The Financial Conduct Authority (FCA) has abandoned its prosecution case against three former executives of healthcare software company iSoft for providing misleading financial statements, after a second retrial was halted as a result of late presentation of evidence report Harris & Co chartered accountants Northampton.
The case, which dates back to 2006, involves Stephen Graham, Timothy Whiston and John Whelan. The FCA has also said it will not be pursuing the prosecution of Patrick Cryne, former chairman of iSoft and owner of Barnsley FC, who did not stand trial because of ill health.
Whiston, iSoft’s former chief executive, along with Graham, and Whelan were accused of deceiving iSoft’s board, auditors and investors into thinking that the company was in a healthy financial position by prematurely booking £43m in revenues from a deal to supply software to Irish hospitals.
After the first trial last year resulted in a hung jury, a second trial which started in April this year has been brought to an end following legal argument about an exhibit handling issue that arose late in the trial, when one of the prosecution lawyers discovered an undisclosed document in her files.
The judge said that the new material ‘resulted in the prosecution changing their stance in important aspects of the case’. After being alerted to the disclosure, the defence said that it needed time to consider the material, but the judge said that a delay would be unfair to the jury and discharged them.
The FCA said that, ‘after much careful consideration of the options available’, it would not be pursuing a second retrial. Tracey McDermott, FCA director of enforcement and financial crime, described the outcome as ‘disappointing’ and said the problems arose as a result of a particularly unusual set of circumstances, which are unlikely to recur.
‘As with all our cases, win or lose, we will look to see what lessons can be learned for the future. In the meantime, we continue to focus our energy on the strong pipeline of cases we have under investigation’
The Financial Services Authority, the forerunner of the FCA, started its investigation into accounting irregularities at iSoft in 2006. The company was set up by Cryne and Graham after they bought the business from KPMG. It was valued at £900m at its peak, but subsequently collapsed with losses of more than £300m and was eventually bought by US software supplier CSC.