The High Court refused an application to disqualify accountant Patrick McCann from acting as an auditor or company officer, despite findings that he failed in his duties as auditor of Kentford Securities Limited and knowingly relied on a backdated letter.
The Director of Corporate Enforcement sought an order under section 160 of the Companies Act 1990. The application concerned McCann’s work for Kentford between 1988 and 1994, when he was employed by Chartered Secretarial Company and was a director and auditor of the company.
The Director argued that McCann acted as auditor while still a director, that his resignation had been backdated, and that he issued unqualified audit reports for four years without checking the company’s substantial bank transactions. The application also alleged that he submitted a letter attributed to Des Traynor, dated January 1990, knowing it had been fabricated or backdated. The court noted the letter’s telephone number could not have been in use until April 1993. It found McCann did not create the letter, but was probably aware it had been backdated when he gave it to an authorised officer.
Justice Michael Peart found that McCann had not formally resigned as a director when he signed the audit reports for the years ending March 1990 to 1993, and that the resignation was recorded retrospectively in 1992. The judge concluded this was probably not a deliberate breach of the law, but reflected a workplace culture in which staff signed forms without considering their significance. The court also found McCann failed as auditor by accepting Traynor’s assurances that Kentford was a trust company without adequately examining its accounts and records.
The judge accepted McCann’s evidence that he had not known Kentford was involved in tax evasion and made no financial gain from its activities. The court found against him on the complaints in the application, while emphasising that those findings did not establish that he had knowingly participated in the illegal scheme.
The judge said the disqualification power was protective, not punitive, and required consideration of whether McCann presented a current risk. The conduct was many years old; his later accountancy practice had been reviewed by his professional body, and the judge considered him to be in good standing. Finding that he did not currently present a danger requiring public protection, the court exercised its discretion to refuse the disqualification order. It made no disqualification order; the judgment does not state any further order.