The FSA has banned and fined former Royal Liver Assurance finance director George McGregor £109,000 for signing off unauthorised payments to a former employee totalling approximately £3.6m.
The regulator says McGregor’s misconduct merits a £1m fine but such a high penalty would cause McGregor serious financial hardship.
McGregor was a member of RLA boards from June 2003 to March 2010, first as corporate services director before taking on the finance director role in May 2009.
In April 2010, Money Marketing revealed that RLA had sacked McGregor for sanctioning unauthorised payments and entering into commercial arrangements with a third party.
McGregor was responsible for negotiating the bonus a former RLA employee was due as part of his severance pay. McGregor did not believe the amount of bonus agreed would be approved by the board so sought to conceal it by entering into two contracts with companies controlled by the former employee.
On top of the bonus, the contracts required the companies to provide investment advice to RLA. McGregor states that due to a miscalculation on his part, the fees payable under the contract were 10 times higher than he intended.
McGregor received invoices from the companies dated July 3, 2009 for £1,814,686 and October 1, 2009 for £1,826,868. McGregor realised after receiving the first invoice that he had miscalculated what would be paid under the contracts.
The payments required approval from RLA’s chief executive because they exceeded McGregor’s authorisation limit, which was £500,000 per payment.
McGregor falsified the signature of RLA’s chief executive to facilitate the payments.
Baronworth Investment Services director Colin Jackson says: “Making a mistake on the fees is one thing but to falsify someone’s signature is a different ball game and much more serious.”