SpinVox’s CEO Christina Domecq had to pay back £125,000 to the company after an investigation in to her use of corporate finances, according to a detailed 70-page filing made by new owner Nuance to the SEC.
The investigation was ordered by SpinVox’s board in July, when, after paidContent:UK lifted the lid the company’s financial troubles and heard such claims from staff, a dossier of complaints was handed to the board by shareholders, advisers and suppliers.
The SpinVox accounts released by Nuance are brutal; they are a sea of red ink, showing little inclination to protect the managers of the company it acquired in December. Amongst other things, they reveal the conclusion on CEO’s unaccounted expenses: “The company did not adequately capture all necessary information to administer PAYE properly and to identify expenses that were personal to the CEO.”
That meant it failed to pay UK tax properly on “benefits in kind for employees including the CEO, benefits and expenditure that could fall to be treated as personal for the CEO and incorrect application of taxation to bonuses for the CEO”. Her Majesty’s Revenue & Customs fined SpinVox, but fines could keep coming, the documents warn. The company was without a full-time CFO for 15 months while this went on — filling that gap might have helped make the accounts more transparent.
The documents concede that: “Bonuses were satisfied partly by the company meeting the cost of various personal expenses of Ms Domecq. Employment taxes withholding PAYE was not deducted on bonuses declared. The effect of these matters was to create a current account between the company and Ms Domceq.” The company even owed Domecq £72,000 at one point.
— Transfer of company funds: (1) SpinVox had paid £96,032 in 2008 to Ojala Ltd, “a company owned by a trust of which Ms Domceq is a discretionary beneficiary, in respect of its purchase and sale of shares in the company”. (2) SpinVox also paid up £38,400 in rent for a property used by Domecq, under an Ojala rental agreement, between February and January 2009. (3) SpinVox had paid a total £153,000 for translation services to Celtic Communications, a company of which Domecq and co-founder Daniel Doulton were former directors.
As well as paying back £125,000, Domecq also agreed to “revise certain of her employment terms” after the investigation, the documents state.
— Staff’s stock-for-salary was worthless: Much of this started to go public when we reported that staff were being offered share options in place of salary while SpinVox weathered financial woes in July and August 2009; the offer was accepted by most. But those options were useless: “During the nine months ended 30 September 2009, the company granted 104,000 stock options to employees of the company. The 2009 stock option grants were valued using a http://en.wikipedia.org/wiki/Black