ISoft directors ‘conspired and got rich’

Former senior directors of iSoft plotted to create “huge discrepancies” in the published accounts of the company, deceived investors and got rich, a court heard today.

Prosecutors claim Patrick Cryne, Stephen Graham, Timothy Whiston, and John Whelan, conspired together to make statements, promises, or forecasts about iSoft which they knew to be misleading, false, or deceptive in the middle of the last decade.

Cryne is not standing trial alongside Graham, Whiston, and Whelan, having ‘become unwell’ since proceedings began against the four alleged conspirators.

But Southwark Crown Court was told that they were all involved in a scam that enabled Cryne, the firm’s chief executive, and Graham, its director of operations, to become multi-millionaries.

Finance director Whiston and erstwhile group financial controller Whelan were also highly paid and expected to net annual bonus based on the company’s apparent success, jurors heard.

Their conspiracy was hatched in a “smoke-filled room” and a “mass of inferential evidence” would drive jurors to conclude they were in cahoots, they were told.

The four allegedly claimed they had won a major contract to supply information systems to Irish Hospital Information Systems before 30 April.

But the men began their deception by publishing falsified annual and half-yearly accounts, knowing the market would use them to judge the firm’s success, in a scam that began in October 2003 and ran for nearly three years, said prosecutor Richard Latham QC.

"What is alleged here is a huge discrepancy between the reality of the company’s position and how it was expressed in its company’s accounts,” he said.

"This case involves a continuing, deliberate, deception practiced on the non-executive directors of iSoft, its audit committee and its auditors, and this was so misleading accounts could be published as being the truth. This in turn misled its primary bank, city analysts, and the wider market.”

Mr Latham said jurors could be sure that the three defendants had conspired with Cryne as it was impossible for the scam to have worked without all four in’ “active agreement and participation.”

They conspired to cover up their actions, continuing the scam until July 2006, Mr Latham added in his opening statement.

“Once they had started the deception it required further deceptions to cover up the original lie. They had to do their best, because this was criminal behaviour, to ensure the truth would never, ever, emerge.”

None of the four men have any connection with iSoft today. The company, based in Banbury, Oxfordshire, was sold to Australian software firm IBA Health after a takeover in October 2007. It has since been sold to US company CSC and is now part of CSC’s healthcare group.

Each deny 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. The trial continues.

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