LONDON, Dec 10 (Reuters) - Britain’s accounting watchdog has filed a complaint against the former chief executive of European Home Retail for a breach of accounting rules related to the collapse of Christmas savings club Farepak.
Farepak Food & Gifts, a subsidiary of European Home Retail, ceased trading in October 2006 owing 37 million pounds ($59.28 million) to 120,000 customers.
The Financial Reporting Council (FRC) said that following an investigation it had filed a formal disciplinary complaint against William Rollason when he was European Home Retail (EHR)CEO.
The FRC said Rollason, a chartered accountant, “drafted and distributed to his fellow directors of EHR a memorandum on 2 February 2006, which he knew was misleading and did not reflect the financial position of EHR.”
The watchdog also said Rollason had “signed a letter on 7 February 2006 on behalf of EHR to Farepak stating that EHR would continue to support Farepak to enable it to meet its liabilities as they fell due, which he knew was misleading.”
Rollason could not immediately be reached for comment.
An independent disciplinary tribunal will decide whether to reject or uphold the FRC complaint. These disciplinary tribunals have just been given powers to impose stiffer fines.
The FRC also investigated other European Home Retail and Farepak staff but decided not to pursue a formal complaint against them.
An attempt by the government to try to have Farepak’s former directors barred from serving on a board again had to be abandoned in June.
Farepak operated by collecting money from customers throughout the year in return for a hamper or vouchers that could be spent at several retailers, helping people to spread the cost of Christmas over many months. ($1 = 0.6242 British pounds) (Reporting by Huw Jones. Editing by Jane Merriman)