Verdict eagerly awaited on Polly Peck adminstrators: Case seen as test of regulator's ability to fill disciplinary role

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The Independent Online
MICHAEL JORDAN and Richard Stone, the administrators of Polly Peck, could suffer a blow to their lucrative insolvency practice when their professional body announces the result of an inquiry into their conduct on Monday.

The ruling on two of the best- known insolvency specialists in Britain is eagerly awaited because it is being interpreted in some quarters as a test of the Institute of Chartered Accountants' ability to regulate the affairs of the biggest firms, and so maintain a credible disciplinary role.

The two partners in Coopers & Lybrand, the accountancy firm, have already been fined pounds 1,000 each and reprimanded by the institute's disciplinary committee.

They were found guilty of breaking ethical guidelines by accepting the Polly Peck appointment when their firm had a potential conflict of interest through advising the company or its fugitive former chairman, Asil Nadir, in the previous three years.

When this judgement was made last October the institute was heavily criticised for its leniency. The fines were the maximum available at the time, but the committee could have taken away their practising licences.

Douglas Llambias, an institute council member who runs an accountancy recruitment firm, labelled the punishment a 'total whitewash', while Austin Mitchell, the Labour MP who has been a fierce critic of the accountancy profession, said the decision was 'a pathetic response'.

Monday's announcement will be the culmination of a separate hearing before the institute's insolvency licensing committee. The body - which has the power to order a firm to have its internal systems examined or to impose a variety of restrictions on a practitioner's licence up to taking it away - met in secret and its judgement has not been made public.

However, Coopers & Lybrand appealed to the institute's review committee. That body, chaired by Clive Parritt, senior partner of Baker Tilly, the accountants, has reached a judgement but has delayed an announcement until all parties have been informed. Mr Jordan is understood to be out of the country on business until this weekend.

Mr Jordan, who is due to retire this year, and Mr Stone have always rejected the charges, maintaining that they had no case to answer. The firm blamed problems with operating two different systems following the merger of the insolvency specialists Cork Gully with Coopers & Lybrand in 1989 for not picking up the fact that it had done other work for Polly Peck.

Under the institute's rules neither it nor Coopers & Lybrand can comment on the proceedings until the announcement is made.