Roger Eden and Geoffrey Brailey - former directors of Corporate Services Group Plc - have been found guilty today at Croydon Crown Court of charges relating to accounting irregularities aimed to overstate profits. They are to be sentenced tomorrow 18 September.
Outline
The circumstances (which predate the management of the company under its present board) revolve around the company's financial statements for the years ending 31 December 1997 and 31 December 1998. The defendants conspired with others to defraud existing and potential investors in the company. The defendants dishonestly caused and permitted the company's financial statements for 1997 to be prepared in such a way as to overstate the true extent of its profitability and that they sought to do so in 1998. In 1997, the overstatement amounted to just over £3 million. In 1998, the accounting irregularities came to light before the statements could be published. The potential overstatement of profit for 1998 is estimated to exceed at least £25 million.
The defendants instructed company employees to make false and misleading entries in its books when accounting for PAYE, leasing, loan and other liabilities; to draw up fictitious sales invoices; and to reinstate invoices that had previously been written off. The defendants were also responsible for disguising the true nature of (i) a number of the company's acquisition agreements, i.e. concealing the debtors figure, allowing the company to boost its profits, and (ii) the Training Division sale agreement. In 1998, it was also intended that a substantial amount of the company's UK costs should be charged to the books of a recently acquired American company.
Proceedings
The SFO, acting on a report received from the Department of Trade & Industry, commenced its investigation in June 2000. The investigation involved officers from the Leicestershire Constabulary.
On 23 April 2002, the two defendants Roger Charles Eden, former chief executive, age 47, and Geoffrey Ian Brailey, former finance director, age 51, appeared at Leicester Magistrates Court, on charges of fraudulent trading. (There was also a third defendant, John David Abrahamson, age 57, former director and company secretary, who was subsequently acquitted).
The case was transferred to Croydon Crown Court where the trial commenced on 30 June 2003.
On 26 August 2003 (at the end of the prosecution evidence), His Honour Judge Macrae directed the jury to return a not-guilty verdict on Mr Abrahamson.
Today 17 September 2003, the jury returned guilty verdicts on Eden and Brailey on both counts they faced of conspiring to defraud existing and potential investors. They have been remanded in custody for sentencing tomorrow 18 September.
Note for editors
The Corporate Services Group Plc is listed on the London Stock Exchange. Its business is the provision of recruitment services and manpower solutions to industry, commerce and the healthcare sector. It has operations throughout the UK and the USA and its head office is in Luton, UK.
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