DISCIPLINARY COMMITTEE OF THE ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS

REASONS FOR DECISION

In the matter of: Mr John Gimson

Heard on: 17-22 March 2016

Location: Charles Darwin House, 12 Roger Street, London WC1N 2JU and The Chartered Institute of Arbitrators, 12 Bloomsbury Square, London, WC1A 2LP

Committee: Mr John Wilson (Chairman - Accountant), Mr Alastair Papps (Lay) and Mr Gerard McClay (Lay)

Legal Adviser: Mr Richard Ferry-Swainson

Persons present and capacity:

Mr Paul Ozin QC (ACCA Case Presenter), Ms Jill Baldwin (Hearings Officer), Mr John Gimson (Member), Mr Kenneth Hamer (Member’s Representative) Mr Christopher Cope (Member’s Representative) Mr David Young (Member’s Representative)

Observers: None

INTRODUCTION

1. The Disciplinary Committee (the Committee) convened to consider two

Allegations against Mr Gimson.

2. The papers before the Committee were numbered 1 to 776. There were,

however, some omissions in the bundle of material provided by the

Defence. This material was provided at the hearing and numbered D1 to

D158. For the avoidance of doubt, some of those pages also appeared in

the bundle numbered 1 to 776.

ALLEGATIONS/BRIEF BACKGROUND

3. The Allegations were as follows:

Allegation 1

Pursuant to bye-law 8(a)(i) Mr Gimson is guilty of misconduct, in 2009,

knowing that Mr A was subject to a disqualification order under the terms of

the Company Director Disqualification Act 1986,

(i) He knowingly assisted Mr A to be concerned in the management

of companies;

(ii) He did so, knowing that Mr A was thereby acting in contravention

of the disqualification order.

The companies referred to in Allegation 1 are (jointly and severally):

(a) Company 1;

(b) Company 2;

(c) Company 3;

(d) Company 4;

(e) Company 5;

(f) Company 7.

Allegation 2

Pursuant to bye-law 8(a)(i) Mr Gimson is guilty of misconduct in that he

made or permitted payments to be made from companies of which Mrs

B was a director, Company 1 and Company 2, (a) to Mrs C and (b) to or for

the benefit of companies controlled by himself and/or Mr A namely,

Company 3, Company 4, Company 5 and Firm 6,

(i) without Mrs B’s knowledge or agreement;

(ii) dishonestly.

4. Mr Gimson was admitted as a member of ACCA on 17 April 2000 and as a

Fellow on 17 April 2005.

5. This case concerned Mr Gimson’s involvement with a man called Mr A. On

2 November 1995 Mr A was sentenced to a total of four years imprisonment

for two offences of fraud and two offences under section 11 of the Company

Directors Disqualification Act 1986. He was disqualified from acting as a

director under section 2 of the Act for 10 years. On 22 October 2003 a

maximum period of disqualification of 15 years was imposed on Mr A as a

result of his operations with relation to a failed company. He thus remains

disqualified until 2018. Section 11 of the Act states that it is an offence for a

person who is an undischarged bankrupt to act as a director of, or directly or

indirectly to take part in or be concerned in the promotion, formation or

management of a company. A person acting in contravention of section 11

is liable to imprisonment for up to two years.

6. ACCA alleged that Mr Gimson knowingly assisted Mr A to be concerned in

the management of the companies listed above, and that he did so in the

knowledge that Mr A was thereby acting in contravention of the

disqualification order.

7. Being concerned in the management of a company may include such

activities as:

undertaking tasks in relation to the company’s business, for example

ordering, paying or negotiating with suppliers or customers, renting or

buying premises, hiring or firing employees, dealing with the company

bank account;

acting as a management consultant;

acting in a governing role within the company;

taking executive decisions as to the company’s affairs or making it seem

that one is in a position to take such decisions.

8. Additional guidance as to what is meant by being concerned in the

management of companies can be found in the case of R v Archibald

James Campbell (1984) 78 Cr. App. R. 95. “…. if one looks at section 188

the wording is so widely cast that it is the opinion of this court that it is

intended to insulate persons, against whom an order of disqualification has

been made, from taking part in the management of company affairs

generally. It is cast in the widest of terms— “… in any way whether directly

or indirectly, be concerned or take part in the management ….” It would be

difficult to imagine a more comprehensive phraseology. It is designed to

make it impossible for persons to be part of the management and central

direction of company affairs.”

9. Mr Gimson stated in an undated letter to ACCA that:

“By the time that I first met [Mr A], I was aware of some of his background,

namely that he had served time in prison. I also discovered that he had

twice been adjudicated bankrupt and disqualified as a director of limited

companies for a period of 15 years…although I worked with [Mr A], I did not

work for him…”

10. Mr Gimson stated in a further letter to ACCA dated 27 May 2011 that:

“…From time to time, [Mr A] would give advice and make suggestions with

regard to the running of the various companies, in which I was involved.

However, I never allowed him to act for any of these businesses or give a

direct instruction. When he came close to this, I made it clear that I would

not accept [Mr A’s] involvement.”

11. However, in a statement provided to ACCA by Mr Gimson, dated 29

January 2016, he stated, “I admit that complaint, but only for the purpose of

these proceedings. Although I was aware of the previous conviction and

disqualification of [Mr A], I believed that with a proper separation of duties,

any conflict could be avoided. As matters progressed, I found it increasingly

difficult to achieve this, and after 6 months or so, I resolved to terminate the

relationship. I accept that I should have acted more speedily, but I had also

developed a relationship with [Mr D and Mrs B], whom I wished to support

and which I could only achieve by remaining a director.”

12. Mr Ozin directed the Committee to a judgment in the High Court before His

Honourable Mr Justice Evans-Lombe who gave a summation of the alleged

behaviour of Mr A as follows, “The burden of the allegations contained in

the petitions is that the Companies were used by a [Mr A] as vehicles for

fraud, namely the extraction of assets from companies in financial distress

before they entered formal insolvent administration. Thus it is alleged that,

having discovered an appropriate target company, [Mr A] would procure the

acquisition of a controlling interest in its shares by one of the Companies.

Having obtained control, the trading of the target company would be

continued for a brief period during which assets would be abstracted,

typically as substantial “management fees” after which the target company

would be left to be wound up by its creditors.”

13. It was ACCA’s case that it was just such behaviour that Mr A was engaged

in with respect to the two complainants in this case and that he used a

“team” which included Mr Gimson. As an ACCA member Mr Gimson

provided a veneer of respectability to Mr A’s team designed to allay any

concerns clients might have had on learning that Mr A was a convicted

fraudster and disqualified director. Mr Ozin said that the contravention of a

disqualification order was a serious matter which could result in a term of

imprisonment and that on the face of it, by admitting charge 1, for the

purpose of these proceedings, what Mr Gimson had admitted was, factually

speaking, assisting Mr A to commit a criminal offence, which was very

serious.

14. In his second statement to the Committee dated 24 February 2016, Mr

Gimson appeared to accept that Mr A was behaving in the way as described

by Mr Justice Evans-Lombe, by stating, “It is now my belief that the entire

process was a means whereby [Mr A] would extract money from [Mr D and

Mrs B] and [Mr E and Mrs F] at a greatly inflated fee in respect of the fairly

modest services that he was going to provide. Furthermore, there was never

any question of an investment, seeing that the Fermatt Trust did not exist

and that [Mrs C] herself had no money to invest in her own right.”

15. In that same statement Mr Gimson, when referring to various emails, added,

“On reading those emails today, they appear to me to be clear evidence of

[Mr A] becoming involved in the management of these companies. He

should not have done so and I accept that, as I was in receipt of these

emails, I should have attempted to stop [Mr A] from becoming involved in

management as his emails suggested. Indeed, had he persisted, I should

have resigned my position. By doing nothing, I accept that I knowingly

assisted him to be concerned in the management of these companies. By

doing so, [Mr A] was acting in contravention of the disqualification order.”

16. Mr Ozin said that on 2 April 2009 Mr Gimson, in his role assisting Mr A, set

up a company called Company 5, which he said was set up so that he could

assist Mr A with reference to the Fermatt Trust, of which Mrs C was said to

be the main beneficiary. Mr Gimson was the sole director and shareholder

of Company 5. Mr Gimson now accepted that the Fermatt Trust was a fiction

and a vehicle for fraud.

17. There were two complainants in this case, Mr D and Mrs F.

Mrs F’s complaint

18. The second complainant was in fact first chronologically. Mrs F’s husband’s

company, Company 8, experienced financial difficulties due to customers

defaulting on payments in 2008. Mr A made an offer to purchase Company

8 which was refused by Mr E in 2008. Mr A subsequently offered his

services and that of his team to assist Company 8 whilst its cashflow was

very tight in 2009. Mr A informed Mr E and Mrs F that Mr Gimson, an ACCA

member, was one of the members of his team. Subsequent correspondence

between them confirmed those arrangements and that the service was

provided by a team headed by Mr A, of which Mr Gimson was an integral

member.

19. Mr E and Mrs F decided to engage the services of Mr A and his team in

April 2009. The allegation in this case related to Mr Gimson’s conduct during

the period, April 2009 to February 2010, after which Mrs F’s dealings with

Mr Gimson ceased.

20. In an email from Mr A to Mr E dated 14 April 2009, Mr A stated the following:

“John Gimson (ACCA) will be the main provider of Management…

John is a direct employee of ours as Financial Director…

John Gimson has now formed a UK Limited Company called [Company 4]

(SPV) for us, with John Gimson being the sole Director and secretary of that

company.

JG will open a Bank Account for the SPV. JG will also set up the accounting

policies with you to operate such

JG will open negotiations with all necessary suppliers and try and arrange

supply and new credit for [Company 8] under the new SPV ownership…

There is no additional fee or direct instruction to JG for his services to

[Company 8] or the SPV in that there is no engagement by you of his

services.”

21. Mr Ozin acknowledged that Mr Gimson was not copied into this email, but

said it was entirely consistent with the picture that emerged from other

emails within the bundle and that it was inconceivable that Mr Gimson was

not aware that he was being presented by Mr A in this way. This was

because this was the approach adopted by Mr A with Mr Gimson being sent

in as the management man to the companies concerned. Mr Ozin said that

Mr A would not have made these assertions if he thought that Mr Gimson

would baulk at them or contradict them. The modus operandi was Mr A

“calling the shots” and “running the show”, said Mr Ozin, and sending Mr

Gimson in as “his man at the scene telling them what to do in return for a

demand of substantial payments by way of management fees.”

22. Mr Ozin said there were many emails between the various parties in 2009

that made it plain that Mr A was directing Mr Gimson’s activities in relation to

the management of the company. For example:

14 April 2009, an email from Mr A to Mrs F stating that:

“I confirm…that I have now formally instructed both John Gimson

and [Mr I] [solicitor] earlier today as per our service outline…”

8 July 2009, an email from Mr A to Mr Gimson and Mr E instructing Mr

Gimson on the format in which a payment must take place.

22 July 2009, an email from Mr A to Mrs F stating that:

“I have been copied on the reply to you from John and note the

contents of your email to him.”

The original email from Mrs F to Mr Gimson had not been copied to

Mr A as Mrs F wanted to discuss some matters in relation to Mr A

with Mr Gimson. However, Mr Gimson replied and copied Mr A in to

the email thereby making him aware of Mrs F’s concerns and

involving him in the situation.

24 July 2009, an email from Mr A to Mr E and Mrs F stating that:

“John has informed me that you have been on the phone to him this

morning…”

24 July 2009, an email from Mr A to Mrs F stating that:

“…all parties (including you and [Mr E] ) were, prior to our

Agreement, well aware I am barred as a Company Director in the

UK. It is a matter of public record in any event…”

27 July 2009, an email from Mr A to Mrs F and copied to Mr Gimson

stating that:

“I write to advise to put you on Notice that I am about to instruct

Court proceedings against you for the recovery of sums due under

the agreement between us made on 14th April 2009.

30 September 2009, an email from Mr A to Mrs F and copied to Mr

Gimson stating that:

“… [Company 8] was compulsory Wound Up by the Court this

morning (30th September)…I will in due course take the appropriate

steps to wind up [Company 4] …I will now commence formal

Bankruptcy proceedings against you personally this week resulting in

further costs.”

23. Mrs F also provided, in support of the allegation, statements from two of

Company 8’s employees, Mr K and Ms L. Mr K, the bookkeeper, stated that:

“…on numerous occasions I observed [Mr A] giving instruction to Mr John

Gimson with regard to the above and it was my clear impression that [Mr A]

was in the senior position…”

Ms L, the office administrator, stated that:

“…I witnessed the above gentlemen [Mr A and Mr Gimson] working together

on numerous occasions and John Gimson taking direction from [Mr A] on all

manner of matters to do with the accounts of the company. I thought [Mr A]

was John’s boss and John acted on instruction from [Mr A] …when I think

back to the times when I witnessed these two gentlemen working together in

our offices there was no question in my mind that they were working

together…”

Mr D’s complaint

24. Mr Ozin told the Committee how in March 2009, Mr D’s company, Company

9, went into administration. Mr D then received a recommendation from Mr

E of Company 8, with whom he had an existing business relationship, to

speak to Mr A. Mr A informed Mr D that he could assist him in purchasing

Company 9 back from the administrators for a good price.

25. Mr D stated that Mr A informed him that there was ‘some disturbing material’

about him (Mr A) on the internet which was untrue. According to Mr D’s

statement Mr A told him that he had “taken on the Secretary of State and

had won his case and made a precedent/case law”. Mr D also stated that Mr

A informed Mr D and Mrs B that he employed an ACCA accountant, Mr

John Gimson, who would assist the business relationship between Mr A and

Mr D and Mrs B. Mr D said that he felt very reassured by the fact that Mr

Gimson was an ACCA accredited accountant and had confidence in his

professional qualification and therefore relied on him for expert business

advice. In his oral evidence Mr D made it clear that the fact that Mr Gimson

was an ACCA member impacted significantly on their decision to engage Mr

A and his team.

26. Mr A explained to Mr D that Mr Gimson would be the “main provider of

management” as he (Mr A) could not be actively involved in the day to day

running of the company due to his conviction and disqualification as a

company director. Mr Ozin said that it was a feature of this case that Mr A

adopted this position with the complainants and that it was a charade and

must have been known to be so by both Mr A and Mr Gimson, because the

prohibition extended much further and included being involved indirectly with

the management of the companies.

27. The allegations in this case related to Mr Gimson’s conduct during the

period, from the end of March 2009 to January 2010, after which Mr D’s

dealings with Mr Gimson ceased. ACCA relied on the following emails,

provided by Mr D, that outlined the business relationship between him, Mr A

and Mr Gimson.

29 March 2009, an email from Mr A to Mr D and Mrs B:

“…John Gimson (ACCA) will be the main provider of management

…John is a direct employee of ours…”

Mr A then outlined a long list of activities for which Mr Gimson would

be responsible for as follows:

” Forming a Limited Company (SPV) for you with John Gimson (JG)

being the Director of that company…

JG will conduct those negotiations with the Administrator of

[Company 9] …

JG will open a Bank account for the SPV and register the company

for PAYE, VAT etc. JG will also set up the accounting policies with

you to operate.

JG will open negotiations with all necessary suppliers (circa 12 – 15)

and try to arrange and supply credit for the SPV…

JG will also try and arrange Invoice Financing with Lloyds

Commercial for the SPV as well as (with that finance) attempt to

purchase the Book Debt of [Company 9] from the Administrator

thereby allowing the SPV to collect the remaining debt out…

…the SPV will be funded by you as required for the normal course of

running the business of the SPV by the 3 of you. You will liaise

directly with JG about that…”

30 March 2009, an email from Mr A to Mr I. The email was copied to Mr

Gimson:

“…our Finance Director, John Gimson…”

1 April 2009, an email from Mr A to Mrs B and copied to Mr D and Mr

Gimson outlining the work that Mr Gimson would carry out on Mr A’s

instructions:

“…JG will be with you Monday morning (6th) to go through

accounting, VAT, PAYE, supplier queries and general matters

relating to management and the businesses going forward...”

9 July 2009, an email from Mr Gimson to Mrs D and Mr J (Firm 10) and

copied to Mr A and Mr I (Firm 10), demonstrating that Mr Gimson and Mr

A were working together:

“For the sake of completeness, I would be grateful if you would

ensure that you copy me and [Mr A] in with all correspondence that

relates to these companies. I believe that there is a standing

instruction with your firm to that effect.”

22 July 2009, an email from Mr A to Mr Gimson and Mr D. Mr A was

informing Mr Gimson of his future intentions in relation to Mrs F and

Company 8:

“…I would confirm what was proposed yesterday and where we are

heading…I will obviously sue [Mrs F] for the monies owing as it is

admitted in writing in any event…NO further contact please from [Mr

M/Mr D] etc with [Mr E] now please. Let him stew as they say. NO

new/revised invoices should be accepted from [Company 8] to

[Company 2] of course…”

1 September 2009, an email from Mr A to Mr Gimson copied to Mr D

and Mrs B, demonstrating Mr A instructing Mr Gimson on transfers,

invoicing and share allotments:

“John, £29,000 off was transferred IN to [Company 1] from

[Company 7] Nat West and £28,000 exactly should be CHAPS

payment this afternoon to [Company 7] Nat West Account. [Company

7] will invoice [Company 1] the full £28,000 for the stock you saw in

the warehouse today. Please also CHAPS today the £717(?) to [Firm

11]…We need to do the full share allotments for [Company 1] later in

the week…”

3 September 2009, an email from Mr A to Mr Gimson and Mr D

instructing the complainant and Mr Gimson on the format in which

payments were to be requested:

“This is the format needed to request John to do payments!! John

will then confirm or advise why not!!”

3 September 2009, an email from Mr A to Mr Gimson instructing Mr

Gimson on the monthly management charges:

“You will see that I have agreed that [Company 5] does a

management charge of £3,000 a month on both [Company 2] and

[Company 1]. In addition, I want you to…All I would ask is that you

make sure of when dealing with [Company 2] and [Company 1]

payments to [Company 5] is that when you issue (say) £3,000 to

[Company 5] you also issue £2,000 to [Company 7] (pro rata 60/40)

at the same time!!...”

30 September 2009, an email from Mr Gimson to Mr A, copied to Mr D

and Mrs B, informing Mr A on the current status of payments to Inland

Revenue and requesting his approval on the format of information

provided:

“I can confirm that I have made NO payments on behalf of [Company

2] to the Inland Revenue…If you would prefer me not to provide

information in this way, please just let me know.”

5 October 2009, an email from Mr A to Mr Gimson and Mr D and Mrs B

setting out the accounting procedures to be followed.

“Having had discussions now with all 3 of you now I am just setting

out in writing some strict accounting procedures for [Company 1] and

[Company 2]…”

9 October 2009, an email from Mr A to Mr Gimson and Mr D and Mrs B

instructing Mr Gimson on how payments were to be allocated:

“I am at Bordon. ANY payments over the next week or so are going

to be rounded ‘on account’ payments which we will then allocate on

the [Company 2/Company 1/Company 7] ledgers and advise you of

which invoices are allocated specifically.

There is apparently £25k into [Company 2] and £16k into [Company

1] later today/Monday morning!! Whilst that money is clearing we will

all decide what exact payments are going to be instructed late next

week.”

23 December 2009, an email from Mr A to Mr Gimson, copied to Mr D

and Mrs B, setting out a list of tasks that Mr A required Mr Gimson to

perform:

“…Please also provide the up to date position of each and every

(including [Company 4]) that I can forward including, shareholding

actually registered, Director(s) appointed, Insurance held, VAT

number, Tax Number, Employees details, Contracts signed that are

commitments for the company concerned (employment and

otherwise – to include my fee Agreements), Bank Account(s)

numbers and details and Mandates.

I also still need to send them [accountants for the Trust] the full

detailed ledger accounting position of each company…”

28. The complainant also provided, in support of the allegation above, a

statement prepared by his company book keeper, Mrs H, who was

employed from 2 November 2009. Mrs H stated that Mr Gimson asked her

to remove an email from the wall listing office procedures sent by Mr A

during the course of a visit from the Companies House Investigation Team.

Mrs H stated that the reason that Mr Gimson gave for removing it was

because Mr A was not allowed to be involved in the management of a

company.

29. Mr Ozin said that from the evidence provided by the complainant it was

evident that Mr Gimson was aware of Mr A’s past history, as shown by the

following emails:

25 March 2009, an email from Mr Gimson to Mr A which set out a

structure for their business relationship going forward:

“I propose that I incorporate a limited company whose function is to

act as the management tool for the companies that the trustees

purchase…distances the beneficiaries from any executive decisions,

removing threat of creation of shadow directorships…”

25 March 2009, an email from Mr A to Mr Gimson:

“…makes sense for you and the shareholders. Obviously, I don’t

ever want anyone to even suggest ‘shadow directorships’ as

genuinely I have no interest in the Management of these

acquisitions…”

5 January 2010, an email from Mr A to Mr Gimson and Mr D and Mrs B:

“…I want to make it clear that you have all been aware form [sic]

meeting that I am a barred Director of UK companies and that I have

not had any part in the ‘management’ of any business…I know you

all know this but I felt it prudent to just make sure it is in writing yet

again.”

30. Mr Ozin reminded the Committee, that as noted above, a disqualification

order prevents an individual, not only from being a director of a company,

but also from “taking part, directly or indirectly, in the promotion, formation or

management of a company…” The management of a company is broadly

defined, and deliberately so, and included “undertaking tasks in relation to

the company’s business. Mr Ozin submitted that Mr A was indirectly

involved in the management of companies, and used Mr Gimson to effect

his instructions.

31. In respect of the complaint of Mr D, examples of this were as follows:

• tasks relating to the formation of a new company, arranging bank

accounts and financing and negotiation with suppliers;

• directing payments;

• unilaterally agreeing management charges;

• setting out accounting procedures; and

• requesting management information.

32. In respect of the complaint of Mrs F, examples of this were as follows:

tasks relating to the formation of a new company, arranging bank

accounts and financing and negotiations with suppliers;

directing payments.

33. Mr Ozin submitted that there was overwhelming evidence that Mr Gimson

followed Mr A’s instructions in respect of the work he completed on the

complainants’ companies. He said Mr Gimson never appeared to question

any instruction that Mr A gave him. He further submitted that if it had not

been for Mr Gimson, Mr A would not have been able to exercise control and

influence over the complainants’ companies in the manner in which he did,

in spite of Mr A being restricted from the management of companies by the

director’s disqualification order. It was ACCA’s case that the conduct in

which Mr Gimson had engaged by assisting Mr A had brought discredit to

himself, ACCA and to the accountancy profession and he was therefore

guilty of misconduct.

34. At the outset of the hearing, and as indicated in advance of the hearing, Mr

Gimson admitted the entirety of the facts of Allegation 1. He also accepted

that his admitted behaviour amounted to misconduct, whilst acknowledging

that it remained a matter for the Committee to determine whether it did in

fact amount to misconduct.

Allegation 2

35. ACCA’s case was that Mr Gimson had permitted payments to be made from

companies of which Mrs B was a director, namely Company 1 and

Company 2 to various entities without Mrs B’s knowledge or agreement and

that such conduct was dishonest.

36. Mr D gave evidence that Mr Gimson was running the Lloyds bank accounts

for Company 1 and Company 2 and that his wife continually asked for bank

statements, but that Mr Gimson would send excel spreadsheets that he had

completed rather than the actual bank statements. Mr D went on to say that

the Lloyds bank statements were eventually received in January 2010 and

these showed money being transferred to Company 5 and Firm 6. He said

that no invoices had been received for these payments.

37. A review of the Company 1 bank statements highlighted the following

payments being made:

28 May 2009 Company 5 £4,000

15 June 2009 Company 5 £1,185.82

31 July 2009 Mrs C £2,760

23 October 2009 Company 5 £3,450

38. A review of the Company 2 bank statements highlighted the following

payments being made:

12 June 2009 Company 5 £10,000 and £7,550

20 July 2009 Mrs C £5,000

23 October 2009 Company 5 £3,450

22 December 2009 Company 5 £1,400

39. In addition, between 30 October 2009 and 17 December 2009 8 payments

of £25, totalling £200, were made to Firm 6.

40. Mr D said that he was not a director of either business, that was his wife Mrs

B. He was the sales person and his wife was essentially the bookkeeper. He

accepted that there was correspondence about some of the payments and

also that there were invoices for the management services provided by

Company 5 and the payroll services provided by Firm 6. He agreed that

both Company 5 and Firm 6 had been engaged to carry out their respective

roles and that they were due to be paid, however his understanding was that

they would not be paid, or at least the management fees would not be paid,

until suppliers, PAYE, HMRC and employees had been paid and they were

in profit.

41. Mrs B did not provide a statement nor did she attend to give evidence. The

only evidence ostensibly from her was in the form of an unsigned, undated

Director’s Questionnaire in respect of Company 2 and Company 13

(formally Company 1). Mr D said this was completed by his wife when

Company 2 went into liquidation. In that questionnaire Mrs B said, “… my

Husband and I realised around about October/November 09, that John

Gimson we presume on the instructions of [Mr A] had taken management

fees and other payments without permission or any valid invoices or

explanation.” She added, “When we saw that the bank accounts were

starting to be used for their own use, we insisted that we took over the

company accounts.”

Mr Gimson’s response

42. Mr Gimson stated in a letter to ACCA dated 27 May 2011 that:

“I either obtained consent from [Mr D and Mrs B] or they were fully aware of

the situation…”

Submission of no case to answer

43. At the conclusion of ACCA’s case, Mr Hamer made a submission that there

was no case to answer on Allegation 2. The application was opposed by Mr

Ozin.

44. Mr Hamer submitted, inter alia, that there was no witness statement or oral

evidence from Mrs B, the Director of the two companies, and the person

named in the allegation. He said there was, therefore, no evidence about

her state of knowledge and furthermore that all the material and the

questions that he had put to Mr D, demonstrated that both Mr D and Mrs B

did in fact have knowledge of the payments. He submitted that if they had

knowledge then it can hardly have been dishonest for Mr Gimson to do that

which he had been engaged to do. He invited the Committee to give no

weight to the hearsay Director’s Questionnaire ostensibly completed by Mrs

B.

45. Mr Ozin submitted that there was sufficient evidence to prove Allegation 2.

He pointed to the evidence of Mr D as supported by the Director’s

Questionnaire completed by Mrs B and encouraged the Committee to look

at the background and context and to view the behaviour in light of the

overall way in which Mr A and Mr Gimson operated.

46. The Committee considered with care the submissions made by the parties

together with the oral and written evidence. It accepted the advice of the

Legal Adviser.

47. The Committee noted that at no time during his evidence did Mr D state

specifically that he knew about his wife’s state of knowledge. He accepted,

when cross-examined, that his wife’s companies had engaged Mr Gimson

and his management company and that they had given Mr Gimson control

of the bank accounts. He also accepted that Company 5 was due to be paid

a management fee, albeit with the caveat that other bills should be settled

first. He also accepted that his wife dealt with the financial side of the

business whilst he concentrated on sales. The Committee noted that there

were in fact invoices to support the payments made to both Company 5 and

Firm 6 and also that there were two emails dealing with the payments to Mrs

C which, prima facie, appeared to indicate that Mr D and Mrs B and been

informed about them. Mr D gave evidence that he could not remember

whether he had had that conversation or not. The Committee gave little

weight to the hearsay Director’s Questionnaire, which had not been drafted

with these proceedings in mind, particularly in light of the absence of any

witness statement from Mrs B and any direct evidence as to her state of

mind.

48. The whole of Allegation 2 was predicated on the knowledge of Mrs B of the

payments going out. She was the director and it was she who was named in

the Allegation, not Mr D. The Committee had not heard from Mrs B and so

had no evidence about her state of mind. Indeed the documentary material

supported the assertion that at the very least Mrs B, and possibly Mr D,

must have had some knowledge about the payments. Accordingly, the

Committee concluded that there was not sufficient evidence that the

payments were made without Mrs B’s knowledge.

49. Without the proof that Mrs B was unaware of these payments the

Committee could not see how they could be satisfied on the balance of

probabilities that the payments were dishonest. As stated above, Mr Gimson

was engaged to carry out management tasks which included being in

charge of the bank accounts. Thereafter, Mr Gimson made or permitted

payments to be made to Company 5 by way of management fees, Mr D

accepted that management fees were payable but he believed they should

not have been paid until the conditions referred to in paragraph 40 above

had been met. The Committee noted that the Allegation did not refer to the

appropriateness or otherwise of the payments, but rather to whether Mrs B

was aware of them and whether they were dishonest.

50. The Committee therefore accepted the defence application and found that

there was insufficient evidence to allow Allegation 2 to proceed and formally

found it not proved in its entirety.

DECISION ON FACTS/ALLEGATION AND REASONS

51. The Committee considered with care the oral evidence of Mr D and took into

account all the documentary evidence relied on by the parties, together with

the submissions made by Mr Ozin and those made by Mr Hamer. The

Committee accepted the advice of the Legal Adviser. At this stage the only

matter that fell to be decided was whether the facts admitted to in Allegation

1 amounted to misconduct.

52. Mr Gimson admitted the facts of Allegation 1 and the Committee therefore

found those facts proved by way of admission. The Committee then had to

consider whether those facts amounted to misconduct. Mr Hamer on behalf

of Mr Gimson accepted that the admitted facts in Allegation 1 amounted to

misconduct and the Committee took this acceptance into account when

making its own determination.

53. Mr Gimson’s association with Mr A enabled Mr A to continue to extract

assets, including cash, from companies in financial distress and to do so,

allegedly, using a Trust set up as a vehicle for fraud, a fact accepted by Mr

Gimson. The Department for Trade and Industry had put restrictions on Mr

A including a fifteen year director disqualification. However, Mr A was able

to circumvent those restrictions due to the assistance provided by Mr

Gimson. On the face of the papers it appeared that by acting in the

management of these companies, Mr A was in breach of the order

disqualifying him from being a director and in so doing he was committing a

serious criminal offence. Thus, by assisting him, whilst in the knowledge that

by doing so Mr A was thereby acting in contravention of his disqualification

order, Mr Gimson was assisting him to break the law.

54. The Committee was in no doubt that this conduct was most serious and

extremely discreditable to Mr Gimson, the accountancy profession and

ultimately to ACCA, as Mr A continually informed potential companies that

Mr Gimson was an ACCA member, thereby, allaying any fears that they had

about his history. This amounted to misconduct on the part of Mr Gimson

who appeared to have demonstrated no regard for his professional

qualification. It was behaviour which fellow members of the profession would

find deplorable and the Committee thereby determined that it amounted to

misconduct.

Exclusion of a member of the public

55. Mr Gimson gave evidence for the purposes of mitigation. During a break in

his evidence, at the time when he was being asked questions by Mr Ozin,

Mr Gimson alleged that Mrs F, who had attended the hearing as a member

of the public, had threatened him. The alleged threat was overheard by Mr

Young, Mr Gimson’s representative. Both Mr Gimson and Mr Young

provided the Committee with signed statements about what they said Mrs F

said to Mr Gimson. Mr Hamer applied to exclude Mrs F from the hearing, but

first applied for Mrs F to be excluded from the application to exclude her. Mr

Ozin objected and argued that the only power to exclude Mrs F from the

actual application would be under Regulation 11(1) and there would have to

be exceptional circumstances to exclude the public from the hearing.

56. The Committee accepted the advice of the Legal Adviser and decided there

were no exceptional circumstances for the application to exclude to be

heard in private.

57. Mr Hamer then made his application to exclude Mrs F for the remainder of

Mr Gimson’s evidence. Mr Hamer submitted that his client now felt

intimidated by the presence of Mrs F and unable to continue to give his

evidence with her in the hearing room.

58. In the event, the Committee did not have to decide whether to exclude Mrs

F because she voluntarily agreed to absent herself from the hearing during

Mr Gimson’s evidence.

SANCTION AND REASONS

59. In reaching its decision on the appropriate sanction, the Committee took into

account, and considered with care, all the evidence it had heard and read,

particularly the oral evidence given by Mr Gimson in mitigation and the

defence documents provided. Those documents included two testimonials

and a statement of means. The Committee also had due regard to the

submissions made by Mr Hamer on behalf of Mr Gimson.

60. The Committee was referred to, and took account of, the Guidance for

Disciplinary Sanctions (“GDS”). The Committee was aware that the purpose

of sanctions was not to punish Mr Gimson, but to protect the public,

maintain public confidence in the profession and maintain proper standards

of conduct and behaviour and that any sanction must be proportionate. The

Committee accepted the advice of the Legal Adviser.

61. The Committee considered the following aggravating factors: on the face of

it Mr Gimson assisted Mr A to commit a criminal offence; Mr Gimson’s

status as an ACCA member clearly influenced the complainants’ decisions

to become involved with Mr A; the damage and distress caused to Mr D and

Mrs B and Mr E and Mrs F by the actions of Mr A, with which Mr Gimson

knowingly involved himself; had it not been for Mr Gimson, Mr A would not

have been able to exercise control and influence over the complainants’

companies in the manner in which he did; if it had not been for Mr Gimson,

Mr A may not have been able to be concerned in the management of the

companies in the manner in which he did; conduct continued over a period

of time; and limited insight.

62. The Committee noted that the apparent criminal behaviour by Mr A of acting

in the management of companies in contravention of his disqualification was

assisted by the actions of Mr Gimson. The Committee did not accept the

defence’s assertion that Mr Gimson was somehow an almost innocent,

naive participant in the schemes of Mr A, that were allowed to “creep up on

him”. The Committee took account of the fact that Mr Gimson made a full

admission to Allegation 1, including misconduct, and from the evidence put

before it, and having seen and heard from Mr Gimson, the Committee was

satisfied that he played an active and key role in supporting Mr A. Mr A was

no doubt aware that the complainants would have been most wary about

utilising his services in the knowledge that he was a convicted fraudster who

was also disqualified from being a director for the maximum period possible,

namely 15 years. To allay those fears Mr A put together a “team” with Mr

Gimson playing a key role, liaising with the companies and carrying out all

the tasks referred to in ACCA’s Report. As a member of ACCA, Mr Gimson

added a veneer of respectability to Mr A’s “team”, with the complainants

being very much reassured by his membership of such a respected body.

Thus it was that Mr A was able to further his dubious schemes involving, as

they appeared to, the use of a fictitious Trust purely as a vehicle for fraud.

63. The Committee was satisfied on the evidence that Mr Gimson was aware of

Mr A’s criminal history and disqualification as a director from the outset of

their relationship in February 2009. This was clear from his letter to ACCA at

p370 of the bundle where he said by the time he first met Mr A he was

aware of some of his background, namely that he had served time in prison

and had twice been adjudicated bankrupt and disqualified as a director of

limited companies for a period of 15 years. In his police interview at p713 of

the bundle Mr Gimson said that he first met Mr A on 27 February 2009. It

was also apparent from the police interview that he was still actively

involved with Mr A in late November 2009 where he referred to sending an

email to Mr A concerning Company 12, another company in distress. In his

oral evidence Mr Gimson accepted that he approached Mr A with a

business proposal in November 2009 and yet, on his own account, he was

by then distancing himself from Mr A having discovered he was becoming

concerned in the management of the companies, contrary to his

disqualification order. The Company 5 accounts also showed Mr Gimson

drawing a salary up until November 2009 and there was an email from Mr A

to Mr Gimson on 23 December 2009 in connection with Mr D and Mrs B,

setting out a list of tasks that Mr A required Mr Gimson to perform. The

Committee rejected Mr Gimson’s assertion that his knowing assistance to

Mr A was for a much shorter period, which was inconsistent with the

accounts he had previously given as referred to above and contrary to the

documentary evidence. The Committee noted that Mr Hamer accepted that

the period concerned was from March until December 2009.

64. The Committee noted that Mr Gimson told the Committee that prior to

linking up with Mr A, he was not “operationally familiar” with this area of

work. It was therefore questionable why he would allow himself to venture

into an area of work with which he was unfamiliar, and to do so with a

person with Mr A’s background. The Committee noted the financial

inducement of an annual salary of £100,000.

65. The Committee found there to be the following mitigating factors: no

previous disciplinary history, either before this matter or since; the early

admission to Allegation 1; full cooperation with ACCA; significant delay in

this matter being brought to resolution; two positive references; an apology

to Mrs F; expressions of regret.

66. The Committee took into account all the mitigation but considered that,

despite his admission, Mr Gimson had shown a lack of insight into his

misconduct and had attempted to minimise his role in the whole enterprise

by claiming to have thought he had been taking adequate steps to ensure a

proper separation of duties and thereby avoid any conflict. Mr Gimson, in his

second statement, even went so far as to say, “… if anything, [Mr A] is

entitled to be commended for what he was endeavouring to do, even if his

fees turned out to be somewhat on the high side.” The Committee

considered that this demonstrated a disturbing lack of insight and was quite

extraordinary given what he said in the very next paragraph, namely that Mr

A’s actions depended on funding being secured by the Fermatt Trust and

that there was never any question of an investment because the Fermatt

Trust did not exist.

67. The Committee considered all the options available from the least serious

upwards. The Committee considered a severe reprimand and the guidance

at paragraph C4.1 of the GDS and decided that most of the factors referred

to in (a) to (i) were not present in this case. The Committee concluded that

the only appropriate and proportionate sanction was removal from the

register. The Committee considered that for a professional accountant and

Fellow of ACCA, to behave in this way and to assist another to commit a

criminal offence was most grave and fundamentally incompatible with being

a member of ACCA. It was such a serious departure from the relevant

standards and such a serious breach of bye-law 8 that no other sanction

would adequately reflect the gravity of the offending behaviour. It was not an

isolated incident but rather one that was conducted over a period of nine

months and had a significant adverse impact on the complainants, who had

been influenced by the fact that he was a member of ACCA and in whom

they had placed their trust. The Committee considered that a failure to

remove a member from the register who had behaved in such an deplorable

way, would seriously undermine public confidence in the profession and in

ACCA as its regulator. In order to maintain public confidence and uphold

proper standards in the profession it was necessary to send out a clear

message that this sort of behaviour would not be tolerated.

68. The Committee next considered whether it would be appropriate to fine Mr

Gimson. The Committee noted that the ACCA Regulations on fines states

that a fine of up to £50,000 may be imposed. The Guidance states that the

level of fine will primarily reflect the gravity of the misconduct in question,

but should also reflect any financial benefit obtained by the member. The

Committee considered that Mr Gimson had derived a financial benefit from

his part in working with Mr A and therefore considered it appropriate to fine

him. In deciding on the level of fine the Committee took full account of Mr

Gimson’s financial circumstances and noted that he had limited means but

significant assets. The Committee decided its starting point should be the

£36,000 that Mr Gimson received by way of net remuneration as a result of

his association with Mr A. The Committee then took into account Mr

Gimson’s means and assets and decided to fine Mr Gimson the sum of

£7,500, which it considered both appropriate and proportionate in all the

circumstances.

ORDERS OF THE COMMITTEE

69. The Committee therefore ordered that Mr Gimson be excluded from

membership of ACCA and that he pay a fine of £7,500.

COSTS AND REASONS

70. ACCA applied for costs in the sum of £7455. Mr Hamer submitted, and Mr

Ozin agreed, that the Committee could apply some discount to that figure to

reflect the fact that Allegation 2 was found not proved following the

submission of no case to answer. The Committee considered that both

allegations were properly placed before it, but recognised that there was an

overlap in the preparation of the case. Accordingly, the Committee decided

to reduce the sum requested to reflect its finding in relation to Allegation 2.

The Committee thus made an order in the sum of £5,000.

EFFECTIVE DATE OF ORDERS

71. This order will take effect from the date of the expiry of the appeal period

referred to in the Appeal Regulations, unless Mr Gimson duly gives notice of

appeal prior to the expiry of such period in which case it shall become

effective (if at all) as described in the Appeal Regulations.

Mr John Wilson Chairman 22 March 2016