Administrators face Polly Peck ethics charges

THE eagerly awaited professional disciplinary case against the Polly Peck International administrators Michael Jordan and Richard Stone began yesterday. The two men appeared before a tribunal of the Institute of Chartered Accountants in England and Wales to answer allegations that they breached ethics rules.

Mr Jordan, senior partner of Cork Gully, the UK's best-known insolvency practice, and Mr Stone, a partner with Coopers & Lybrand, which incorporates Cork Gully, are charged with offences relating to conflicts of interest. If found guilty they could lose their practising licences and be expelled from the institute.

However, there is a right of appeal within 28 days before another three-member tribunal, including two former Court of Appeal judges.

The prosecution, acting on behalf of the institute's investigation committee and led by Anthony Boswood QC, is claiming that the two men should not have accepted the Polly Peck appointment in October 1990 since they already had a professional relationship with the company and its former chief executive, Asil Nadir.

The hearing, which was delayed from earlier this year, is similar in procedure to a court of law - except that it is being conducted in secret. The case is being heard by a panel of three, two accountants and an independent member, advised by an independent solicitor. It is scheduled to last five days.

Mr Jordan and Mr Stone are 'defending the charges vigorously', a spokesman for Coopers said. Although the firm has not denied working for Polly Peck and Mr Nadir, Michael Crystal QC, leading their defence, is understood to be arguing that the two men have no case to answer.

While the hearing concerns the behaviour of two of the country's most visible accountants, many feel that the profession itself is also on trial. Whatever the result, there will be widespread ramifications.

In particular, the dispute highlights a problem faced by Coopers and the other big six firms, which employ hundreds of insolvency experts, auditors and accountants, and which also act as management consultants.

'What it illustrates is how difficult it is for large accountancy firms to avoid conflict of interest because there are so few of them,' Christopher Napier, a lecturer in accounting at the London School of Economics, said.

'It's quite possible for one arm of a large firm to be doing work for a client almost unbeknownst to the rest of the firm.'