Politicians at the London Fire Brigade and Barnet Council should be hanging their heads in shame for awarding multi-million pound contracts to two private contractors, MetPro and Assetco – one of which is now bankrupt and the other only valued as junk stock .
Both scandals have featured on this site before but the situation is going from bad to worse.
An extraordinary statement from Assetco -owner of London and Lincolnshire’s fire engines and a strike breaking auxiliary force for London’s firefighters – basically admits that it does not have the cash any more to meet capital repayments needed to run its contracts with London, Lincolnshire and the Middle East.See http://bit.ly/mP5WFa .
The key paragraph reads: “The main issue that the business is facing is the capital repayment profile not matching the long-term nature of the Company’s contracts. Whilst the Company is cash generative and can meet its interest costs, it does not generate sufficient funds to meet all the repayment of capital as currently scheduled. The banks are supportive regarding the short-term financing situation and are awaiting our proposals on a financial restructuring but in the meantime we are in breach of our banking arrangements.”
This sorry state has been brought about by its former founder John Shannon who last month was summarily dismissed by the company.
Shannon had landed the company in court facing a winding up order for millions of pounds of unpaid taxes from Revenue and Customs-something they don’t do lightly- and a huge £1m unpaid legal bill from Nabarro’s.
No sooner had these been settled by diluting the share price in a £16m offer to new investors then more grief was to follow. The share price is now down to a junk figure of 4.65p a share – when it once sold at 66p. Market capitalisation at £11m is now less than the value of its PFI contracts in London and the Middle East.
Yet Shannon and his former co-founder are trying to recover £1.1m from the collapsing firm while facing a counter-claim from Assetco for £8m for ” breaches of fiduciary duties”. A bloody legal battle is on the way distracting it from its business.
All this might not matter if they did not own all the fire engines in the capital and Lincolnshire. But the London Fire Brigade has reacted to the crisis with breath-taking complacency. Gareth Bacon, performance management chair, believes there is no serious problem.
Brian Coleman, who was wined and dined by Shannon as well as receiving a gift of a £350 Harvey Nicks Christmas hamper, is silent about the fate of his dining companion.
Yet consider this.Would it be appropriate for a public body to avoid paying taxes and be so reckless with its finances so it can’t repay its capital loans to banks? And for the authority to be in a such a bad way that it has had to hire financial staff to sort out the mess. Heads would roll.
Barnet Council is in a similar mess over the bust private security firm MetPro who owed £250,000 to Revenue and Customs for unpaid tax, VAT and even pay roll tax deducted from its employees.
The fate of this company would not have come to light if it had not been so reckless by filming bloggers and members of the public without their knowledge or permission as they came to watch the council implement cuts.
But now Barnet have admitted they were UNAWARE of the financial plight of the company which got £1m of business and glowing references from them on its website (now finally removed) and appears to have avoided any public tendering process to get the business.
There is a link to both these scandals and he is called Brian Coleman. He has been the key advocate of the government’s privatisation agenda and cheerleader for the company -particularly the disgraced John Shannon. He is also the big wheel on Barnet Council- Cabinet post for the environment- and must have had some knowledge of the bankrupt MetPro. And there is even a bit part for the complacent Gareth Bacon in all this – his division at Dutch consultants MartinWardAnderson has made £75,000 (£12,600 a month) over just a six month period in 2010 – providing temporary finance staff for Barnet.
Can anyone do anything about this? Yes- firefighters employed by the London Fire Brigade could ask for a due diligence investigation by the district auditor Michael Howarth-Maden over the handling of the PFI contract, alleging the authority had employed a company involved in proven tax avoidance
Similarly residents of Barnet could demand an investigation by its external auditors,Grant Thornton into the hiring of MetPro. Here the crucial question should be -how they got the contract in the first place.
It is really time action was taken – the scandalous behaviour of both firms is a stain on London’s politicians.