iSoft four deny misleading investors

Patrick Cryne, former iSoft chairman and director, arriving at Southwark Crown Court yesterday

Four former directors of iSoft have denied misleading investors about the company’s fortunes at a plea and case management hearing at Southwark Crown Court.

Patrick Cryne, 59, Stephen Graham, 46, Timothy Whiston, 42, and John Whelan, 43, are said to have supplied false information about the finances of iSoft Group Plc.

Prosecutors say they misleadingly claimed it had won a major contract to supply information systems to Irish hospitals before April 30, 2005.

All four defendants denied a single charge under the Financial Services and Markets Act at the short hearing,.

Judge Gregory Stone, QC, confirmed that a further preliminary hearing will take place on 16 November and a full trial from 1 September next year.

ISoft alerted the Financial Services Authority after its own investigations found evidence of irregularities affecting the financial years ending April 2004 and 2005.

Shortly after these came to light in August 2006, the group was forced to restate results. A change in accounting policies meant that £174m of revenues booked since 2003 had to be realised in future years instead.

The group, which had also been beset by delays to the £12.7 billion National Programme for IT in the NHS, revealed losses of £382.2m for 2005 after writing down the value of a major acquisition it made in 2004, wiping out previously reported profits.

ISoft, based in Banbury, Oxfordshire, has since been sold to Australian software firm IBA Health, which renamed itself iSoft after the takeover in October 2007.

The defendants are said to have issued misleading forecasts about the financial health of the company. They are accused of falsely stating that the contract for the Irish NHS computer project was ‘signed and funded’ before April 30, 2005.

Ex-chairman and founder Cryne is also owner of Barnsley FC, of 50% of the Vale Royal Abbey Golf Club in Cheshire, two properties in Portugal and another in Ireland. He stepped down from iSoft when the firm was valued at over £1 billion; a year before the irregularities were identified.

Co-founder Graham part-owns Cryne’s golf club and also has a property in Portugal. He was the company’s chief operating officer and commercial director before he left iSoft in August 2006.

Whiston is a qualified accountant and joined the company at the same time as the founders. He resigned as chief executive in June 2006. Whelan is also a qualified accountant and had the smallest shareholding of the four before leaving in November 2004.

They each deny one count of conspiracy to make misleading statements promises or forecasts, contrary to the Financial Services and Markets Act 2000 and section 1 of the Criminal Law Act.