Stoys faces fine and lessons over Polly Peck
Stoy Hayward (now BDO Stoy Hayward) has been fined £75,000 and ordered to pay £250,000 in costs for its role as auditor of Polly Peck International, the collapsed fashion house.
In a ruling issued by the Joint Disciplinary Tribunal, agreements have also been extracted from the mid-tier firm to run a series of courses on dealing with leadership, group audits and secondary auditors, for all partners authorised to sign audit reports. Some managers will also take the courses.
The Tribunal found Stoys responsible for, among other shortcomings, failing to check the suitability of the company’s secondary auditors Erdal & Co, and accepting unsubstantiated explanations about sums held in the company’s subsidiary in the Turkish Republic of Northern Cyprus.
The courses BDO has agreed to are designed to remind partners of their role in the audit process, with particular focus on group audits and the risks surrounding the use of secondary auditors.
Chris Swinson, senior partner at BDO, said: ‘We are very pleased the inquiry is over and we can draw a line under this. It’s taken a long time. Two of the partners involved are now dead.’We are a very different firm from that which dealt with Polly Peck in the 1980s.’
As for the courses that partners must now take, Swinson said: ‘It doesn’t hurt and we thought it was a constructive way of demonstrating that we want to be seen to have learnt a lesson.’
Polly Peck, a FTSE-100 company worth £1.7bn at its peak, collapsed in October 1990 with borrowings of £522m.
On administration Polly Peck run by Asil Nadir was found to have an almost complete lack of internal controls at its London office, allowing Nadir to transfer massive sums from the company’s London bank accounts without question.
Nadir still has criminal charges outstanding against him due to the company’s collapse. He fled to Northern Cyprus where he lives in exile.
Stoy Hayward, now BDO Stoy Hayward, also acted as reporting accountants in a Rights Issue for the company in 1989, when the Del Monte fruit business was acquired.
