Former McAlpine directors jailed after accounts scandal

Three former executives of Welsh Slate Ltd, previously owned by McAlpine plc
were hit with jail sentences after being found guilty of overstating the
company’s production and sales accounts.

After a joint investigation by the Serious Fraud Office and North Wales
Police, the prosecution case argued the three defendants collaborated with each
other over a period of years to falsify the invoicing, management accounts and
audited accounts of Welsh Slate.

Around 44%, or more than £10m of Welsh Slate’s reported debtors were fiction
in a deception which included showing auditors a stockpile of crates of roofing
slate in which the outer crates were full, but the inner crates were empty.

Customer letters were created to give impression that debtors’ payments were
in the pipeline, while delivery notes and transportation invoices for
non-existent consignments were forged.

Christopher Law, managing director, Geraint Roberts, operations director and
Paul Harvey, sales chief, were sentenced to two and a half years, 16 months and
10 months respectively at Caernarfon Crown Court last week, the Serious Fraud
Office announced.

The jail sentences bring almost three years of controversy to a close.
Although he was not implicated,
Alfred
McAlpine’s FD Dominic Lavelle resigned in the wake of the scandal.

Directorship bans, payment toward prosecution costs also apply and
confiscation proceedings will follow, the SFO added.

Welsh Slate was wholly owned by Alfred McAlpine Plc until December 2007. It
represented about two or three percent of the Plc’s turnover and employed around
400 workers at its quarry near Bangor. Welsh Slate was a self-contained
operation, seen by the parent company as low risk.

In January 2007, concerns about the cash position of Welsh Slate and its
apparent non-collection of debt led McAlpine to send an internal audit team to
investigate.

“It soon became apparent that much of the recorded debt was pure fiction,”
the SFO said.

In February 2007, McAlpine informed the stock market it had uncovered
systematic deception. Falsified production and sales figures in previous Welsh
Slate submitted financial reports would require a restatement of its 2005 assets
and a reduction in expected pre-tax profits for 2006.

Further reading:

Accounting
scandal wipes £11m off McAlpine’s books