Scandal of John Shannon and Brian Coleman: Unacceptable faces of capitalism and politics

John Shannon: dismissed by his own firm

This blog has followed  relentlessly the unfolding drama of  AssetCo, the company in charge of London and (until last week) Lincolnshire’s fire engines, which nearly went bankrupt last year and had its shares suspended until recently on the stock exchange.

But nothing can compare with the latest revelations in a dry annual report on the AssetCo website (link for anoraks who want the lot is  http://bit.ly/HVeFEN ). This much delayed report for an 18 month period – it had to be produced to allow its shares to be retraded- tells the real story behind the company’s near collapse which saw its share price drop from 60p to junk stock 1.75p. It has now emerged that dividend payments may have been unlawful, the company has been seriously ripped off by its former chief executive and the accounts were false for both 2009 and 2010.

 Revenue had been overstated by a massive £18.6m and a claimed operating profit of £17.4m was actually an operating loss of £11.4m.

But the company still owes banks a massive £43m – despite creditors taking a 78 per cent hit and its auditors, Grant Thornton  (also owed most of their fees) resigning.Even the restated figures cannot be guaranteed and PriceWaterhouseCoopers,who independently audited the firm, have qualified these accounts. Grant Thornton incidently missed all this -just as they did over MetPro-Barnet’s bust private security firm-bankrolled by Barnet Council.

As the company itself says:”errors include the effects of mathematical mistakes, mistakes in applying accounting policies,oversights or misinterpretations of facts, and fraud.”.

Worse it is quite clear that the only major source of money for the firm in Britain is the council taxpayer in London which is keeping  it afloat to the tune of £3om a year. Even here banks are going to have  to give another bail out and Lloyds have a massive interest because they currently own the London fire engine that comes out on call.

 This is where the scandal of Brian Coleman, the Tory chair of the London Fire Brigade, and John Shannon its former chief executive come in.

Coleman was entertained at least four times by Shannon and accepted an expensive Christmas hamper from Harvey Nicks (see the armchair audit of Brian Coleman in previous blog) and has been AssetCo’s cheer leader.

Now it is clear from this report that Shannon was dismissed by the board of AssetCo because of this financial shenanigans.

I quote: “The new board have been informed that under the stewardship of Mr. Shannon and Mr. Flynn there was a lack of transparent reporting, requests for information were ignored, and related party transactions were entered into without full board approval. The new board cannot be certain that all issues have been captured.

Mr Shannon was dismissed as an employee for breaches of fiduciary duty and whilst the company has not carried out a full investigation, as previously announced in May 2011 in connection with the claims against the Company by Messrs Shannon & Flynn in support of the winding up petition, it identified counter claims against John Shannon of £4.6 m and also counter claims for breach of fiduciary duty of £3.4m against Frank Flynn.

Frank Flynn was the chief financial officer and a mate of John Shannon.

The report reveals that Shannon and Flynn also shared the bulk of a £847,000 pay out in dividends that are probably illegal. And Shannon before he was dismissed managed to up his salary and benefits to a staggering £492,000 and Flynn got an unapproved £30,000 redundancy payment.

Even worse they appears to a dodgy property loan amounting to £1.5m to Shannon. This involved a property company called Jaras.

 The report says: “In respect of the ‘Jaras’ transaction, AssetCo have reviewed internal communications between the date in December 2009 when the £1,500,000 was first paid, and finalisation of the 2010 audited accounts,the management and statutory accounts for the business occupying the property and concluded that:

a) on an arms length basis it would be difficult to substantiate effectively paying six years rent in advance in respect of the property,

b) the payment was originally classified as a Directors’ Loan and was subsequently reclassified as

prepaid rent in order to satisfy audit disclosure requirements, and

c) the business occupying the property is now in Liquidation. ”

It adds: “there is sufficient doubt that either Jaras (where a Receiver has been appointed) or John Shannon will repay the amount.”

The report also reveals that London AssetCo which has assets of the London fire brigade has been moved to another off the shelf company and the firm’s  Middle Eastern operations (see another blog they are servicing the military in the United Arab Emirates)  are now based in a Bermuda tax haven, to keep them secure from any other collapse in Britain. Wise move, as Lincolnshire have sacked AssetCo.

Brian Coleman: AssetCo cheer leader and entertained by John Shannon

The real scandal in this story is that this woefully badly run company has been kept afloat by politicians in London. Coleman and Gareth Bacon should shoulder this blame -with their blind belief that privatisation is the only answer.

 But Coleman is more culpable because of his personal  links with Shannon and acceptance of gifts from a man  now dismissed from the firm. Shannon may get away with all this but you do have a choice next month to make sure that Coleman never darkens the London fire brigade again.

Removal  would be a service to  Londoners  and you have a vote at the Greater London Assembly elections in Barnet and Camden.

19 thoughts on “Scandal of John Shannon and Brian Coleman: Unacceptable faces of capitalism and politics

  1. Privatisation. How did they ever allow this to happen? And why arent the whole London assembly answering for it now?

  2. Mr Coleman is hell bent on privatising the fire brigade and that can only lead to the lives of londoners being put further at risk.

  3. Look into their Bank accounts I bet there’s been a lot more backhanders for Coleman, ex LFB senior managers and Boris because he won’t get rid of the Toad.

  4. Why did we need to go Private in the first place?. Now London fire Brigade training has gone private for 25 years, without asking Londoners what they think. Nobody knows and thats ok.

  5. Surely Coleman should be facing a criminal fraud investigation and not just being sacked. All I hear is people just talking about getting rid of him but I want to see the crook put away

  6. Look at the farce of the empty and unsellable former LFB HQ in Lambeth.
    Unoccupied for 5 years, allegedlly unsellable due to a covenant restriction stipulating the building and site can only be used for fire brigade.
    Masses of extra expense moving the HQ to union street.
    All the Authority Papers and documents relating to both the former HQ in Lambeth and the move to Union Street are restricted and not open to public scrutiny.
    What is the Authority hiding?? Maybe some digging, and a FOI request, from a determined journalist would reveal some interesting decision making.
    (Apparently the rear block at the old Lambeth HQ has been squatted recently)

  7. Telegraph journalist Andrew Gilligan has suggested that even if Coleman loses his GLA seat, Boris might keep him on as Chairman of LFEPA (assuming Boris wins – which he will!). This would be an affront to democracy, but as all the political parties have trampled over our democratic rights for years, this possibility should not be ruled out.

    • I hope that doesn’t happen and hope you are wrong ..but I think I was told that Coleman hadn’t exercised his right to remain as one of the top up councillors (like Gareth Bacon) if he was not elected. This would stop Boris being able to appoint him.

  8. The sad thing about this whole affair is that in the early days when the contract was run by TLG most people were very happy with the service run by technically trained people in this country.Unfortunately when Assetco and particularly shannon and his band all they wanted to do was make as much money as possible giving poor service.I was one of many proud people who lost thier livelihood under this shoddy band.I contacted the then mayor Ken Livingstone for help alas to no avail.

  9. what goes around comes around
    it was always suspected that quality and service were intentionally compromised now we know why

  10. at&t, Mr Shannon a crook?? no one like you should hurl accusations like that on a public forum. people on here may not know your dark past or how you conduct your “business”!! i of one am very aware of how you operate in NI. so maybe you shouldnt wash in public just because you were always in his shadow!!

    • This comment seems to have come from someone who has strong feelings about the commentator. For the record I don’t accuse Shannon of being a crook but stick to the findings of reports by his fellow and successor AssetCo directors who say in their latest annual report that they are examining taking legal action against him.

      • maybe you should have re-read my post. i was replying to a post by the user name “AT&T” not you Mr Hencke. You are obviously well involved in the entire situation to comment on this blog of yours. I wasnt aware you were an employee or this company or a shareholder to have as many issues as you have. But isnt free speech a wonderful thing. and no, im not a relative, just an observer.

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