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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

21

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