A chartered accountant who was discovered to have detailed a plot on his computer designed to defraud creditors in advance of the insolvency of his building company has been banned from acting as a director for 12 years after an Insolvency Service investigation
Alan Proto, a member of ICAEW who was named Kent Entrepreneur of the Year in 2012, was director of GML Construction Limited (GML) which specialised in building green homes.
GML traded in the construction industry from 1991 to December 2012 and went into administration on 16 November 2013 and then into liquidation on 7 January 2014 with assets of close to £1.9m and liabilities of nearly £4.5m.
An investigation by the Insolvency Service found that Proto, who trained with EY, created and backdated fictitious documents to try and legitimise asset transfers totalling over £1m at a time he knew the company was insolvent.
At December 2012, GML was owed approximately £898,000 from a subsidiary which was involved in the sale of a property development. It was expected that GML would receive repayment in full or in part following the sale of the development by the subsidiary.
The Insolvency Service discovered Proto had created entries on a computer which purported to write off the outstanding debt due from the subsidiary and transferred the interest in the subsidiary for his benefit.
He also created documents which purported to show other people agreeing to this at a time he had never met them or, in relation to companies, when they did not exist. He then backdated any correspondence he did have to try and validate the scheme. In addition, Proto entered into transactions whereby his loan to GML of £150,000 was repaid ahead of other creditors.
The scheme came to light because Proto had written out his plot on a computer, and these notes were retrieved by Insolvency Service investigators after they had been deleted.
Cheryl Lambert, head of outsourced investigations at the Insolvency Service said: ‘This is a very significant ban, reflecting the severity with which the Insolvency Service considers director conduct.
‘Directors of companies experiencing financial difficulties have a duty to act in the best interests of its creditors. This must include ensuring the transparency of the company’s trading activities. Mr. Proto’s conduct of GML’s affairs fell short of the judgment expected.’
