Insolvency practitioner ‘severely reprimanded’ and fined by regulator

Eric Stonham sanctioned for a ‘conflict of interest’ by the ICAEW

By Insolvency News, 13 January 2012. Posted in People

An insolvency practitioner (IP) has been severely reprimanded and fined £5000 for having “brought discredit to the ICAEW, the profession and himself”.

Eric Stonham, of Chichester, – who also had to pay out £7000 costs – was sanctioned for a “conflict of interest” involving the administration of a restaurant business by the ICAEW.

He was found to have encouraged the directors of The R-Bar & Restaurant – a mother and daughter – to pay themselves a bonus in a bid to get his pre-appointment fees covered.

Stonham suggested making the bonus payouts to help facilitate his payment in a letter written in April 2007 to the directors.

The tribunal acknowledged there had been a “fundamental dispute” between Stonham, of Stonham.Co, and the directors as to the fees agreed regarding his initial advice and pre-appointment work.

But the regulator concluded: “Mr Stonham’s suggestion of the payment of a bonus was primarily motivated by a desire to release funds to the directors in order that they may pay his pre-appointment fees.

“This created a serious conflict of interest in his role as administrator.

“It appeared to them (the tribunal) that Mr Stonham turned a blind eye to the ethics of his actions in the belief that he was entitled to be paid.”

Stonham admitted to the tribunal that “a part of my motivation in suggesting the bonuses which I suggested… must have been to increase the chances of my pre-appointment fees being paid”.

The company – initially went into administration in 2006 before entering a Company Voluntary Arrangement (CVA) – but has since ceased to trade.

The ICAEW also documented Stonham also had two previous disciplinary matters with a £1000 fine relating to another conflict of interest, as well as regulatory penalty of £3000 linked to unauthorised payment.

Stonham’s counsel insisted there was no risk of repetition and explained there had been no risk of repetition.

The tribunal ordered the fine and costs to be paid on a basis of £1000 every month.

via Insolvency News – Insolvency practitioner ‘severely reprimanded’ and fined by regulator.