The watchdog responsible for slapping audit firms and accountancy professionals with tens of millions of pounds in fines is quitting to take a lucrative post with a City law firm.
Sky News has learnt that Gareth Rees, who has served as executive director of enforcement at the Financial Reporting Council (FRC) since 2012, is leaving to join King & Spalding as a partner.
The timing of Mr Rees’s departure is intriguing because it comes just months after he became embroiled in a row about the leak of a confidential fine that was about to be imposed on PricewaterhouseCoopers (PwC), the world’s biggest audit firm.
Stephen Wooler, an FRC member and barrister, informed a newspaper journalist that a forthcoming ruling on PwC’s auditing of Connaught, a collapsed social housing maintenance provider, would underline the effectiveness of the FRC’s enforcement operations.
In his email to the journalist at The Times, Mr Wooler related a discussion he had had with Gareth Rees QC, the FRC’s executive counsel, about potential coverage in the newspaper.
There is no suggestion that Mr Rees was aware of Mr Wooler’s intention to prematurely leak the outcome of the tribunal – which saw PwC fined £5m, the watchdog’s second-largest ever.
Mr Wooler has since stepped down, while an investigation into the affair, overseen by Reed Smith, another law firm, has been concluded without any public statement.
Sources close to the FRC said there was no link between the Connaught issue and Mr Rees’s decision to leave.
His exit will leave the FRC needing to fill one of its top executive roles at a time when the watchdog is being handed greater responsibility for holding corporate Britain to account.
Under reforms confirmed by Greg Clark, the Business Secretary, this week, the FRC will oversee the establishment of a voluntary governance code for large private companies.
It will also play an important role in new measures to give company employees a stronger voice in the boardroom.
Mr Rees is expected to join King & Spalding, an American firm, in the coming months.
He has overseen a series of multimillion pound penalties for audit firms, the biggest of which saw PwC fined £5.1m for failings in its work on RSM Tenon,
The FRC has also launched probes into the preparation of accounts at companies including BHS, Tesco and Mitie, the outsourcer.
The FRC and King & Spalding both declined to comment on Friday.