Ex-iSoft CEO, Directors Lied to Market to Boost Bonus, FSA Says
The former chief executive officer and two former directors of iSoft Group Plc lied to the market about revenue in order to win contracts and boost their pay, the U.K. finance regulator said.
Timothy Whiston, 44, the former CEO, Stephen Graham, 48, the company’s ex-commercial director, and John Whelan, 45, its former finance director, made misleading statements, said Richard Latham, a lawyer for the Financial Services Authority, which is prosecuting the case.
The men misstated iSoft interim reports and year-end financial statements from October 2003 until July 2006, according to the FSA. They also lied to external auditors, saying iSoft had won a contract to supply software to an Irish hospital system when it hadn’t yet, according to the indictment.
There was “a massive discrepancy between the reality of that company’s position and what was in its public accounts,” Latham said on the first day of trial in London today.
The defendants made the statements to win a contract from the U.K.’s National Health Service and encourage 2003 merger talks with another company, Latham said.
The men had “major remuneration packages of which a significant portion related to the financial performance of the company,” Latham said. It was “spectacularly” in their interest that iSoft report a profit, he said.
Australia’s iSoft Group Ltd., which develops and markets health information computer software, acquired U.K.-based iSoft Group Plc in October 2007 after the events that were the subject of the investigation. ISoft was later bought by Falls Church, Virginia-based Computer Sciences Corp. (CSC)
The men were charged in January 2010, along with Patrick Cryne, the former chairman of the company. Cryne “became unwell” and is unable to stand trial with the other three, Latham told the jury.
Lawyers for Whiston, Graham and Whelan will present arguments to the jury later in the trial. The case is scheduled to run until mid-August, with a two-week break for the Olympics.
To contact the editor responsible for this story: Anthony Aarons at email@example.com