DISCIPLINARY COMMITTEE OF THE ASSOCIATION OF … · 2020-06-18 · 1 DISCIPLINARY COMMITTEE OF THE...
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DISCIPLINARY COMMITTEE OF THE ASSOCIATION OF CHARTERED
CERTIFIED ACCOUNTANTS
REASONS FOR DECISION
In the matter of: Mr Jeremy Lawrence Giles
Heard on: 1, 2, 3 and 4 December 2015; 2, 3 and 4 March 2016; 5, 6, 7
and 8 September 2016; 1 and 3 February 2017
Location: ACCA Head Offices, 29 Lincoln’s Inn Fields, London WC2A 2EE
and The Adelphi Building, John Adam Street, London WC2 and
The Chartered Institute of Arbitrators, 12 Bloomsbury Square,
London WC1A 2LP
Committee: Mr Graham White (Chairman), Mr Constantinos Lemonides
(Accountant), Dr Pamela Ormerod (Lay)
Legal Adviser: Mr Andrew Granville Stafford
Persons present and capacity:
Mr Jeremy Giles (Member)
Mr Tim Grey (Counsel for Mr Giles)
1 and 4 December 2015; 3 March 2016 and 3 February 2017: Mr
Christopher Cope (Mr Giles’ Solicitor)
2 and 3 December 2015; 2 and 4 March 2016; 5-8 September
2016: Mr David Young (Mr Giles’ Solicitor’s representative)
Mr Alex Mills (Counsel, ACCA Case Presenter)
Ms Sophie Cubillo-Barsi (Hearings Officer) except on 3 February
2017
3 February 2017: Ms Poonam Patel (Hearings Officer)
1 and 4 December 2015: Ms Medina Forson and Ms Sarah
Mutesi (ACCA Investigations Officers)
3 February 2017: Ms Victoria Adkins (ACCA Investigations
Officer)
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(The Committee sat in camera on 1 February 2017 and there
was no attendance by the parties)
Observers: None
INTRODUCTION
1. The Disciplinary Committee of ACCA (‘the Committee’) convened to consider
allegations of misconduct against Mr Jeremy Giles. The Committee had before it a
bundle of papers (pages AA-BB and 1-330), an additional bundle (pages 331 to 598),
a further additional bundle (pages 599 to 802) and tabled bundles (pages 803 to 805;
806 to 874 and 875 to 881).
ALLEGATIONS AND BRIEF BACKGROUND
2. Mr Giles has been a Member of ACCA since 2001 and was admitted as a Fellow of
the association in 2006. At the relevant times he was a salaried partner of QED Tax
Consulting LLP (‘QED’).
3. The allegations against Mr Giles, as amended (see paragraph 33 below), were as
follows:
Allegation 1
(a) Pursuant to bye-law 8(a)(i), Mr Giles is guilty of misconduct in that he
instructed solicitors to make a payment to a nominee company, when in fact
the payment was to Mr A, as the nominee company bank account did not
exist.
(b) Mr Giles's conduct also in relation to allegation 1(a) was:
(i) Dishonest.
(ii) Contrary to the Fundamental Principle of Integrity (as applicable in 2006).
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Allegation 2
(a) Pursuant to bye-law 8(a)(i), Mr Giles is guilty of misconduct in that he made
inaccurate representations to third parties based on information provided to
him by Mr B.
(b) Mr Giles's conduct also in relation to allegation 2(a) was:
(i) Dishonest.
(ii) Contrary to the Fundamental Principle of Integrity (as applicable in 2005
to 2007).
Allegation 3
(a) Pursuant to bye-law 8(a)(i), Mr Giles is guilty of misconduct in that he
provided Mr A with a letter addressed to AB Solicitors from QED tax
consulting stating that a payment of £2,254,626.50 had been made by Mr A
into the bank account of Nominee X Ltd when in fact no bank account existed
for Nominee X Ltd.
(b) Mr Giles' conduct also in relation to allegation 3(a) was:
(i) Dishonest
(ii) Contrary to the Fundamental Principle of Integrity (as applicable in 2007).
4. At the time of these allegations Mr A was a client of QED. In particular, QED assisted
Mr A with the completion and tax treatment of various high value property deals.
Nominee X Ltd and Nominee Y Ltd were companies set up in June 2005 as special
purpose vehicles (SPV’s) to buy properties from a developer. The ownership of the
properties would then pass by virtue of sub-sale(s) or assignment(s). The purpose of
this was to minimise tax liability and to maximise borrowing. Nominee X Ltd and
Nominee Y Ltd were non-trading companies that acted as agents to facilitate the
transactions. ACCA’s case is that Mr A was the ultimate beneficial owner of the
properties.
5. Allegation 1 relates to an email sent by Mr Giles on 11 July 2006 to a solicitor acting
for Nominee X Ltd in property transactions. In this email, which appears to have been
sent at the behest of Mr A, Mr Giles gave instructions to the solicitor to complete in
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respect of the purchase of a number of properties. The funds to complete the
purchases were coming from CD Solicitors, who were acting for Mr A. It is alleged
that the funds being provided on behalf of Mr A significantly exceeded the amount
Nominee X Ltd was paying to the developers. The email from Mr Giles stated:
‘After sending funds to [Mr C], there should be approximately £670,000
remaining of which, please deduct your fees and send funds as previously
agreed to [EF] Solicitors and remit the remainder to the following [Nominee X
Ltd] account:
Natwest [XXXXXXXX]
[XXXXXX]
Funds should be with you quite early so I would appreciate it if we can
execute as early as possible.
If you can call me on [XXXXX XXXXX] at around 9.45am to confirm that you
are happy to
Regards
Jeremy’
6. ACCA’s case is that the Natwest account referred to was not Nominee X Ltd’s
account but Mr A’s own account. ACCA’s case is that Nominee X Ltd did not have a
bank account and Mr Giles knew that. Therefore ACCA alleges Mr Giles’ email was
misleading and that he sent it either knowing that its contents were inaccurate or
reckless as to the truth of them.
7. Mr Giles said in a response to queries from the ACCA investigator on 24 March 2014
that he had sent this email on Mr A’s instructions and he had not performed any
checks on the information provided. In response to being asked whether he knew
that the bank account in question was not Nominee X Ltd’s account, Mr Giles said ‘I
was aware that [Mr A/Company A] provided 100% of the funds and that the Agent
companies did not operate bank accounts.’
8. Allegation 2 relates to statements made by Mr Giles about the income of the directors
of Company A Ltd, Mr A and Mr D. The statements in question were in letters to
Company B, which had been approached to provide finance for a property
transaction, in which it was stated that:
(a) Mr A and Mr D received salaries of £68,000 for the accounting period
ending 31 March 2005 (letter dated 26 October 2005);
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(b) Mr A and Mr D received director’s salaries of £4,615 and dividend income
of £63,385 for the accounting period ending 31 March 2005 (letters dated 3
November 2005).
9. On 25 October 2005, Mr B, Finance Manager at Company A Ltd , emailed Mr Giles
stating:
‘...At the moment, the year ending 31/03/05 shows:
Directors salaries £9,230
Wages £350,240
Net profit 91,465
We need both incomes to be well in excess of £60k and the accountants
need to confirm that out of Directors Salaries, X was payable to [Mr A] and Y
to [Mr D], Out of Wages, X to [Mr A] and Y to [Mr D], and Net Profit —
same...at the moment, it only looks like they earnt 4.5K each during the year.
If you can do this for me it will be much appreciated.’
10. Mr Giles replied asking for ‘the actual figures for X and Y in each case’. Mr B’
response was by email on 26 October 2005 which said:
‘If you can just state that the personal wages for [Mr A] and [Mr D] were
£68000 each, that would be superb’
11. Following this, on 26 October 2015 a letter was sent on QED’s notepaper to
Company B which read:
‘We confirm that both [Mr A] and [Mr D] have received Salaries in the sum of
£68,000 for the accounting period ending 31 March 2005. In addition they are
both entitled to a share of the profits of the business.’
12. A further letter was sent by QED to Company B on 2 November 2005 in similar
terms, stating that [Mr A’s director’s salary was £68,000 for the accounting period
ended 31 March 2005. It seems this prompted a further email from Mr B to QED on 2
November 2005 stating:
‘New letters are here, and although they are better, they are still causing me
an issue.
They state directors salary of £68k, however, the 2005 accounts show
director salaries in total are £9230.00. It doesn't tie up and as the lenders will
want to see both letter and accounts - we need more as I emailed on Monday
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- "Need Clarification what income comes from Directors Salaries, how much
other income is in general salaries and how much from the share of profit -
this needs to be broken down seperately for both of them’
13. The same day Mr Giles sent that email on to a secretary at his firm asking her to
‘redo the letters again showing directors salaries of £4615 and £63385 as dividend
income.’ The following day a letter was sent on QED notepaper to Company B which
read:
‘We confirm that [Mr D] has received a director's salary of £4,615 and
dividend income of £63,385 for the accounting period ending 31 March 2005.’
An identical letter was sent on the same day in relation to Mr A’s earnings.
14. ACCA’s case is that Mr Giles caused these letters to be sent and they contained
material misrepresentations. ACCA relies on the following to show that the figures
contained in the letters were inaccurate.
(a) He gave different figures in different letters.
(b) On 14 December 2005 Mr A emailed Mr Giles requesting a reference
letter for another lender showing Directors Salary of £4,615 and Dividends of
£12,500. On 23 December 2005 a letter was sent on QED notepaper to a
mortgage provider confirming ‘the salary and other income as provided by the
Directors of [Company A Ltd]’ were in these sums, notwithstanding that
different figures had been provided a month-or-so earlier to Company B.
(c) Mr A’s tax return for the year concerned, which was certified by Mr Giles
as his accountant on 15 October 2007, shows that his income for the year
was £4,422.67 and he received £25,000 in dividends.
15. In his response to ACCA’s investigator’s enquiries on 24 March 2014 Mr Giles said at
the time the letters in question were prepared the tax return ‘did not exist’. He said
the information was provided by Mr A’s in-house accountant, namely Mr B, and as he
did not suspect these clients were being dishonest he did not question it.
16. Allegation 3 relates to a letter from QED to AB Solicitors stating that a payment of
£2.25m had been made by Mr A to Nominee X Ltd.
17. On 9 February 2007 Mr A sent an email to Mr Giles containing the following request:
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‘Re: 18 Unit transaction with [JK Ltd] - 12 Units at The Lighthouse and 6 Units
at Seacon Wharf
Hi Jeremy,
Would you please mind confirming the above, I have drafted a letter.’
18. The draft letter referred to was addressed to AB Solicitors in respect of the
transaction in question, and included the following:
‘We confirm:-
1. The sum of £2,254,626.50 was paid on the 10 May 2005 by [Mr A] and [Mr
D] from an account at [ ] Bank to Nominee X Ltd in settlement of the
balance of the purchase price payable to them
. . .
4. We are satisfied from our investigations that the balance of the purchase
price of £2,254,626.50 was paid by [Mr A] and [Mr D] to [Nominee Y Ltd] at
the account of [Nominee X Ltd] — it was paid to the latter's account because
the former did not have a bank account at the time which would accept a
telegraphic transfer.
5. We are satisfied that the above payment was duly made and that the
transaction between [Mr A] and [Mr D] with [Nominee Y Ltd] was a legitimate
transaction.’
19. On 21 March 2007 Mr Giles forwarded a letter to a secretary at QED asking her to
send it on QED paper. It was identical to the draft sent to him by Mr A save that the
name of National Westminster Bank was inserted in to paragraph 1. Mr Giles sent
this letter to AB Solicitors, who had previously provided to QED a copy bank
statement purporting to show that £2.25m had been transferred out of Mr A’s
account. Mr A’s trustee-in-bankruptcy subsequently obtained his bank records which
showed that no such payment had been made from his account. Therefore this bank
statement must have been a forgery.
20. Accordingly ACCA’s case was that the letter sent by Mr Giles was false in that
Nominee X Ltd did not have a bank account and the alleged payment of £2.25m had
not been made by Mr A to Nominee X Ltd. ACCA further alleges that Mr Giles knew
that the letter was false for those reasons.
21. In a letter to ACCA’s investigator written on 3 March 2014, Mr Giles indicated that his
recall of events was that he had asked Mr A for a copy bank statement to confirm the
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funds existed and sending that with the fax to AB Solicitors. In an email to the
investigator on 24 March 2014 he said at the time he did not know this was not an
authentic statement.
PRELIMINARY APPLICATIONS
22. At the start of the hearing Mr Grey applied for a stay of the proceedings on the
grounds that it was impossible for Mr Giles to have a fair hearing by reason of (a)
disclosure and (b) delay. The application was opposed by Mr Mills. Both advocates
provided written submissions and supplemented those with oral submissions at the
hearing.
23. Mr Grey contended that disclosure in this case had been partial and had been driven
by the complainant, Mr E, the trustee-in-bankruptcy of Mr Giles’ former client Mr A.
He submitted that ACCA had a duty to investigate the case and had failed in that
duty. In particular it should have itself inspected all the documents in Mr E’s
possession relating to his trusteeship of Mr A’ bankruptcy. This was said to be at
least 22 boxes of documents.
24. The incidents in question all happened in the period 2005 to 2007 whilst Mr Giles was
a partner in a firm providing tax advice to Mr A. Mr A was adjudicated bankrupt in
2010. The complaint by Mr E to ACCA was not made until 2013. Due to the delays in
the investigation and scheduling of the case it had taken a further two or so years for
this hearing to be listed. Mr Grey submitted that the delay of ten years since the
events giving rise to these allegations had resulted in prejudice to Mr Giles. Mr Giles
had retained no paperwork himself but was relying on his own memory to defend
himself. Mr Grey insisted that many of the documents held by Mr E were likely to be
highly relevant to the issues in the case.
25. Mr Mills said (and this was not disputed by Mr Grey) that everything that ACCA had
had in its possession and which it was required to disclose had been disclosed. He
submitted that, relying on R (Johnson) v NMC [2008] EWHC 885 (Admin), ACCA was
not under a free-standing and unqualified duty to seek material that might advantage
the defence. He said that, in light of the material that ACCA had obtained from the
complainant and its invitation to the defence to identify what categories of further
material might assist, ACCA had discharged any obligations that were upon it.
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26. The Committee received advice from the Legal Adviser. The Committee bore in mind
that it should only grant a stay of proceedings if it concluded that a fair hearing was
impossible. If any potential unfairness to Mr Giles could be managed by the trial
process then a stay should be refused.
27. The allegations in this case are not complex. The three allegations are, in essence,
that Mr Giles made inaccurate representations in letters or emails whilst acting on
behalf of Mr A. In the Committee's view Mr Giles was sufficiently informed of the
nature of the allegations at an early stage of the investigation process. Of
significance is the fact that, before ACCA was apprised of the complaint, Mr E and Mr
Giles had been in communication regarding Mr A affairs. There is force in ACCA’s
contention that Mr Giles appears to have had no difficulty in arguing his corner in
these exchanges and, indeed, in those with Ms F who investigated the case on
behalf of ACCA.
28. The Committee did not agree that ACCA’s actions in investigating the complaint or
responding to requests for information were unreasonable. Whilst acknowledging that
the events in question happened ten or so years ago, Mr Giles is nonetheless likely
to have sufficient knowledge and understanding of the work he was doing for Mr A to
know the nature of the documents that might assist him. He is therefore not in the
Committee's view significantly impeded in his ability to frame requests for
information. In the view of the Committee ACCA had pursued appropriate lines of
enquiry based on the indications Mr Giles had given as to his defence.
29. It appeared to the Committee that the main complaint advanced on behalf of Mr Giles
was that, amongst the large volume of material in Mr E’s possession, there must
inevitably be documents which could materially undermine ACCA’s case. The
Committee was not convinced that this was a conclusion that could necessarily be
drawn, particularly as the nature of such documents had not been identified, but in
any event Mr E is attending the hearing to give evidence. The very nature of the trial
process can, and in the Committee's view is likely to, address any legitimate
concerns there may be about want of disclosure. The Committee was also mindful of
the fact that it could and should keep under review the question of whether a fair
hearing is possible as the hearing progresses.
30. It was not in dispute that, under Article 6 of the European Convention on Human
Rights, Mr Giles has the right to a fair trial within a reasonable time. There was a
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dispute between Mr Grey and Mr Mills as to when time begins to run for these
purposes. Even taking the view most favourable to Mr Giles, namely that time runs
from April 2013 when Mr Giles was first formally notified by ACCA of the complaint,
the Committee was not of the view that there had been an unreasonable delay in the
prosecution of these allegations.
31. The Committee noted that none of the issues in question were likely to have come to
light prior to Mr A’s bankruptcy in 2010 and that details only became available as a
result of Mr E’s enquiries in about 2012. In all the circumstances, and notwithstanding
a lapse in time of some ten years, the Committee did not regard the delay between
the events giving rise to the allegations and this hearing as being unjustifiable.
32. The Committee was quite satisfied it is possible for Mr Giles to have a fair hearing.
Therefore it rejected Mr Grey’s application for a stay of proceedings.
33. Mr Mills applied to amend Allegation 1 to make it clear that it referred to only one
payment. Therefore he applied to amend the plural to the singular. There was no
objection and the amendment was allowed. Allegation 1(a) as amended reads:
Pursuant to bye-law 8(a)(i), Mr Giles is guilty of misconduct in that he
instructed solicitors to make a payment to a nominee company, when in fact
the payment was to Mr A, as the nominee company bank account did not
exist.
ADJOURNMENT (4 December 2015)
34. There being insufficient time to conclude the hearing in the four allotted days, the
Committee ordered on 4 December 2015 that the hearing be adjourned to be re-
listed on a date to be notified. The parties were subsequently notified that the hearing
would resume on 2 March 2016 with a three day listing.
35. In light of the evidence heard and upon Mr Grey’s further application, the Committee
directed that:
(i) ACCA shall take all reasonable steps to obtain from Mr E the 22 boxes of GH
Solicitors records and the two boxes of QED records in his possession
relating to his trusteeship of Mr A’s bankruptcy;
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(ii) Copies of all documents intended to be relied upon by either party shall be
disclosed to the other and added to the bundle by 17 February 2016.
ADJOURNMENT APPLICATION (2 March 2016)
36. On 8 January 2016 Mr Giles’ Solicitor applied for the hearing not to be re-listed on 2
to 4 March 2016 on the basis that Mr Giles had childcare problems on those days.
The application was refused by the Chairman in a written decision dated 10 January
2016 on the grounds that the date had been fixed after consultation with all parties
and that it would otherwise be unlikely that the case could resume before June 2016.
37. On 3 February 2016 ACCA notified Mr Giles’ Solicitor that the two boxes of QED
papers had been received from Mr E. These were copied and sent to the Solicitor on
4 February. Subsequently both parties prepared additional bundles of papers for the
Committee from documents in the QED files.
38. GH Solicitors objected to the disclosure of the 24 boxes of documents held by Mr E
relating to its involvement. It was subsequently agreed by Mr E that he would release
copies of these documents provided Mr Giles and his Solicitor entered in to a suitable
undertaking regarding confidentiality. Undertakings were provided by 22 February
2016 and ACCA confirmed on 25 February 2016 that Mr E was content to release the
GH Solicitors papers to Mr Giles. Arrangements were discussed between Mr E and
Mr Giles’ Solicitor in order to facilitate the transfer of the 24 boxes from one office to
the other. However, the undertakings also had to be approved by Mr E’s Solicitors
and, at the start of the resumed hearing on 2 March 2016, that approval had not been
given.
39. Following the hearing in December, Mr Giles’ Solicitor instructed a forensic
accounting expert to prepare a report commenting on a number of issues arising in
the case. The expert, Ms G, was unable to finalise the report by the date for
exchange of further documents, namely 17 February 2016, and it had only been
served on ACCA two days prior the resumed hearing.
40. Prior to the resumed hearing the Committee was provided with 397 pages of
transcript of the previous hearing.
41. On the morning of the resumed hearing the Committee were presented with the
following further bundles of additional documents:
Correspondence between parties (pages 1 to 50);
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Correspondence between ACCA and Mr E (pages 1 to 42);
ACCA additional documentation relied upon from QED papers (pages 1 to
22);
Defence additional documentation relied upon from QED papers (pages 1 to
123); and
Defence expert report (pages 1 to 118).
42. Mr Grey on behalf of Mr Giles applied for an adjournment principally on the grounds
that the defence had not yet received the 24 boxes of GH Solicitors papers. He
pointed out that, in light of the fact both parties had found documents in the two
boxes of QED papers which they considered were relevant, it was highly likely that
documents in these boxes would also be relevant. In addition he contended that
other grounds supporting his application for an adjournment were that the expert
report of Ms G had only been served on ACCA two days ago and time would be
needed to consider it; and that Mr Giles would only be available for limited periods on
Thursday 3 March and Friday 4 March due to childcare difficulties.
43. Mr Mills did not oppose the application for an adjournment in relation to disclosure of
the GH Solicitors files. He said that ACCA's position had been that it was not
necessarily proportionate to go through all the 24 boxes. However, ACCA accepted
that, as the Committee had ordered that they be disclosed if it was reasonably
possible to do so, it would be wrong to oppose the adjournment and deny the
defence the opportunity of reviewing these documents.
44. The Committee was keen, as were the parties, to make as much progress in the
allotted hearing days as possible. Whilst it accepted Mr Giles ought to have the
opportunity to review the GH Solicitors files, it did not find that this was a reason
precluding it from continuing with the case at this stage. Therefore the Committee
directed that it would receive in evidence all the additional bundles referred to in
paragraph 21 above and would move on to the member’s case. It would
accommodate Mr Giles’ availability on 3 and 4 March were he to give evidence. The
expert report would be admitted on the basis its author would be called to give oral
evidence in due course. As it was unlikely that oral evidence would be completed by
Friday 4 March it was likely that the hearing would have to be further adjourned in
which case there would be an opportunity for Mr Giles’ Solicitor to obtain the GH
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Solicitors papers and for ACCA to resolve its position as to how it intended to
address the expert report.
45. In all the circumstances, the Committee refused the application for an adjournment.
The Committee acknowledged that the above rulings and/or subsequent disclosure
from the GH Solicitors files may result in further applications being made to allow
documents in evidence, recall or call witnesses, or re-open ACCA’s case. These
would be considered on their merits as and when they arose.
NO CASE TO ANSWER
46. ACCA having closed its case on 4 March 2016 after the adjournment application was
considered, Mr Grey applied to the Committee for a determination that there was no
case for Mr Giles case to answer on each of the three allegations.
47. Mr Grey submitted that the evidence relied on by ACCA was either insufficient to
make out the allegations or so unreliable it ought to be rejected by the Committee. In
addition he argued that ACCA had failed to establish a case on both dishonesty and
misconduct on each of the three allegations. The application was opposed by Mr
Mills.
48. The Committee accepted that it should apply the Galbraith test (R v Galbraith 73 Cr
App Rep 124). Therefore the application would succeed if either there was no
evidence to support a particular allegation or that the evidence was so unsatisfactory,
tenuous or unreliable that the Committee, directing itself properly as to the burden
and standard of proof, would be unable to find the allegation proved.
49. The Committee rejected Mr Grey’s submissions. ACCA’s case relies primarily on
documents created whilst Mr Giles’ firm was engaged to act for Mr A and his related
interests. Those documents established, in the Committee's view, a prima facie case
on the factual matters set out in the three allegations. Furthermore, if the factual
allegations were proved then, in the Committee's view, there was a prima facie case
on misconduct and dishonesty in respect of each allegation.
50. In respect of Allegation 1 it appears not to be in dispute that the factual proposition,
namely that Mr Giles instructed GH Solicitors ‘to make a payment to a nominee
company, when in fact the payment was to Mr A, as the nominee company bank
account did not exist’, is an accurate statement of what happened. Mr Giles does not
now dispute that Nominee X Ltd, the nominee company in question, never had a
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bank account. An inference which could be drawn from the internal memo dated 20
June 2005 and paragraphs 9 and 18 of Mr Giles statement of defence is that it was
common knowledge amongst those at QED dealing with this matter, including Mr
Giles himself, that the nominee companies did not operate bank accounts.
51. The Committee has not at this stage formed any view as to the state of knowledge of
the solicitors who received this instruction as to whether a Nominee X Ltd bank
account existed. However, the undisputed facts alone are, in the Committee's view,
sufficient to raise a prima facie case on dishonesty, the allied issue of integrity and on
misconduct.
52. In respect of Allegation 2 Mr Grey submitted that, in the absence of any conclusive
evidence at the time as to what the directors’ declared salaries were going to be, it
could not be said that the representations in the letters to the mortgage lender were
inaccurate. Moreover, he submitted there was no conclusive evidence that the letters
had been received by the lender and therefore ACCA had not established that the
representations had been made to a third party.
53. An inference which could be drawn from the contemporaneous documents was that
Mr Giles was prepared to write letters, or instruct letters to be written, which simply
repeated figures given to him by Mr B without any independent verification of those
figures. It is not without significance that material changes were made to letters that
had been drafted on the face of it based on nothing more than a request by Mr B to
make those changes.
54. It is accepted in paragraph 15 on page 9 of Mr Giles’ defence statement that he
wrote to Company B on 26 October 2005 confirming salaries for the two partners in
the sum of £68,000 for the year ended 31 March 2005. He further accepts in
paragraph 19 that the letters dated 3 November 2005 addressed to Company B were
worded by Mr Giles and were in fact sent to Company B by a secretary at QED. It is
of significance that the figure quoted for Mr A’s income in the letter of 3 November
2005 is significantly different from that contained in a document headed ‘Financial
Statement Tax Return (06/04/2004-05/04/2005)’ which was prepared and signed by
Mr Giles on 15 October 2007.
55. There is therefore evidence from which a tribunal could conclude that factual
assertions in Allegation 2 were made out. It follows inevitably in the Committee's view
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that there is therefore also evidence supporting the allegations of misconduct,
dishonesty and lack of integrity in this allegation.
56. In respect of Allegation 3 it is accepted on Mr Giles’s behalf that on its face the letter
in question could be regarded as misleading, given that it states a payment had been
made to Nominee X Ltd’s account when in fact Nominee X Ltd did not have a bank
account. It is not without significance that Mr Giles was, at the time the letter was
written, a director of Nominee X Ltd. These matters alone are sufficient in the
Committee's view to raise a prima facie case both on the factual allegations in
Allegation 3 and also on the contention that the actions in question amount to
misconduct, dishonesty and a breach of the Fundamental Principle of Integrity.
57. The Committee therefore found there was a case to answer on all the allegations.
ADJOURNMENT (4 March 2016)
58. There being insufficient time to conclude the case in the allotted three days of the
resumed hearing, the hearing was adjourned on 4 March 2016 part-way through the
evidence of Mr Giles. The Committee directed that the hearing be re-listed on a date
to be notified with a four day time estimate and gave the following further directions:
(a) All parties shall provide to the Hearings Officer no later than 11 March 2016 all
dates of availability (whether four days in a row or not) for themselves (and if
relevant any witnesses) for the months of June and July 2016;
(b) A transcript be prepared of the hearing that took place on 2 to 4 March 2016 and
supplied to the parties and the Committee no later than 14 days prior to the next
hearing;
(c) In respect of disclosure of the GH Solicitors files:
i. ACCA will communicate with Mr E and/or his assistant to establish
whether the undertakings provided are acceptable to his solicitors;
ii. The parties will by letter or email report to each other and the Committee
(through the Hearings Officer) no later than 25 March 2016 as to the state
of progress with regard to the disclosure of these files;
iii. Any documents from the GH Solicitors files upon which Mr Giles wishes to
rely will be disclosed to ACCA within 14 days of receiving the files (or in
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the event that Mr Giles does not wish to rely on any documents from
these files he shall notify ACCA of that within the same period). If for any
reason Mr Giles is unable to comply in full with the requirements of this
direction 23 April 2016 he shall inform ACCA and the Committee (through
the Hearings Officer) why he is unable to comply; and
iv. If, in light of any further disclosure by Mr Giles in accordance with iii.
above, ACCA wishes to inspect the GH Solicitors files it shall make
arrangements to do so within 14 days of that disclosure by Mr Giles. Any
documents from the GH Solicitors files upon which ACCA wishes to rely
will be disclosed to Mr Giles a further 14 days thereafter (or in the event
that ACCA does not wish to rely on any documents from these files it shall
notify Mr Giles of that within the same period). If for any reason ACCA is
unable to comply in full with the requirements of this direction by 23 May
2016 it shall inform Mr Giles and the Committee (through the Hearings
Officer) why he is unable to comply.
(d) Ms G, the expert relied on by Mr Giles, shall attend the next hearing to give oral
evidence.
(e) ACCA shall notify all parties no later than 18 March 2016 whether it intends to
rely on expert evidence; and if so, its expert’s report shall be served on all parties
no later than 21 days prior to the next hearing and its expert shall be available at
that next hearing to give oral evidence.
59. The Committee noted and accepted that Mr Giles’ advisers would need to speak to
him during the adjournment for the purposes of and related to the above directions.
RESUMED HEARING (5 to 8 September 2016)
60. At the resumed hearing starting on 5 September 2016 the Committee received the
following additional documents: correspondence between parties 10 March – 28 July
2016 (pages 1 to 44), further additional bundle (pages 1 to 64), ACCA tabled
additional bundle (pages 1 to 7) and defence tabled additional documents (4 pages).
61. The evidence of Mr Giles was completed and the Committee heard evidence from
Ms G, FCA, who was called on behalf of Mr Giles as an expert witness. Having heard
submissions on behalf of the parties and advice from the Legal Adviser the
Committee retired to consider its determination on the allegations.
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DECISION ON ALLEGATIONS
62. The Committee carefully considered all of the oral and documentary evidence. It took
into account the submissions of the parties and the advice from the Legal Adviser.
The Committee bore in mind that the burden of proving these allegations was on the
ACCA and the standard of proof is on the balance of probabilities. Each allegation
was considered separately.
Allegation 1: not proved
63. The email in question was sent by Mr Giles on behalf Nominee X Ltd to solicitors who
had been instructed to act for Nominee X Ltd. The email instructs the solicitors as to
which account the proceeds of a sale by Nominee X Ltd to Mr A should be sent.
64. There was no dispute that Nominee X Ltd did not have a bank account; and that the
account details included in Mr Giles’ email were in fact the details of Mr A’s personal
account. There was also no dispute that, in relation to this transaction, Nominee X
Ltd was acting as a nominee, and that the ultimate beneficial owner of the property in
question was at all times Mr A.
65. A key issue in respect of this allegation was whether the wording of this email was
misleading. The email sent by Mr Giles to the solicitors was, save for immaterial
additions, in the terms requested by Mr A. ACCA’s case was that by adopting the
words ‘remit the remainder to the following Nominee X Ltd account’ Mr Giles was
deliberately misleading the solicitors, knowing that Nominee X Ltd did not have a
bank account and that the details which followed were for Mr A’s own account.
66. Mr Giles’ case was that the words ‘Nominee X Ltd account’ were simply an
identification tag, identifying the legal beneficiary of the payment. This was necessary
for accounting purposes. Further, that as Mr A was the beneficial owner of the funds
in question it was perfectly proper for the money to be directed into his account.
Furthermore, Mr Giles’ case was that the solicitors, GH Solicitors, fully understood
the nature of the transaction.
67. The Committee was satisfied that instruction was to make a payment to an account
owned and operated by ‘Nominee X Ltd’. There being no such account the
Committee accepted that the facts set out in this allegation are proved. The more
important question was whether giving an instruction in these terms amounted to
misconduct.
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68. Essentially, the gravamen of the allegation was that this was an attempt to disguise
the destination of the payment. As Mr Mills conceded, it was therefore necessary for
ACCA to prove that Ms H of GH Solicitors, the recipient of the email, was unaware of
the true position.
69. There was no direct evidence on this point from either Ms H or her firm. There was
however emails which made it clear that GH Solicitors was not only aware of Mr A
but had direct dealings with him. It was not disputed that Mr A was ultimately entitled
to the funds.
70. It is of significance that the instruction was to remit the funds to ‘the following
[Nominee X Ltd] account’ and not to Nominee X Ltd. Given that it appears that Mr A
was entitled to the funds, the Committee could not be satisfied that the wording of the
email was designed to deceive.
71. The Committee therefore determined that, in relation to this specific financial
transaction, there was no evidence that it did not take place in a way intended by all
the participants. The Committee could not be satisfied either that there was an
intention on the part of Mr Giles to mislead or that anyone had in fact been misled.
72. In those circumstances Mr Giles’ actions as set out in Allegation 1(a) could not
amount to misconduct. Nor could they amount to dishonesty or a breach of
Fundamental Principle of Integrity, as alleged in Allegation 1(b).
73. Therefore the Committee found Allegation 1 not proved.
Allegation 2: Proved
74. There was no dispute that the three letters which Mr Giles sent on behalf of his client
to Company B contained inconsistent income figures.
75. The first, dated 26 October 2005 stated that Mr A and his fellow director, Mr D, had
both received salaries of £68,000 for the year ending 31 March 2005 and were, in
addition, entitled to a share of profits. This letter was clearly written in response to an
email to Mr Giles from Mr B asking him to ‘just state that the personal wages’ for the
two directors were £68,000.
76. On 2 November 2005 Mr Giles sent further letters to the same addressee stating that
Mr A had received a director’s salary for the same year of £68,000.
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77. The company’s accounts, which were signed on 1 October 2005, showed that
salaries paid to the directors in the year ended 31 March 2005 totalled £9,230. Thus,
on the face of it, there was a discrepancy between what Mr Giles had stated in the
second letter and what was showing in the accounts. This caused Company B to
raise a query. That query was passed on to Mr Giles by Mr B on 2 November 2005.
Within 5 minutes of receiving the query Mr Giles instructed his secretary to produce a
third letter stating that both directors had received salaries of £4,615 (which tied in
with the figure in the accounts) and dividends of £63,385. This latter figure, as Mr
Giles accepted in his evidence, was chosen in order to get the total income up to the
figure of £68,000 in line with Mr B’ original request. A letter in these terms was sent
to Company B on 3 November 2005.
78. The Committee was quite satisfied that Mr Giles had provided Company B with
inaccurate information about his client’s income. The figures were not consistent with
each other. Furthermore they were inconsistent with the information available to Mr
Giles, namely the company accounts for the previous year end which were signed by
the directors on 1 October 2005.
79. At the hearing Mr Giles explained in oral evidence that he would have discussed the
figures with his colleague, Mr J, who was on the accountancy side of QED, in order
to verify them, but was unable to recall whether he did in fact do so.
80. Mr Giles’ case was that the company accounts for the relevant year end were only in
draft form and that there was sufficient ‘headroom’ in the figures to allow for
dividends of £63,385 to be paid to both of the directors. Therefore he contended that
the figures he provided were not misleading. There were, however, a number of
problems with that contention.
81. First, the letters sent by Mr Giles spoke only of the historic position. They all said that
the director or directors ‘have received’ the stated income. As Ms G said in her
evidence, once the payroll for the year is complete, no further salaries can be paid.
Further, the year-end accounts show that dividends totalling only £25,000 had been
paid. Therefore stating that certain sums had been received when clearly they had
not was misleading.
82. Indeed, Mr Giles conceded that the representations in the letters to Company B were
inaccurate at that point in time and they were representations he was willing to make
in order to please his client, Mr A.
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83. Second, the accounts do not necessarily demonstrate that sufficient funds were
available to pay dividends of over £63,000 to each director. They show net profit for
the year of £91,465. As Ms G conceded in cross-examination, if all that Mr Giles was
aware of was that net profit was £91,465 and there was no indication of whether that
is pre- or post-corporation tax, then the letter of 3 November 2005 was not
appropriate. She further conceded that unless the accountant responsible for the
accounts had confirmed that funds were available to pay such dividends it would
have been inaccurate to make such a representation in the letter of 3 November
2005.
84. Third, even if sufficient funds had been available for the dividend payments of this
magnitude they would have to be approved by the directors. Mr Giles had not
obtained, and could not be sure he would obtain, such approval.
85. In short, when the third letter was sent on 3 November 2005 not only had the
directors not received dividends of £63,385 but it would have been wrong to assume
that they would in due course do so.
86. Mr A was described as a demanding client. However the Committee is quite satisfied
that Mr Giles was far too willing to provide these references at the behest of his
client’s brother, Mr B, without adequately checking the information he was providing.
He himself accepted that he did not at any stage see the draft year end accounts.
Although his evidence was that he would have discussed matters with the QED
accountant responsible for preparing them, he accepted that he did not speak to that
accountant in the five minutes between receiving the query about the second letter
and instructing his secretary to draft the third one.
87. Having found that the letters in question contained inaccurate representations, the
Committee went on to consider whether providing these references amounted to
misconduct on Mr Giles’ behalf.
88. The Committee was in no doubt that this approach fell far below the standards to be
expected of an accountant and would be regarded as bringing discredit to Mr Giles,
his firm and his profession. It therefore clearly amounted to misconduct.
89. Giving inaccurate information knowing it is likely to mislead a finance provider would
undoubtedly be regarded as dishonest by the ordinary standards of reasonable and
honest members of the public. Furthermore Mr Giles, as a professional accountant,
must have realised that his actions would be regarded as dishonest by those
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standards. It must also follow that Mr Giles was not acting in an honest and
straightforward manner and was therefore in breach of Fundamental Principle of
Integrity.
90. Therefore the Committee found Allegation 2 proved in its entirety.
Allegation 3: Proved
91. Mr Giles accepted that the letter he sent to AB Solicitors at the request of his client
Mr A was inaccurate. His case was, in essence, that the letter may have been badly
worded and he may have acted in a sloppy manner but he was not deliberately trying
to mislead anyone. He stated in his Defence that, given the passage of time, he is
unable to explain why he simply accepted the wording supplied to him by Mr A. He
also accepts in his Defence that he carried out no ‘due diligence’ before sending out
the letter other than checking the view statement. This statement, it transpires, was a
forgery.
92. It is not, of course, alleged that Mr Giles had anything to do with creating the forgery.
However he was at the time he wrote the letter a director of Nominee X Ltd and had
been for several months. He was therefore fully aware that Nominee X Ltd had never
operated a bank account and therefore had no method of receiving the payment.
Further, Nominee X Ltd was not even incorporated until a month after the alleged
payment had been made to it. Therefore Mr Giles should have appreciated the view
statement could not be relied upon.
93. The Committee accepted Mr Mills’ submission that the letter unambiguously
represented that QED had investigated the transaction and had satisfied itself both
that it had taken place and that the solicitors could be assuaged that it had taken
place. Mr Giles had not in fact properly investigated the transaction, as he accepts,
and the assurance contained in the letter should not have been given.
94. The request to Mr Giles to write the letter came from Mr A by email on 9 February
2007. Mr Giles replied on 12 February 2007 saying:
‘Why do we have to write these things? If [AB Solicitors] have written to
[Nominee Y Ltd/Nominee X Ltd] can we see the correspondence? I would like
to see how your draft reply relates to the lawyers request for comfort and
what commercial risks are in point.’
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95. Therefore Mr Giles clearly appreciated there was a need to scrutinise the letter
before sending it to the solicitor. Nonetheless he sent the letter regardless without
alteration. The Committee did not accept the letter could be described simply as
badly worded. It was completely misleading. It says ‘We are satisifies (sic) that the
monies were paid’ and he confirms that the money was transferred to Nominee X
Ltd. He further gives an explanation as to why the money was paid into the ‘account
of [Nominee X Ltd]’. These assertions were patently incorrect. Essentially the letter
was a fabrication from start to finish, designed to give comfort to a solicitor that a
particular transaction had taken place in a particular way when in fact it had not.
96. The Committee was quite satisfied that Mr Giles sent this letter knowing the
assertions in it were incorrect, something which he now concedes, at least in relation
to paragraphs 4 and 5 of the letter. Therefore he was deliberately taking part in an
attempt to misrepresent the circumstances of the transaction. Given the importance
of giving accurate information to a solicitors firm, knowing that it wants to rely on it,
Mr Giles’ failure to do so in these circumstances clearly went well beyond negligence
or sloppiness. The Committee found that Mr Giles’ action in sending the letter was
significantly below the standards of a reasonable accountant, were discreditable to
himself, his firm and his profession and therefore amounted to misconduct.
97. A deliberate attempt to misrepresent information regarding a significant financial
transaction and give credibility to it by use of his professional status was in the
Committee's view dishonest and would be so regarded by reasonable and honest
members of the public. Having appreciated in February 2007 the importance of this
letter, there is no doubt in the Committee's mind that Mr Giles must have appreciated
that sending a deliberately misleading letter would be regarded as dishonest. For the
same reasons, sending this letter was a failure to act in a straightforward and honest
manner and therefore was a breach of the Fundamental Principle of Integrity.
98. Therefore Allegation 3 is proved in its entirety.
SANCTION AND REASONS
99. The Committee considered what sanction, if any, to impose taking into account
ACCA’s Guidance for Disciplinary Sanctions (‘GDS’) and the principle of
proportionality. The Committee bore in mind that the purpose of sanctions was not
punitive but to protect the public, maintain confidence in the profession and declare
and uphold proper standards of conduct and behaviour. It took into account the
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submissions of the parties and the advice of the legal adviser. It received a further
bundle of documents from Mr Giles (identified as second tabled further additional
bundle pages 5 to 32).
100. Having found that Mr Giles’s actions amounted to misconduct, taking no further
action was clearly not appropriate. The Committee therefore considered the available
sanctions in ascending order of seriousness.
101. The Committee took into account that no previous disciplinary findings had been
made against Mr Giles. Apart from these findings he has an unblemished record. He
had co-operated fully with the disciplinary process. The Committee took into account
that he had provided a number of references and testimonials which spoke very
highly as to his professional and personal qualities. However, in light of his denial of
the allegations that have been found proved against him, he had shown little by way
of insight and remorse.
102. Mr Giles has been found to have acted dishonestly on more than one occasion in the
context of his professional practice. Whilst it was accepted that there is no evidence
that any loss resulted, there is clearly potential for loss to be caused where a
professional accountant uses his status to provide misleading information on behalf
of his clients. Mr Giles was, as the Committee has observed earlier in this
determination, far too willing to sacrifice his standards in order to do his client’s
bidding.
103. The Committee accepted that it was significant that there has been no repetition
since and therefore Mr Giles appears to have learnt his lesson. However, dishonesty
in the context of a professional engagement is bound to be viewed particularly
seriously.
104. Issuing an admonishment or a reprimand were clearly insufficient as they would not
mark the gravity of the misconduct in question. It was not of a minor nature. It
involved two separate incidents of dishonesty in a professional capacity. These were
entirely the sort of actions that undermine public confidence in the profession. It was
a serious departure from acceptable standards. Therefore the Committee decided
that issuing a severe reprimand would not satisfy the public interest in this case.
105. The Committee concluded that Mr Giles’ behaviour was fundamentally incompatible
with membership of a professional organisation. Therefore the appropriate and
proportionate sanction was to remove Mr Giles’ membership of the Association.
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106. Therefore, pursuant to CDR 13(1)(a), Mr Giles is excluded from Membership of
ACCA.
107. The Committee did not however consider that it was necessary to invoke the power
to extend beyond the minimum the period after which he can re-apply for
membership.
COSTS AND REASONS
108. ACCA applied for costs in the sum of £43,297.50. The application was supported by
a schedule providing a breakdown of the costs incurred by ACCA in connection with
the hearing (tabled additional bundle pages 1 to 4).
109. The Committee considered that in principle a costs order should be made in favour of
ACCA having found two serious allegations, which Mr Giles had steadfastly denied,
proved. It did not consider that the amount of work done by ACCA on the case was
unreasonable. Further, it did not accept it was unreasonable for ACCA to have
pursued Allegation 1 which was not found proved, given that the Committee ruled
there was a case to answer in respect of it. However, the Committee felt it was not
unreasonable to reflect in the award of costs the fact costs will have been incurred in
defending this allegation which had not ultimately succeeded.
110. The Committee also accepted Mr Grey’s submission that the estimate of costs was
based on full hearing days when some days had not been full. The Committee also
took into account Mr Giles’ means and considered it was proper to reduce the figure
claimed to reflect Mr Giles’ likely reduced future financial position
111. The Committee determined that the appropriate order was that Mr Giles pay ACCA’s
costs in the sum of £25,000.
EFFECTIVE DATE OF ORDER
112. The Committee did not consider that there was an immediate risk to the public which
would justify ordering the sanction imposed to have immediate effect. Therefore the
order will come into effect from the date of expiry of the appeal period, namely after
21 days from service of this written statement of the Committee’s reasons for its
decision, unless Mr Giles gives notice of appeal in accordance with the Appeal
Regulations prior to that.
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Mr Graham White
Chairman
3 February 2017