CROSS POSTED ON BYLINE.COM
The scandal that led to the huge £3.7m fine ( reduced to £2.4m after co-operation) against accountants Grant Thornton and ex partner Robert Napper is revealed in a dry 56 page report by the Financial Reporting Council.
The biggest con by the privatised company Assetco responsible for owning and maintaining the capital and Lincolnshire’s fire engines was in faking additional cash payments from London’s fire brigade when it was asked to do more work.
Directors of the company took advantage of three extra requests that were approved by London fire brigade – involving new equipment for fire engines and emergency training for 700 of the capital’s firefighters.
In all three cases they fiddled the books to boost the value of the company to shareholders and lied about the cost of the contracts to gullible auditor Robert Napper and accountancy firm Grant Thornton.
The London fire brigade wanted its engines to be equipped with new foam pumps and thermal imaging cameras. Under the privatisation deal they could charge large sums of money per month under a leasing deal for fitting this equipment. But the greedy directors were not satisfied with this great deal. They decided they wanted icing on the cake and claimed even more to make their company look more profitable. And not just a few pence -literally millions of pounds.
The new foam pumps meant that Assetco could and did charge an additional £2.6m to London fire brigade. But the directors claimed that additionally they were charging London fire brigade another £46,975 a month from April 2009. This produced promised income of another £4.991 million over the next 14 years. But Assetco never even sent an invoice to the London fire brigade. for these sums. It was a complete fake – the money did not exist and the auditors didn’t spot it.
The same applied to the thermal imaging cameras. The 140 cameras were leased to London fire brigade at a cost of £331,443 a year or £27,620 a month. But then the directors told the auditors that it had cost over £1m to purchase and fit the cameras and that the London fire brigade was paying over £57,000 a month. This generated a total of over £5,875m over 13 years. Again this was a complete fake and it would have shown a profit margin of 80 per cent. This went unchallenged by Mr Napper despite queries by his team.
Finally they fiddled the emergency training programme for 700 firefighters. They claimed they were receiving another £71,000 a month for ladders and hoses and guards that they were already were being paid under an existing contract. They also fiddled the costs. They said it would only cost the company £2m to provide it over five years. In fact it was over £6m.
This catalogue of deceit was aimed at inflating the value of the company. It was particularly despicable because the directors were using the need to improve London’s fire fighting capability as a vehicle to fiddle the books. But that was not all they were doing and I will come back to it in another blog.
Reblogged this on Buried News and commented:
Why do people still believe that selling or leasing of government assets leads to lower costs and greater efficiency. There is historical parallels , the King giving land to his friends and the Church. The result was such action led to the enrichment of the Nobles and the Church and the weakening of the Crown. As for the Peasants, screwed by Crown & Nobles.
Did the auditors rush the job and miss what they should have seen or did they just not take action on what they should have seen? I’m trying to be careful with my wording.
Good question. The hint is that they may have turned a bit of a blind eye to keep the business – particularly when a more junior team spotted discrepancies. But who knows?
Looking further at the report – quite clear at one stage Grant Thornton also employed newbie accountants who were not experienced – but their work should have been picked up by Napper who had 23 years experience.
Also from reaction I have having to the blog – Grant Thornton seen as auditors who presided over the Rangers football club fiasco and One Barnet – the privatisation of services in Barnet.
Mrs Angry’s Broken Barnet has been very good on the fiasco of One Barnet presided over by Grant Thornton and Capita. She’s currently looking at the spat between Coleman and Cohen and uneven ward vs ward budgeting.
Yes: excellent blog, Broken Barnet. Wonderful woman, Mrs Angry: just my type, if somewhat more opinionated than I would like. And with more jokes, and better spelling and punctuation than you, Mr Hencke, if I may be so bold. Vernon.
I Know Mrs Angry is the Queen of Barnet Green!
Well, thank you, Vernon. Very kind. I am sorry if I am overly opinionated. It is a criticism that has been raised by others: but I am glad my spelling and punctuation meets with your approval. The benefit of a grammar school education.
Being ordinarily opinionated seems an inappropriate option where Barnet is concerned.
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