The Financial Conduct Authority (FCA) has abandoned its case against former directors of IT supplier iSoft, due to ‘procedural problems’ after prosecution documents were revealed to the defence team.
The FCA said that pursuing the case against former iSoft chief executive Timothy Whiston, chief operating officer (COO) Stephen Graham and finance director John Whelan was ‘not in the public interest’, after the jury was discharged following problems with evidence handling.
The judge made the decision after the prosecution's junior counsel barrister revealed four year old file notes relating to the location of evidence found in the intitial stages of the investigation, a spokesperson said. The file notes called into question the prosecution's original assertion of where the evidence was found, leading to demands by the defence to cross-examine the counsel over possible contradictions.
The judge decided against allowing the defence time to review the evidence at the late stage of the trial, and the jury was dismissed.
The FCA subsequently decided against pursuing a third trial, in part due to the cost, as well as concerns over whether a judge would allow yet another retrial after the case already dragging on for a number of years.
The case against the directors began in 2006 after iSoft informed the FCA's predecessor, the Financial Services Authority (FSA), of irregularities in its accounts.
The former directors were subsequently accused of falsely stating that iSoft had signed a services contract with Irish hospitals ahead of its 2005 financial results, boosting the company share price and their own bonuses. It had been alleged that a falsified statement had led to the company posting a £9.4 million rather than a £11 million loss.
iSoft had struggled with delays to the government’s National Programme for IT, as well as writedowns from a large acquisition. iSoft, now owned by CSC following a 2007 acquisition by Australian software firm IBA Health, had supplied the Lorenzo patient administration system to hospital trusts under the NHS IT programme.
Last year a jury failed to return a sentence after a four month long trial for the directors and chairman. A fourth director and chairman Patrick Cryne, Barnsley Football Club owner, had also been charged with the same offences, but did not stand trial due to ill health.
Commenting on the collapse of the case Tracey McDermott, director of enforcement and financial crime said:
“This is of course a disappointing outcome. The problems that have arisen in this case result from a particularly unusual set of circumstances, which are unlikely to recur.
“As with all our cases, win or lose, we will look to see what lessons can be learned for the future.”