The Financial Services Authority (FSA) has confirmed that it has commenced criminal proceedings against four former directors of iSoft Group Plc. Patrick Cryne, Stephen Graham, Timothy Whiston and John Whelan have been summonsed to appear at City of Westminster Magistrates Court on 29 January 2010 to face charges of conspiracy to make misleading statements contrary to section 397 (1)(a) and (2) of the Financial Services and Markets Act 2000 and section 1 of the Criminal Law Act 1977.
iSoft said in 2006 the FSA would investigate possible accounting irregularities uncovered by the firm, which was engaged in a 6.2 billion pounds ($9.9 billion) upgrade of computer systems for the public health service one of the world’s largest IT projects.
iSoft’s share price plunged by 90% in 2005-06 following changes in revenue recognition policy which wiped out £165m of historic revenues. After a series of profit warnings and failure to achieve promised delivery targets for the NHS project, Tim Whiston resigned as chief executive in June 2006. Whiston, who was previously the company’s CFO, walked away with a pay off equal to his annual salary plus a £90,000 pension contribution – a total package worth £550,000. The collapse also raised questions about highly profitable share disposals by the directors in 2004 which netted £38 million.
The FSA has said it will discontinue its investigation into iSoft Group plc under S 397 of the Financial Services and Markets Act 2000. A separate investigation by the Accountancy Investigation and Discipline Board (part of the Financial Reporting Council), that was first launched in 2006, remains ongoing.
After the collapse iSoft was sold to Australia’s IBA Healthcare for £166m in October 2007. In a statement, the company said that it had: “cooperated fully with the FSA throughout the investigation, which involved former management of iSoft Group plc and had no bearing on any of the current management or employees of iSoft Group Ltd.”
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