Three men have today been sentenced for their role in dishonest activity committed at the now defunct South Yorkshire Trading Standards Unit (SYTSU) in Sheffield. The case came to the attention of the SFO, following the death of the head of SYTSU, Michael Buckley.
The three men who all pleaded guilty at Sheffield Crown Court today to conspiring with Michael Buckley (deceased) to falsely account, received the following sentences:-
Paul Liggins of Northampton (d.o.b 11/04/54)
Twelve months imprisonment, suspended for two years, 200 hours of unpaid community service and to repay £84,102 within twelve months or serve two years imprisonment in default.
David Abbott of Sheffield (d.o.b 07/10/47)
Twelve months imprisonment suspended for two years, 120 hours of unpaid community service, and to repay £47, 790 within six months or serve 18 months imprisonment in default.
William Whitehead of Chesterfield (d.o.b 13/08/46)
Twelve months imprisonment suspended for two years, 240 hours of unpaid community service; and to repay £153, 074.35 within twelve months or serve three years imprisonment in default.
In addition each defendant was ordered to pay prosecution costs of £10,000. The judge HHJ Bullimore ordered that the money repaid by the defendants would be returned to Sheffield City Council as compensation.
Background
The allegations of dishonesty arose when the long-standing head of SYTSU Michael Buckley died of a heart attack on 21st December 2005. For many years the SYTSU had given all appearances of being a highly successful business. The unit provided special calibration services to local authorities and private industry, and was regarded as one of the leaders in its field, organising conferences which attracted international delegates. To all outward appearances, the manager of the Unit, Michael Buckley, was the consummate professional; well respected, diligent and hardworking, frequently working long hours and most weekends at the Unit. As the sentencing judge commented today Buckley gave the appearance, "of being a leader in his field." HHJ Bullimore said today that: "many were beguiled by his [Buckley's] reputation and stood in awe of him." The reality was however very different. Buckley had for many years hidden the Unit's true financial position by using false invoices to make it appear that the Unit was far more profitable than it actually was. The three defendants sentenced today had each colluded with Buckley by supplying false invoices for the purchase of calibration machinery at his direction.
However Mr Buckley's sudden death in 2005 led to an examination by Sheffield City Council of SYTSU's records and the façade quickly crumbled. The Council contacted South Yorkshire Police who uncovered a series of unusual transactions and subsequently referred the matter to the Serious Fraud Office on 22 May 2006.
The irregularities discovered on Mr Buckley's death contributed to the closure of the Unit in August 2006 with the loss of 24 jobs.
Extract from Prosecution Opening:
An internal investigation by the Council and subsequent involvement of the South Yorkshire Police and the Serious Fraud Office revealed a series of unusual transactions between the defendants and Mr Buckley in relation to the purchase of calibration machinery for the Unit. These unusual transactions overvalued the costs of the machinery supplied. Investigations revealed that additionally a substantial proportion of the machinery related to the transactions had not in fact been delivered to the Unit.
Paul Liggins, David Abbott and William Whitehead have all pleaded guilty to conspiring with Michael Buckley to false account. The defendants all run companies used by SYTSU to assist in the supply of specialist machinery to the Unit. The defendants companies are:
a) Liggins - Precise Exports Ltd [PE]
b) Abbot - Metrology Support Systems Ltd [MSS] but he also ran the "projects" for Whiteheads' companies
c) Whitehead - Calibration Logistics Ltd [CL] and North Derbyshire Measurement Systems Ltd [NDMS]
2. The fraud perpetuated by Buckley and the defendants had two main effects. Firstly, it substantially over-inflated the income of the Unit, making it look far more successful than it actually was, and secondly, it allowed the purchase of valuable calibration equipment that the Unit would otherwise not have been able to afford. Buckley appears to have been motivated by vanity, by his desire to be seen at the top of his profession, the head of a world renowned Metrology Unit possessing the best calibration equipment and greatest expertise. Buckley used his autocratic control of the Unit and its workings to perpetuate the dishonest system he put in place, and these defendants facilitated his dishonestly. If the Council had known the truth about the Unit's financial situation it would likely have acted to close the Unit much earlier than it did.
3. The fraud worked as follows: Each transaction between Buckley and one of the defendants began with a request from Buckley to one of the defendants' companies to quote for the supply of equipment to the Unit, under reference of a "project". Each of the projects, at least at first, did involve the supply of a machine but the conspiracy relied upon a series of fictions between Mr Buckley and the defendants about the value of that equipment and of services supposedly provided by the Unit to the defendants' companies.
4. Buckley's request to one of the defendants' companies for a quotation was not a quotation in the sense that most people would understand it. He would specify the exact amount that should be quoted, but at this stage of the documentation the overall figure was broken down for the defendants into the real cost of the machine, the management fee to be retained by the defendants as a result of their assistance and an additional figure for what was dubbed "ancillary equipment".
5. The references to "ancillary equipment" on the documentation prepared was completely misleading because it did not relate to any equipment that the defendants would source and supply to the Council at all. What Buckley and the defendants understood by the term "ancillary equipment" was actually money destined to be returned to the Unit under the guise of a false invoice allegedly for calibration services that SYTSU had apparently performed for the respective defendants' company. No such calibration had ever occurred. The invoice was just a device to covertly allow Buckley and the defendants to return money to SYTSU without the Council or other party noticing that it was in fact just a refund of the Council's own money.
6. The effect of these invoices for calibration services issued by Buckley and paid by the defendants' companies was to falsely inflate the income for the Unit. The consequential inflated profits in turn allowed Buckley to make the Unit appear more successful than it really was and purchase specialist calibration equipment that otherwise he would have been unlikely to afford.
7. The defendants' roles in the fraud were to cooperate with Buckley and create and submit quotations in the required amount. Once their "quote" had been accepted by Buckley, they would create misleading invoices that stated that the cost of the equipment itself was the full amount given on the quote and that did not break down the costs into its constituent parts, thereby omitting the material figures which reflected the true position. To all intents and purposes any outsider who looked at the defendants' invoices would be given the impression that one of the defendants had sourced and purchased a piece of equipment that cost "x". The fact that the true cost of the equipment was much less than this because the figure had been inflated by the cost of the "ancillary equipment" and the defendant's own personal "management fee" would be concealed.
8. This false documentation led the council to believe that they were purchasing a machine that was worth far more than was the reality. As with all Council purchases, Sheffield City Council would then enter into a finance leasing arrangement at this higher value, and the Unit would be expected to cover the lease rental payments from its revenue created by the calibration services it provided. Subsequently - when at Buckley's instigation - a Council invoice was created to bill the defendants' companies for fictional "calibration and related services" (actually the return of the ancillary equipment fee from the defendants to SYTSU) there would be no connection on the face of the invoice to the earlier transaction. So far as SCC were concerned this was legitimate income obtained for SYTSU's calibration services when in reality it was its own money being returned to them for the sole purpose of inflating the figures; thus perpetuating Buckley's myth of success.
9. The defendants' dishonest involvement was essentially threefold:
(1) Creating the false quotations as directed by Buckley,
(2) processing the order as directed (i.e. obtaining the equipment required (if any), keeping the management fee and retaining the Council's money in their own accounts until directed to return it by Buckley with one of his SCC "calibration" invoices);
(3) Paying the false "calibration" invoices.
10. There is no doubt that the instigator and main protagonist of this fraud was Mr Buckley. However Mr Buckley could not have done what he did without the active participation of the defendants. By making and submitting the false quotations and invoices and by concurring in the making of the SCC invoices for fictitious services, which they duly paid, the defendants played a vital role in Buckley's scheme in return for which they were paid a management fee.
11. Following Mr Buckley's death and the fraud investigation the true financial position of SYTSU was revealed to the four councils who funded the Unit. The councils had to pay increased contributions to settle the leases on the equipment and to fund the legitimate activities of the Unit. It became clear that SYTSU was not financially viable and the Unit closed with the loss of 24 jobs in the summer of 2006.
The defendants were interviewed in turn when they attended voluntarily at the police station. Each in turn said in essence that they had trusted Buckley and were assisting him in his efforts to keep income generated by his Unit within SCC rather than be divided between the four councils responsible for the Unit.
12. In the last series of interviews with the Serious Fraud Office and South Yorkshire Police, the defendants all chose to exercise their right to say "no comment" to all questions put to them.
