Senior construction executives made up about £10m of expected payments, and deceived auditors by showing them stockpiles of slate with the other crates empty

Three former senior executives of Alfred McAlpine Slate have been given jail sentences, after pleading guilty to fraud.

The three confessed they had deliberately overstated the company’s production and sales figures for several years. About 44% - more than £10m - of reported payments from the firm’s debtors were fictional.

Christopher Law, former managing director of Welsh Slate, received two-and-a-half years, Geraint Roberts, received 16 months and former operations director for the roofing division and Paul Harvey, former sales director was sentenced to 10 months.

Law and Robert were also disqualified from acting as company directors for four years and three years respectively. Confiscation proceedings under the Proceeds of Crime Act 2002 will follow.

The case arose after McAlpine, now owned by Carillion, became concerned about the cash position of its subsidiary Welsh Slate, and sent an internal audit team to investigate in January 2007.

Welsh Slate had accounted for about 2-3% of the group’s turnover, and just under 5% of its workforce.

In February 2007, McAlpine reported to the stock market that its internal audit team had uncovered a systematic misrepresentation of production volumes and sales from a number of years by senior managers at Welsh Slate, which it said would lead to a restatement of the 2005 net assets and a reduction in the expected pre-tax profits for 2006.

The books and records of Welsh Slate had overstated the sales achieved by the firm, making it appear more successful than it was.

Examples of deception included auditors being shown a stockpile of crates of roofing slate, with the outer crates full, but the inner crates empty.

Customer letters were also created to give the impression that debtors’ payments were in the pipeline.

The matter was later referred to North Wales Police and a joint investigation with the Serious Fraud Office later began in September 2007. The defendants were charged in December 2008.

The prosecution said Law had been the author of the fraud, recruiting the others and giving them directions, but the other two defendants had played their parts in the fraud willingly.