The FSA has banned and fined former Royal Liver Assurance finance director George McGregor £109,000 for entering into contracts which benefited a former employee and incurring a possible contractual liability of up to £18m.
The FSA determined that McGregor’s behaviour merited a fine of £1m but reduced the amount because this level of fine would cause serious financial hardship.
Between May 2009 and November 2009 McGregor entered into contracts on behalf of RLA with two companies which were controlled by a former employee of RLA. McGregor was negotiating the former employee’s bonus but thought the amount he had agreed with the individual would not be approved by RLA’s board. McGregor therefore sought to conceal the level of bonus by entering into the two contracts to pay substantial sums to the former employee’s companies.
In April 2010, Money Marketing revealed that Royal Liver had sacked McGregor, claiming that he sanctioned unauthorised payments.
The FSA says McGregor abused his position in RLA. He withheld this information from RLA and circumvented systems and controls for approving contracts which he himself had been instrumental in implementing.
McGregor also falsified the signature of RLA’s CEO in order to process monies relating to these contracts. This resulted in RLA paying at least £3.6m to the two companies and incurring a possible contractual liability of up to £18m.
FSA acting director of enforcement and financial crime Tracey McDermott says: “McGregor abused his position of responsibility and engaged in a dishonest, deliberate and sustained course of misconduct. McGregor failed to act with integrity and is not a fit and proper person to work in the financial services industry.
“Those who take on the responsibility of being an approved person should be in no doubt about our commitment to take the strongest action to tackle behaviour which falls below the high standards we expect.”