Former iSoft directors face court

The Financial Services Authority has today 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. 

They face proceedings relating to the offence 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.

All four are former directors of iSoft, who have all now left the company. Patrick Cryne was a co-founder and chairman of iSoft up to 2005, stepping down when the firm was valued at over £1 billion.

Tim Whiston resigned as chief executive in June 2006 after iSoft changed its accounting policy, wiping out £165m of historic revenues.

The changes in revenue recognition policy and a series of profit warnings, combined with failure to achieve promised delivery targets, saw iSoft’s share price plunge by 90% in 2005-06. The collapse raised questions about lucrative disposals of shares by the company directors in 2004.

Ultimately, the ensuing financial crisis and collapse in investor confidence cost iSoft its independence. The firm was sold off to Australia’s IBA Healthcare for £166m in October 2007.

The FSA has said it will discontinue its investigation into iSoft Group plc under S 397 of the Financial Services and Markets Act 2000.

In a statement, the company said: “iSoft Group Ltd 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.”

A separate investigation by the Accountancy Investigation and Discipline Board (part of the Financial Reporting Council), that was first launched in 2006, is understood to be ongoing.

The AIDB investigation focuses on “The conduct of Members and Member Firms in relation to the preparation, approval and audit of the Financial Statements of iSoft Group Plc for the financial years ended 30 April 2003, 2004 and 2005.”