Sigma CEO and CFO avoid jail sentence

Sigma Pharmaceuticals’ former CEO, Elmo de Alwis, and his chief financial officer, Mark Smith, have avoided a custodial term for cooking the company’s books, receiving instead a fine and a suspended prison sentence, the Sydney Morning Herald reported.

The pair were each fined $25,000 and sentenced to a year in prison on charges of providing false information to the company’s auditors and directors. However, County Court of Victoria Judge Richard Smith suspended the custodial sentence, placing the pair on a 42-month good-behaviour bond.

Both Mr de Alwis and Mr Smith had pleaded guilty to two charges of falsifying the company’s half-year and full-year accounts for the 2010 financial year relating to Sigma’s purchase of two new medicines in 2009.

One of the charges related to Sigma overstating its income and revenue by $15.5 million and inventories by $11.3 million. Pre-payments to the company were inflated by $2 million and Sigma’s profit after tax was overstated by $9.6 million.

The other charge related to misstating the amount of revenue and income in Sigma’s half-year accounts for the period ending July 2009 by $3.5 million, reported the newspaper.

The pair also pleaded guilty to additional charges relating to misleading the company’s auditors and board of directors.

Sigma’s financial woes during 2009 and 2010 led to it having to pay shareholders almost $60 million in 2012 to settle a class action brought by disgruntled investors. This was based on Sigma predicting it would record modest profit growth when it was conducting a $300 million capital raising in 2009. Six months later, Sigma stunned investors by disclosing a $424 million write-down that led to a $389 million loss for the 2010 financial year, reported the newspaper.

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