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Farepak boss accused of accounting errors

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12th Dec 2012
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The Financial Reporting Council (FRC) has filed a disciplinary complaint against William Rollason, a former director of Farepak and parent company European Home Retail (EHR).

Rollason is accused of failing to act in accordance with the ICAEW’s ethical code and allowing his conduct to fall short of the standards expected of members during his stewardship of Farepak.

According to the FRC he misled fellow directors on the financial position of EHR; its ability to support Farepak as its liabilities fell due; and signed off on misleading financial statements.

In more detail, the formal complaint alleges that Rollason:

  • Drafted and distributed to his fellow directors of EHR a memorandum on 2 February 2006, which he knew was misleading and did not reflect the financial position of EHR
  • Signed a letter on 7 February 2006 on behalf of EHR to Farepak stating that EHR would continue to support Farepak to enable it to meet its liabilities as they fell due, which he knew was misleading
  • Signed the financial statements of Farepak for the period ended 28th April 2005, which he knew were misleading in that it was stated that EHR would continue to support Farepak to enable it to meet its liabilities as they fell due and accordingly the going concern basis had been adopted for the financial statements

An FRC disciplinary tribunal is expected to take place in the first half of 2013 and will be the first official sanction following the failure of the Christmas savings business back in 2006.

Rollason joined EHR in 2003 as chief executive and also took a board role at Farepak. By 2006 Farepak had collapsed and left more than 100,000 savers out of pocket.

Ernst & Young is facing similar proceedings from the FRC for its role as auditor in the failed business. That case is also likely to be heard in the first half of 2013.

The Insolvency Service also brought a case against the directors of the company earlier in the year, but it collapsed after the judge blamed Farepak's bank, Halifax Bank of Scotland (HBOS), which effectively cleared the directors of any wrongdoing.

The bank, now part of Lloyds Banking Group, has since donated £8m to the Farepak compensation scheme.

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