FORMER HOTEL BOSS DISQUALIFIED FOLLOWING DTI PROSECUTION

19 Jul 2004 06:45 PM

The former chairman of hotel chain Queens Moat Houses plc has been disqualified from acting as a director for six years today following a DTI application in the High Court.

John Bairstow, of South Weald, Brentwood, Essex was disqualified following an investigation into Queens Moat Houses plc arising from the announcement of its annual results for the year ended 31 December 1992. The final report into the affairs of Queens Moat Houses plc of the inspectors appointed by the Secretary of State was published in June 2004 (see DTI press release P/2004/224).

Judgement was delivered today following an earlier five day hearing on an application by the Secretary of State under section 8 of the Company Directors Disqualification Act 1986 (CDDA).

In his judgement, The Hon. Sir Donald Rattee said:

"As a result of investigations made by Mr. Burn and his fellow inspector appointed by the Secretary of State, Mr. Burn has given very full and detailed evidence to the effect that the results published by QMH prior to the suspension of the listing of its shares were false and misleading, both in terms of the amount of profits made by QMH and the nature of those profits, and that QMH's bankers and the stock market in general were consequently misled as to QMH's financial position.

"Third parties dealing with QMH, as well as its shareholders, were seriously misled by thoroughly irresponsible statements as to the company's financial position in 1991 and 1992 to which Mr. Bairstow was a party. Although I accept that he did not intend to mislead such persons, I am satisfied that such misleading statements would not have been made, had Mr. Bairstow performed his duties as a director of QMH properly and conscientiously. In my judgment his negligent disregard of such duties in the respects I have found proved against him make him unfit to be concerned in the management of a company."

Disqualification proceedings have already been taken against three other senior company officers: former managing director, Martin Marcus, former finance director, David Hersey and former deputy finance director, Allan Porter.

Mr Marcus has given an undertaking not to act as a director for 10 years and Mr Hersey and Mr Porter have been disqualified for eight and seven years respectively.

John Bairstow was refused leave to appeal.

Notes to editors

1. The final report by inspectors Adrian Burn FCA and Patrick Phillips QC, appointed under section 432(2) of the Companies Act 1985 to investigate and report on the affairs of Queens Moat Houses plc (QMH), was published on 18th June 2004.

2. The section 8 proceedings were issued in 2000 against four former QMH directors following submission to the Secretary of State of an earlier (unpublishable) report by the same inspectors under section 177 of the Financial Services Act 1986.

3. The circumstances which led to the appointment of the inspectors and the proceedings under section 8 CDDA against Mr Bairstow and the other three defendants are summarized in the judgment as follows:

(1) On 30 April 1992 QMH published consolidated accounts of the group of which it was the holding company for the year ended 31 December 1991, which showed profits before tax of 90.4m.
(2) On 12 August 1992 QMH published its interim results for the period 1 January 1992 to 12 July 1992, showing profits before tax of 38.1m.
(3) In the months leading up to March 1993 investment analysts forecast that QMH's profit for the year ending 31 December 1992 would be approximately 85m.
(4) On 26 March 1993 QMH published its intention to announce its preliminary results for the year ended 31 December 1992 on 7 March 1993.
(5) However, on 31 March 1993 QMH announced that the Stock Exchange listing of its shares was to be temporarily suspended at the Company's request pending clarification of its financial position, and that the dividend on its preference shares, which was due for payment on 31 March 1993, would be deferred.
(6) On 29 October 1993 QMH announced financial information which included:

(a) That its results for the year to 31 December 1991 were to be restated to show a loss of 56.3m., as opposed to the profit of 90.4m. previously stated; and
b) That the Company's results for the year ended 31 December 1992 showed a loss on its ordinary activities before tax of 1,040.5m., which resulted in part from reduced valuations of its tangible fixed assets showing a total reduction in value below historical cost of 803.9m."

4. The registered office of Queens Moat Houses Plc is Queens Court, 9/17 Eastern Road, Romford, Essex.

5. Inspectors appointed under section 432 of the Companies Act 1985 have wide powers to require documents and the attendance of witnesses, including directors, officers and agents of the company and anyone else they consider is or may be in possession of relevant information concerning the company, and examine that person on oath. They may extend the investigation to other member companies of the group if this seems appropriate. Once appointed, they act independently of the DTI.

6. The inspectors made their report under section 437 of the Companies Act 1985.

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