Latest from the FCA on a sorry saga that goes back almost a decade when the company was known as Redstone. Incredibly, Redstone/Redcentric has continually been awarded public sector IT and telephony contracts throughout its troubled history. Strangely, nobody ever asks why.
Today, former Redcentric PLC CFO, Tim Coleman, was sentenced to five and a half years’ imprisonment and disqualified from being a director for ten years having been found guilty of two offences of making false and misleading statements to the market, and three offences of false accounting.
Redcentric, an IT service provider and AIM-listed company, issued false and misleading unaudited interim results in November 2015, and false and misleading audited final year results in June 2016. Both materially overstated Redcentric’s cash position – by £13.1m and £12.2m respectively – and consequently misstated its net debt position by the same amount each time. When the true position was revealed, shareholders suffered immediate losses in the value of their shares.
Mr Coleman had inflated the cash position that was presented to the Redcentric Board, and had used the same false figures to assure key investors about Redcentric’s financial position, persuading them not to sell down their investment in the company. As a result of the false statements, the share price of Redcentric shares was artificially inflated, which meant that investors paid more to purchase shares than they were actually worth.
In sentencing Mr Coleman, HHJ Beddoe remarked:
‘Your offending was persistent, significant and substantial, abusing an exceptional degree of trust. Your actions have damaged Redcentric plc and also public confidence in the City.
‘A CFO of a public company – of any company – is expected to demonstrate the highest standards of integrity. It is the bedrock upon which a company, its directors and its shareholders are entirely dependent. When people such as you are found to have failed seriously they must expect severe punishment.’
Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said:
‘The crimes Mr Coleman and Ms Croft committed were serious and caused harm to investors. The sentence handed down today reflects the seriousness of the crimes and should serve as a deterrent to anyone considering committing similar offences. We will now pursue confiscation proceedings against Mr Coleman.’
Estelle Croft, a former finance director at Redcentric, had previously been sentenced to three years’ imprisonment having pleaded guilty to charges of making false statements and false accounting. Ms Croft was also ordered to pay £120,346.70 following confiscation proceedings.