A former senior executive of iSoft, accused of misleading investors over a £44.3m contract, has denied that failing to agree the deal would have affected the company’s success.
At Southwark Crown Court today, Stephen Graham, 48, the former director of operations of iSoft Group Plc, said the completion of the Irish contract would not have impacted on its ability to merge with rival IT firm Torex or to win NHS business.
Graham is said to have plotted with Barnsley FC owner Patrick Cryne, 61, Timothy Whiston, 44, and John Whelan, 45, to make millions by deceiving the stock market.
The prosecution has alleged that the three men used a forged contract to book revenues from a €54.3m (£44.4m) contract with the Irish Health Service as early as October 2003, even though the contract was not signed until April 2005.
It has claimed that they did this in order to bolster the company’s finances and avoid a dramatic drop in the iSoft share price that would have affected its success and their fortunes.
Had the firm not signed the deal with Ireland, it stood to make a loss of more than £10m, prosecutor Richard Latham QC told the trial earlier this summer.
But giving evidence this morning Graham said that declaring a loss in its half yearly accounts in October 2003 would not have affected the company’s chances of winning work from the National Programme for IT in the NHS.
This had been set up the previous year, and was in the process of letting contracts to deliver new care records services to hospitals.
“By that stage, it was clear there were only a couple of horses in the race. The bottom line is that from the national programme point of view the products were the key,” he said.
Graham also denied that declaring a loss would have affected iSoft’s merger with Torex.
“Torex were not going to win it, absolutely no chance. The only real value that Torex brought to the party was a tidy situation of the control of the existing hospital systems.”
The businessman said he was unaware of iSoft’s policy for revenue recognition as his job was “to persuade customers to agree contracts and then to deliver them and get paid.’
Graham told jurors he was been born and raised in Carlisle, and that he had developed an interest in computers before studying Computer Science and Mathematics at Manchester University.
He began work as a programmer for Fraser Williams before he was head hunted by Cryne to join KPMG as an IT consultant. At the time, he was just 23-years-old.
While at KPMG, he worked on a project to develop software for the health service. In 1994, in partnership with Cryne and Birmingham-based businessman Roger Dickens, Graham created KPMG Health Systems, the precursor to iSoft.
By the end of 2003, he was worth £10m, having made a large chunk of his fortune by selling 3m shares in iSoft when it was floated on the stock market in July 2000.
Graham told the court that, coming from a non-accounting background, it was “a bit of a battle” to establish himself.
He described Dickens as a ‘very strong and dominant character’ and said that with Cryne he formed the “driving force” behind the company.
“Roger had very good contacts in the City, and Patrick had a very strong vision of what the market needed – what products were needed – and could spot opportunities.
“What I was good at doing was taking those visions and turning them into something saleable and deliverable,” he said.
All four men deny conspiracy to make misleading statements promises or forecasts, contrary to the Financial Services and Markets Act 2000 and section 1 of the Criminal Law Act. Cryne is not before the court because of health issues.
None of them have any connection with iSoft today. The company has been sold twice since the events being related in court, and is now part of CSC’s healthcare group. The trail continues.
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