the authorities. Richard was worried that this might jeopardise his job. He knew there were plans to sell the Chairman’s shareholding in the group, and suspected that when the new owner discovered the true state of affairs at the company he would lose his job anyway.
We contacted the Serious Fraud Office and arranged a confidential meeting at which Richard could explain his concerns and the SFO could advise whether the Chairman’s actions constituted serious fraud. At the meeting Richard produced his evidence. He explained that the purchasers might be receiving suspect information about the group which could significantly alter the purchase price.
As his suspicions of malpractice were not corroborated by accounts or documents, a full scale investigation seemed premature. The SFO agreed to consult regulators and other interested parties in the UK and overseas.
Shortly afterwards Richard told us that a sale had been arranged. On the authority of the Chairman, very large sums were to be paid to individual advisers - who were close friends of the Chairman - in connection with the sale. This led to the resignation of a number of the non-executive directors and to internal friction between the Chairman and those senior officers who were thwarting the suspect payments. We passed this information to the SFO so they could liaise with other agencies as to what action was appropriate. Richard then informed us that the group’s auditors had resigned, the proposed sale of the company had been cancelled and that a full investigation of the group was set in train involving the overseas authorities.
This case study has been agreed with our client - the only changes are to protect the identity of those involved.