Fined £3.5m for professional misconduct: Grant Thornton approved dishonest accounts for London and Lincolnshire’s privatised fire engines

GrantThornton

Grant Thornton: A big fine for professional misconduct Pic credit: Wikipedia

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In 2011 this blog was involved with the Fire Brigades Union in investigating the handing over of London’s and Lincolnshire’s  fire engines to a private company called Assetco.

The company nearly went bust  in 2011 owing £140m. Shareholders and banks hoping to make money from privatising the emergency services lost millions and small shareholders were ruined.

The  City Hall Tories under Brian Coleman, then  the elected chair of London’s fire authority now nowhere in public life, saw the  flagship policy as a future blueprint for privatisation. Instead it was a disaster compounded by an Old Etonian baronet buying London’s fire engines for £2  from Assetco only to go bust himself leading to another company taking over.

Now six years later the grim and unsavoury truth has come out. A report from proceedings taken by the Financial Reporting Council against the auditors of the Assetco, big accountancy firm, Grant Thornton, and the accountant who audited the company Robert Napper,  has led to a £3.7m fine for  both of them for professional misconduct.

The facts are staggering. Over two years Grant Thornton   were found to have committed no fewer than TWELVE  cases of professional misconduct which meant the accounts presented to the public were mainly fictitious. Robert Napper was found to have  ELEVEN cases of professional misconduct.

As the report says: “This misconduct adversely  affected or potentially adversely affected a significant number of people in the United kingdom.”

It points out shares were trading at £6 during this period and fell to £1 in 2011 when the real situation was known. The report adds: ” The share price in 2009 (£6) reflected financial statements that contained an inflated balance sheet and included some significant revenue that was fictitious.”

An accompanying report reveals the scale of the dishonesty and cover ups. They range from fictitious payments amounting to millions of pounds from City Hall to buying up a firm for a relative  with shareholders money and creating a rental firm that let property out to directors. So extensive was the deception that I intend to use further blogs to describe in detail what happened.

As the report says: ” GT and Mr Napper were deliberately misled by AssetCo’s  management but the exercise of proper scepticism would have led to dishonesty being uncovered.”

Grant Thornton  was fined £3,500,000, reduced to £2,275,000 after  they co-operated with council and given a severe reprimand;

Mr Napper was fined  £200,000, reduced to £130,000 after  he co-operated  with the inquiry

Grant Thornton also had to pay £200,000 as a contribution to the Executive Counsel’s costs.

Mr Napper, an accountant with 23 years experience, was seen to have acted so badly that they have also recommended he be barred for three years from membership of his professional organisation ( the ICAEW –Institute of Chartered Accountants in England and Wales) for breaching  their code of ethics.

Mr Napper, from South Oxfordshire has since retired.  The Executive Counsel of the FRC said: ” The misconduct of Mr Napper , in its totality, is so damaging to the wider public and market confidence in the standards of members and in the accountancy profession and the quality of corporate reporting in the United Kingdom that removal of the member’s professional status is the appropriate outcome in order to protect the public or otherwise safeguard public interest”.

Further inquiries by me show Mr Napper in his Linked In page was publicly  endorsed by seven people including  Perry Burton, head of London audit, for Grant Thornton. and Natasha Pettiford-White, an executive assistant at Grant Thornton. Mr Burton’s recommendation would carry considerable weight as he is an auditor of 20 years experience.

Gareth Rees QC, Executive Counsel to the FRC, said:
“The Respondents have admitted widespread and significant failings in their audit work, and GT specifically has accepted there were serious failings in the execution of certain aspects of the firm’s quality control procedures. This misconduct is rightly reflected in the seriousness of the sanctions, such as the exclusion of Mr Napper from membership of the ICAEW ( the accountants professional organisation) and the fines on both Respondents.”

Matt Wrack, general secretary of the FBU, said :

“It is mystifying that central government did not spot this scandal, when the Fire Brigades Union and firefighters themselves were warning about it for years.  Leading politicians and fire service managers were responsible for allowing a gang of spivs to take over essential equipment and vehicles, the property of the people of London and Lincolnshire.  Both of the authorities for these regions need to investigate fully to ensure this never ever happens again. ”

Grant Thornton were approached and did not reply. I have written about this in Tribune magazine.

In my view this shows that one of our big accountancy firms was derelict in its duty in protecting the public from people who obviously wanted to fleece shareholders and took no care in auditing the books of people in charge of vital emergency  vehicles in London  and Lincolnshire. It also shows the real dangers of privatisation and we cannot  trust big accountancy firms to act in the public as opposed to their private commercial interests. You will see the scale of the scandal in future blogs.

 

 

 

 

 

A damning indictment on the dangerous failure of privatisation in the criminal justice system by a former Tory MP

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Jerry Hayes, practising criminal barrister and former Tory MP for Harlow Pic Credit:Goldsmith Chambers

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I am reblogging this from the site of Jerry Hayes, a former Tory MP and practising criminal barrister. He is highlighting the dangers of miscarriages of justice since the Forensic Science Service was privatised by David Cameron because private companies are cutting corners and not doing a proper job. The person here could have been imprisoned for seven years as a result of their negligence.

THE SCANDAL THAT UNDERMINES OUR ONCE GREAT SYSTEM OF JUSTICE

10 May 2017 at 07:09

I never blog on cases, but today I must break my rule. Yesterday I discovered a scandalous state of affairs which could have led to an innocent man going to jail for a substantial period of time. I will not name the defendant nor the court for obvious reasons. In forty years of practice at the bar this shook my faith in what was once the finest and fairest justice system in the world. Read this and weep. And mourn for British justice.

Yesterday I was sent to the Crown Court to offer no evidence in a firearms case. I had been instructed some weeks ago as Prosecution counsel. Let me give you a thumbnail sketch. Last year the police searched a van. In this van was a tool box and in this tool box were founds guns and ammunition. This comprised of an 8mm blank firing pistol converted to be a lethal weapon. An empty magazine belonging to that hand gun. A Glock self loading hand gun. The magazine from this handgun contained two live rounds. And three further live rounds were found in a knotted bag. It goes without saying that the possession of these items is a very serious offence and carries a minimum sentence of five years for the guns and a consecutive sentence for the ammunition. Anyone convicted potentially faces a sentence of imprisonment of seven years upwards.

The guns and ammunition were forensically examined. The laboratory gave the police what is called a Streamlined Forensic Report (SFR). It came to this conclusion, ‘a match exists between the defendant and the sample’. In other words the defendant’s DNA was found on one of the magazines.

This was served on the CPS and duly uploaded onto the digital case system, effectively serving this on the court and the defence. An SFR is precisely that, and both prosecution and defence are entitled to see the full report. But very often it is taken at face value. As there was no other evidence the CPS reviewing lawyer wanted further information. He asked for more information. Was there a mixed profile? How strong was the DNA? He received obfuscation from the lab. ‘The SFR provided indicated that a number of results were subject to progress.’ But the lawyer was dogged in his determination and finally received this bombshell. ‘The lab confirms due to confusion they have never compared mixed profiles against the defendant.’ They also stated that ‘progress means there are no additional findings’. Then came this chilling line. ‘The lab refused to elaborate any further……’

The reviewing lawyer reported the following,‘I am concerned that the language used in the SFR appears to assert positive and ongoing actions when they are clearly negative. I have requested the OIC to obtain an email from the forensic officer confirming the phone communication and what is implied in the SFR…..he confirmed that the report was misleading.’

The CPS, underfunded, overworked and creaking at the seams comes in for a lot of criticism. In this case the reviewing lawyer deserves a herogram.

Yesterday when I offered no evidence I explained to the judge in detail what had happened. I will never forget the look of horror on his face. There will be a thorough judicial investigation.

And yesterday SKY NEWS reported that a private forensic laboratory had ‘manipulated data.’ What the hell is happening? I will tell you. In 2010 the government announced that the national forensic service (the FSS) was to be closed down and forensic analysis would be privatised. Let me be clear that the FSS has had its fair share of cock ups. But the government announcement prompted horror from professionals. The National Audit Office warned, ‘this could spark a crisis within the justice system.’ They were right. Soon the court of appeal will be swamped. Will someone, somewhere listen? I won’t hold my breath.

A Whitehall management disaster that could wreck Britain’s trade deals after Brexit

UKTI blog-online

Jazzy representation by UKTI of Britain’s export trade that belied the mismanagement of their contract

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If you were running a business would you employ people without checking how much you are paying them? Would you lose your documents for  outlining  your business case for a crucial contract? Would you also sign a deal that was  so complex – running to over 600 pages – without understanding what you are doing?

Of course you wouldn’t or you’d soon be bust.

This and more was done by a Whitehall agency in a botched up privatisation contract which allowed the contractor to rip off the government and the taxpayer and left the agency looking daft.

What is more serious is that the agency is UK Trade and Investment – the very organisation that  will be at the heart of advising British firms on how to capitalise on exports and encouraging foreign firms to invest in Britain – post Brexit.

While ministers have been flying round the world promising an exciting future for trade deals outside Europe – the body that actually has to do all the  nitty gritty work has been an embarrassing failure that couldn’t organise the proverbial p… up in a brewery.

The whole sorry saga was outlined in a report by MPs on the Public Accounts Committee which came out during the recess following a National Audit Office investigation. I also wrote about this  and another privatisation failure involving tax credits in Tribune magazine.

The firm which ripped off the department was PA Consulting who were asked to supply staff to provide specialist advice to exporters. One extraordinary fact in the report is that PA Consulting jacked up consultants rates by £142 a day – some 29 per cent – between the bid and the deal ..and UKTI did not even notice it.

The MPs said : ”

“UKTI displayed poor governance and did not keep proper records. It made a simple matter as complex as possible. It negotiated significant changes to the contract with PA when it should have gone back to the market. It pushed to sign the contract before it had finished these negotiations. All this was unfair to other bidders and left UKTI exposed to being exploited by PA.

“For its part, PA fell well short of the appropriate duty of care that we expect contractors to demonstrate when in receipt of taxpayers’ money; instead of looking out for its client, PA took advantage of UKTI’s poor decision making. It sold UKTI a service it is not clear it needed and failed to give the fair breakdown of its costs and profit that UKTI asked for.

“Instead, it used the negotiations to pass on costs to UKTI that it had said in its bid that it would bear, and to increase its profit from the contract while telling UKTI that its profit had not increased. Our inquiry has been hampered by the lack of proper records from all parties concerned.”

The MPs are demanding a forensic audit of UKTI as a result of this fiasco. I should say so or otherwise I don’t see British firms getting any meaningful help from this group of naive incompetents  when we do start having to negotiate new trade deals.

Thames Water: Unfit to protect our environment

 

Sewage around Marlow pc credit Environment Agency

Raw Sewage and foam around sailing boats on the Thames. pic credit: Environment Agency

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The record £20m fine for  Thames Water’s multiple pollution of the River Thames and its tributaries  with over 1.4 billion tonnes of untreated sewage shows  how badly the company was managed.

It makes the incident where the company polluted the Wendover Arm of the Grand Union Canal seem small fry compared to the damage the company caused to humans, livestock. wildife and fish across Hertfordshire,Buckinghamshire, Berkshire  and Oxfordshire.

Thames Water admitted 13 breaches of environmental laws over discharges from sewage treatment works in Aylesbury, Didcot, Henley and Little Marlow, and a pumping station at Littlemore.

It also pleaded guilty to a further charge on March 17 over a lesser discharge from an unmanned sewage treatment plant at Arborfield in Berkshire in September 2013.

The court at Aylesbury also took into account seven further incidents at sewage sites on the Thames in 2014.

thames waterWhat was extraordinary was the lax attitude of  top managers who ignored warnings from staff about failures in the system

 No wonder the judge Francis Sheridan said: “This is a shocking and disgraceful state of affairs. It should not be cheaper to offend than take appropriate action.”

He added: “What a dreadful state of affairs that is.

“Logbook entries reflected the pathetic state of affairs and the frustration of employees.

“Thames Water utilities continually failed to report to the Environment Agency despite (managers) being fully aware of the issues and reporting governance.”

He later said of the firm: “There is a history of non-compliance.”

Anne Brosnan, the Environment Agency’s chief prosecutor, said in The Guardian: “Thames Water was completely negligent to the environmental dangers created by the parlous state of its works. Our investigation revealed that we were dealing with a pattern of unprecedented pollution incidents which could have been avoided if Thames Water had been open and frank with the EA as required.”

But should  we be surprised? Thames Water is a remote multinational making huge profits – and a £20m fine – large as it is – will still hardly dent a £742m annual profit.It is also only a quarter of the annual dividend paid to investors.

And it’s owners include Kuwaitis, the Chinese, Canadians and other international foreign investors . What will they care if fish die in Oxfordshire and  humans running sailing clubs become ill.

They are now claiming it is better managed and promising tigher controls. But they won’t want to sacrifice the bottom line and have a captive audience who can’t live without water or disposing their waste.

If ever there is a case for the return of  public ownership Thames Water have made it today. They have proved themselves unfit to protect the environment.

 

 

Is George Osborne’s Northern Powerhouse about to hit the buffers?

George-Osborne

George getting out in time before the Northern Powerhouse runs into trouble

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My last post on the national repercussions of the Great Western electrification shambles has elicited some very interesting information about why Network Rail got into such a big overspend. (£1.2 billion on a £2.8 billion project)

If the information is accurate – and it seems to be based on some sound sources – it would suggest that George Osborne’s strategy to boost the North through better rail connections is about to come to a grinding halt because it has not been properly costed.

Through Tim Fenton well known for his caustic comments on the media oligarchs on his Zelo Street blog , I have become acquainted with an extraordinary obscure debate about the  safe clearances needed to install overhead electrification.

Ever since the electrification of the West Coast mainline in the 1960s Britain has had narrower clearances than the bigger gauge continental railways. We even had a derogation under the EU. But according to rail expert Roger Ford a serious blunder during the privatisation of the rail engineering which meant all the papers justifying the narrower standards were lost. So we now have no derogation because we lost all the paperwork to justify it.

Why this is important is that the higher clearances will add huge costs to ongoing rail electrification projects in every tunnel and under every bridge on the line. They will have to be higher margins between the top of the train and the wires.and the structures  They will  also have to raise the height of every planned pantograph- to protect people and staff coming into contact with it.

Now it appears that if each situation is given a special risk assessment it might be possible to get round the rules – but that will add to delays and costs and will have to be approved by British regulators – the Office of Rail and Road- even if we have left the EU.

As Roger Ford wrote in his December bulletin: “When all this was reviewed by the relevant British Standards committee it was agreed that, while the previous  2.75m clearance  was not justifiable as a minimum limit in a standard, it might be justifiable subject to a risk assessment.  So, according to Network Rail, electrical clearances below 3.5m are possible – with risk assessment.

” What’s really infuriating about this safety-by-diktat, is that the engineers concerned know that it is irrational and yet they go along with it. To paraphrase Edmund Burke, ‘the only thing necessary for the triumph of bureaucracy over common sense is that good engineers should do nothing.’

Great_Bentley_station_geograph-3890553-by-Ben-Brooksbank

Picture of Great Bentley station by Ben Brooksbank

Now obviously this is going to effect more lines than just the Great Western – and this is where George Osborne’s plans  turn to dust.

Already costs are rising on the Midland main line electrification from Bedford to Nottingham and Sheffield. With a critical National Audit Office report likely it is possible that electrification  will stop dead in its tracks at Kettering and Corby – nowhere near the real North.

And the Trans Pennine electrification – another Osborne  project -might stop altogether.

No wonder George Osborne is now going to be editor of the London Evening Standard – he will want to be well clear of the North. This is just a brilliant example of how our incompetent and overrated political amateurs  don’t properly assess what they are  doing.

And the public are  always the losers – in this case the travelling public.

 

Why millions of passengers will face years of overcrowded trains because of a staggering electrification blunder

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Electrification work Pic Credit:South West Business

overcrowded train

Today’s Vision of future travel: Overcrowded train Pic credit:BBC

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If you want to know what is wrong with the present state of  Britain’s railways look no further than a recent National Audit Office report into the mess that is the Great Western electrification scheme. I have written about this in Tribune

As reported at the time the cost overrun and delay totalled a mouthwatering £1.2 billion on a £2.8 billion scheme and led to the scheme being curtailed with delays to the Cardiff to Swansea electrification for up to five years and  similar delays for the electrification of branch services in the Thames Valley.

But the damage  goes much further than just the Great Western Mainline to Cardiff and Bristol electrification scheme, bad though that is, the National Audit Office reveals. It will affect train capacity hundreds of miles away

The electrification was supposed to be the catalyst for the release of rolling stock across the country improving train capacity and phasing out old stock that has been around for decades.

The NAO reports: Under the original plan:

Electric trains from Thameslink would replace diesel trains in the Thames Valley from May providing more capacity to reduce overcrowding

Thames Valley could then release diesel trains to the west, providing more capacity for passengers on the Bristol, Exeter and Cornish networks

West Devon and Cornwall routes would then release diesel trains to support service improvements on Northern franchise routes

New Super Express Trains from the Department’s Intercity Express Programme would replace ageing diesel High Speed Trains on the London to Swansea line cutting journey times from London to Cardiff

The London to Swansea route could then release the diesel High Speed Trains to address capacity issues on intercity routes in Scotland.

An additional fleet of diesel and electric ( Bi mode trains) capable trains recently ordered by the train company, Great Western Railway,  would be introduced in the south-west, providing more capacity and faster journey times on London to Plymouth and Penzance routes.

Now:

Diesel trains due to go to the west in 2017 will be retained until 2019 as electrification is completed and new electric trains are phased in

Passengers in the west (Bristol, Exeter and Cornwall routes) will now have to wait almost two years later than scheduled to see benefits such as more capacity.

Passengers on Northern franchise routes may have to wait an additional nine months as trains are retained in the west to protect services

Great Western Railway has also had to make additional orders of new bi-mode  trains to prevent the cancellation of services on busy Oxford to London routes.

The result according to the NAO will mean higher costs as diesel trains cost more to maintain, lower revenue because of lack of capacity and a bill for converting older trains to comply with stricter laws on helping disabled passengers that would not have been necessary if they had been replaced.

But it goes further than the NAO findings. The privatised rail companies- many owned by state railways in France, Holland and Germany – will be allowed to raise fares every year regardless- so they charge commuters more for inferior services but spend the profits modernising train services in France, Holland and Germany.

And they won’t care if the trains are overcrowded as they can maximise revenue. If ever there was a case for reforming the rail system and ending privatisation this is a perfect example.

Exposed: The Whitehall high flyer who stole ministry secrets to help Adam Smith International bid for overseas aid contracts

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Raja Dasgupta: pic credit Daily Mail and keyword suggestions

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This is Raja Dasgupta. He was a fast stream entrant to the civil service elite. He had a  good career . He started in the private office of  Alan Duncan ,the minster for international development in 2011.

He was promoted to climate change manager in South Africa in 2012 and then became head of the business effectiveness team in 2014 also in South Africa.

His Linked In profile says : “I have played a leading role on strategic business planning for DFID’s regional Africa programme, directly advised and worked with UK International Development ministers, and officially represented the UK during international treaty negotiations at the United Nations.”.

His Linked In profile which detailed his career now appears to have been taken down following  the exposure about his activities.

But in June last year he joined Adam Smith International – a British private overseas aid contractor ( annual income £130m) which relied on 80 per cent of its money from the Department for International Development – as a senior manager based in Nairobi, Kenya.

Now he has proved to be the catalyst that has brought down ASI Ltd – which has been effectively banned from bidding for any more contracts until the organisation has proved to the ministry that it has been completely reformed. Three senior founder directors, Peter Young ( in his youth a far right Tory), Andrew Kuhn and  Amitabh Shrivastava have resigned and the founder executive chairman,William Morrison, is to leave once the reforms are completed.

Three separate sources in England and Africa  (and the Mail on Sunday) have named Raja  Dasgupta as the civil servant who gave confidential ministry  information to ASI Ltd which gave them a competitive edge to bid for contracts across Africa.

One source said : “when moving to ASI in South Africa he took with him DFID country plans and country specific private sector engagement plans that DFID would then rank bids against, it set out specific priorities and specific sectors and markets that DFID wanted to focus on…This then allowed ASI to bid on contracts specific to these Southern Africa private sector engagement plans as set out and created by DFID and FCO.( Foreign and Commonwealth Office).”

Certainly the official findings of a DFID report – which does not name him – confirm this.

“The withdrawal by ASI is the result of serious concerns about the company’s behaviour:

  • ASI employees sought to make use of improperly obtained DFID documents shared within ASI by a former member of DFID staff.
  • The documents in question were draft internal DFID documents which contained information clearly confidential to the Department.
  • The documents were nevertheless shared widely within ASI, including to senior personnel, in full knowledge that ASI should not have had access to the documents.
  • This was done with a view to exploiting the material to ASI’s commercial advantage.
  • At no point did ASI or any of its employees question this or raise concerns with DFID.
  • DFID has conducted its own forensic investigation into these allegations. There have been serious questions over ASI’s ethical integrity. It is therefore right that ASI is taking action to address this.”

I tried to contact Raja Dasgupta by ringing his Nairobi office. There was no reply nor message facility to leave my name. I tried to contact ASI’s media team and did leave a message about whether Raja was still working for them. They have not come back to me.

Reprehensible as his actions were, this story has wider ramifications. He is not just a rogue  chancer or trader even if DFID seem to pin the blame on him. The culture exposed at Adam Smith International is a damning indictment of the British company. They knew they had access to confidential material which could be used for commercial gain. They wanted to make more profits in a company that already paid six figure salaries  and huge dividends to its top people. They were millionaires dealing in poverty. That is why – even if it is reformed – DFID are right to say there will be no “quick fix” which allows them to resume business next month.

But it also raises questions about DFID and its capacity to monitor what is going on. While the aid budget has gone up – the staff budget has been cut. So fewer people are monitoring larger sums of aid. DFID will not release the  full forensic report into what happened – either to the public or to the Select Committee for International Development, which holds the ministry to account. What have they got to hide.

This story began when the Mail on Sunday exposed the firm trying and failing to hoodwink the Select Committee on International Development by creating favourable reports of their work. It has now morphed into an example of how British private contractors can try and rip off the British taxpayer for private gain by any means they see as necessary.