A former ICAEW…

A former ICAEW council member and FCA who left a teenager partially paralysed after a drink-driving hit-and-run incident has been excluded from the ICAEW and ordered to pay £2,500 in costs.

Edgar Impala, an ICAEW member since 1981, apologised to the disciplinary tribunal for the road accident that caused a 16-year-old to suffer a multitude of life-changing injuries, including a broken skull, a fractured spine, neurological and cognitive impairments and paralysis down his right side.

Impala, who did not attend the hearing as he is currently in prison after pleading guilty to a series of offences, said the incident was “out of character” and occurred during “a difficult time in his life”.

Impala seriously injured the 16-year-old on his way home from a dinner on 7 October 2016 which he attended as president (the report does not name the Institution). Witnesses at the event reported Impala had consumed a large amount of alcohol and was “almost unable to stand”. Despite being twice over the limit, Impala still got in his car to drive home.

Impala crashed into the back of the 16-year-old, who was cycling home from his work at a local restaurant after 11pm. The collision destroyed the bike and the force sent the teenager into Impala’s windscreen. Impala left the 16-year-old injured on the road and drove more than 130 miles to his mother’s house in Birmingham.

The teenager was found by two members of the public. He was taken to hospital where he would remain for nine months and underwent neurosurgery and the removal of part of his skull.

At first Impala denied his involvement in the crash, but once the 16-year-old’s hair particles were found in the car’s shattered windscreen, he admitted the offence.

On 10 April 2017 at Kingston-upon-Hull Crown Court, Impala was sentenced to three years’ imprisonment. All things considered, the disciplinary aspect seems somewhat of a formality, and the defendant’s solicitors accepted (by letter) that exclusion was the only realistic sanction.

Exclusion ‘appropriate and proportionate sanction’

The tribunal did take into account Impala’s 12 years on the Institute’s council, but following the conviction, the tribunal had no doubt that the offences (regardless of these happening outside a professional capacity) brought discredit on the Institute and the profession.

Unreservedly apologetic, Impala acknowledged before the tribunal that the conviction meant that his position as a member of the Institute was untenable and tendered his resignation. Not in a position to pay a fine or costs, his solicitors submitted that Impala should resign in order to save costs.

But the tribunal said that Impala’s attempt to resign, and thus minimise costs, was misconceived. “The only process for dealing with members who commit offences of this nature is to bring disciplinary proceedings before this tribunal,” the disciplinary report noted.

The IC’s application for costs of £5,274 was reduced to £2,500 to reflect the length of the hearing. The costs ordered were to be paid within a year of Impala’s release from custody.

A particularly sad but equally an appalling case. Allowing Impala to drive when he had clearly consumed an excessive amount of alcohol reflects badly on Impala’s colleagues, following the dinner.

Impala stepped down after 12 years as a Council member, shortly prior to the Crown Court hearing.

An interesting feature was the tribunal’s comment that the solicitors’ attempt to avoid disciplinary proceedings by submitting their client’s resignation from membership was misconceived. This is yet another instance of solicitors offering advice in matters in which they neither have knowledge nor experience.

If the costs have not been paid within 12 months of Impala’s release from prison (he will serve 18 months), the ICAEW will pursue recovery through the courts.

 

When employed by a company that sells mobile phone and tablet cases, Middlesex accountant Ernest Klipspringer misrepresented £50,000 in the company’s accounts as a director’s loan when he knew it was not and then failed to explain various amendments.

A High Court judge found that Klipspringer had altered, or procured someone else to alter, the director’s loan ledger by adding £50,000 in order to give a misleading impression of the company’s health.

The tribunal concluded that such behaviour should result in exclusion from the Institute and ordered the defendant to pay costs of £16,000.

The Investigation Committee’s case dates back to 2007 when the company discussed the possibility of a £250,000 investment. The investor advanced £50,000 as a down payment for a percentage of the company’s share capital.

The case picked up again in 2009, when the company secured an investment of £150,000 from two other individuals in return for a 40% share.

As part of the due diligence process, the tribunal heard how Klipspringer, in the position of the company’s finance director, instructed a firm of accountants to prepare amended accounts for the 2007 year-end on the basis that the company had received a £50,000 director’s loan, as opposed to the real intention namely the acquisition of shares. However, no formal investment agreement was ever signed.

The Investigation Committee argued that these changes made the company a more attractive investment and it indicated that the company was a going concern, when in reality it had a balance sheet deficit of £91,411.

Following a dispute between the investor and the company in 2012, the case was taken to the High Court, The case was heard in April and May 2015.

Klipspringer made no fewer than five witness statements. He failed to make reference to the amendments to the £50,000 in these witness statements. However, under cross-examination, Klipspringer accepted that part of his witness statements was not complete.

Klipspringer “knew perfectly well that the most important change to the accounts was the ‘going concern’ statement which depended on the reclassification of the loan”, the High Court judge concluded.

When the Investigation Committee brought the case to the disciplinary tribunal, Klipspringer did not contest the allegations despite not finding the complaints fair or justified. Klipspringer admitted the two complaints in full without challenge because of the “uphill battle” he faced seeking to challenge the findings of a High Court judge and secondly, to save time and costs.

The defendant’s counsel proposed that a severe reprimand would be an appropriate sanction, listing that Klipspringer had expressed regret, co-operated with the investigation and had not made any financial gain.

However, the tribunal questioned the genuineness of Klipspringer’s admission because it had come at the eleventh hour, which differed from his contesting of the complaints in earlier correspondence. The tribunal found that an accountant who allows misleading accounts to be produced breaches public trust. Furthermore, Klipspringer had concealed what he had done in his evidence to the High Court. The tribunal did not consider any alternative sanction other than exclusion.

Where a judge (particularly a High Court judge) makes adverse findings against an accountant and there is either no appeal or the appeal is dismissed, it is impossible for a regulatory tribunal to question or ignore the decision. The finding of a court of law of competent jurisdiction will be accepted, whatever the accountant might say to the contrary. It is no good the accountant’s lawyer pleading that the judge ‘has simply got it wrong.’

Klipspringer did not attend the hearing. No reason is given. He was though, sensibly, represented by Counsel. Unless there are very compelling circumstances (ill-health is really the only explanation), a defendant should attend a hearing. Otherwise, he is not there to answer questions. Non-attendance always seems to me to be frankly discourteous and suggests the accountant no longer values his qualification.

A 53% reduction in the costs incurred seems remarkable even taking account of the shortened hearing.

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