The banker who sold his soul for bling

And the forensic accountant who brought him down. Bribery, corruption, money laundering; Geoff Mesher has seen it all as a Forensic Accountant, and gives us the inside scoop on his role in the infamous HBOS case.

The Forensic Accountant

Geoff Mesher trained and qualified as an accountant in the mid-1990s while working for KPMG. He was working as an Auditor, when he was exposed to the discipline of forensic accounting.

These two areas are very different. Whilst audits are forcibly imposed by regulations, forensic accounting can actually help organisations deal with problems and achieve better financial results.

Geoff found that his forensic work was more highly valued and actually sought after by clients, so he soon left audits in the dust.

“I really enjoyed the analysis work, and explaining accounting terms and concepts to non-accounting people like the judge and jury,” says Geoff. The variety of the work was a big plus too; at one point he was engaged to work as part of a team on the Volker Commission.

Read more on how you can become a forensic accountant.

The Volker Commission

This was a big case that took place at the turn of the century, focussed around locating and identifying assets belonging to victims of the Holocaust. These were then to be returned to as many of the victim’s families as possible.

The work involved investigating the records of a number of Swiss banks. Unfortunately Geoff didn’t discover any long-lost paintings by Rembrandt or Van Gogh, but he did get the chance to rummage through the attics of various bank branches. He was looking for old handwritten ledgers and transferring the information onto a database.

Though the passage more than 50 years made this difficult, it was a significant case for ethical reasons; it was the right thing to do. It put the past to rest and helped to achieve a measure of social justice.

It was Geoff’s involvement in this and similar cases that led him to be invited to work on the HBOS case in late 2016.

The Expert Witness

The case involved Mr Scourfield, a former senior manager of HBOS, who was in charge of the Distressed Lending department in Reading. This department was set up to support businesses that were in financial difficulties.

He often introduced his colleague, Mr Mills, to HBOS clients as a ‘Turnaround’ Consultant. But it was this particular relationship that needed investigation.

Through scrutinising bank statements and following the movement of funds, Geoff was able to uncover certain transactions that couldn’t be classified as regular business transactions. These included payments for holidays abroad (without the wives), alongside cocktails, and prostitutes.

Mr Scourfield was even given a credit card on Mr Mill’s American Express account, which Scourfield made much use of. At one point, an interior design company was set up in Mrs Scourfields’ name, laundering over £150,000. It was only when the press became interested in the dealings (with the catchy headline of ‘Bonk Rockers’) that the powers-that-be started to act, and Geoff was engaged to investigate.

The work resulted in the production of more that thirty reports over a period of three years. These were presented as evidence at Southwark Crown Court over a period of ten days.

Geoff’s evidence was instrumental to the successful outcome of the case, which ultimately saw Scourfield, Mills and more convicted.

“You sold your soul, for sex, for luxury trips with, and without, your wife – for bling and for swag,” the judge accused Scourfield.

The ethics of the case

Geoff has found that, in his experience, the line between what’s acceptable in business relationships and what’s not, is very thin.

One example is that of hospitality. When does using hospitality to build a business relationship cross the line?

Prior to the last financial crash, money was free-flowing. It was a time of excess. What was given in the name of ‘hospitality’ then may now be thought of as excessive.

The Forensic Accountant has to be able to identify and assess any payments that look likely to be over and above what is acceptable. As Geoff remarks “there’s a lot of looking at Bank Statements and movement of funds” before being able to draw any conclusions.

Key lessons from the HBOS fraud case

Geoff identified two main things he learned from his role on the HBOS case.

1. Determine where to draw the line between acceptable and unacceptable behaviour

Or in this particular case, the line between genuine hospitality, and bribery and corruption.

In Geoff’s experience, the villains are very skilled at recognising people they can manipulate. And then the gifts start arriving.

They start small and can be seen as legitimate hospitality at first. Later on though, the ‘gifts’ become larger and more elaborate.

It’s then that the individual becomes ‘hooked’ and can’t refuse.

2. Look at the message coming from the top of the organisation

In the vast majority of cases, the ‘tone’ or ethos of the organisation comes from the top. HBOS, as with many of the big banks before the Financial Crash, was all about the drive for profitability regardless of how those profits were gained.

There was an excess of everything, a pattern of greed, and this fed into the behaviour of those lower down the management hierarchy. Arguably it was this ethos that allowed the bribery, corruption, and money laundering to take place.

In summary

A Forensic Accountant can be seen as the ‘Sherlock Holmes of the accounting world’. A curious mind with attention to detail, good communication and the need to persist at a job are all qualities that a Forensic Accountant needs; discovery, analysis and communication are the watch words.

Geoff recently gave a fantastic talk on the HBOS case at the AAT Berkshire Branch; keep an eye out for him at future AAT Branch events.

Further reading on the role of a forensic accountant;

Julie Hodgskin is a fellow member of AAT, runs a licensed accounting practice and is a technical materials author for CIPP.

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