Assetco: The negligent privatisation audit that has cost Grant Thornton over £20m in damages

Top accountancy firm loses appeal over failing to spot forged documents in huge London fire brigade privatisation scandal

A London fire engine -once owned by Assetco

The big four accountancy firms make a fat living from auditing the large number of private companies taking over public services.

But a Court of Appeal ruling last month suggests that if they don’t do the job properly they could now face huge damages claims from directors of companies who were duped by their negligent auditing.

The Assetco saga has been extensively covered on this blog. It involved the sale and leasing of the entire fire engine fleet of London and Lincolnshire to a gang of spivs and fraudsters – who were last known to still be evading justice nearly a decade after swindling investors and conning the London Fire Brigade. The Fire Brigades Union also took up the issue on behalf of its members.

ban after causing fraud

A separate investigation by the Financial Reporting Council found Assetco’s chief executive John Shannon ” causing or facilitating fraud. He was banned as practising as a chartered accountant  for 16 years – a new British record – fined £250,000 and ordered to pay £300,000 in costs.

Raymond “Frank” Flynn (former Chief Financial Officer) for  banned from practising for 14 years and Matthew Boyle (former Financial Controller) for 12 years. Additionally, £150,000 and £100,000 respectively have been imposed and they share paying  part of the £400,000 costs bill.

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. ( Napper was fined £120,000) Neither Grant Thornton nor Mr Napper made any financial gain out of the scandal. The accountant took early retirement and now lives in a bucolic Oxfordshire village developing his hobby as a wine buff.. See here.

Now the Abu Dhabi directors of Assetco who took over in 2011- straight after the London and Lincoln operations collapsed have successfully sued Grant Thornton for £22m and their case has been upheld by the Court of Appeal.

The first trial lasted 20 days, involving extensive evidence from factual and expert witnesses and consideration of a large volume of documents and of 877 pages of written submissions as well as oral submissions.

Grant Thornton appealed but lost the case. The court was told that if Grant Thornton had audited the accounts properly they would have found evidence of forged documents which inflated the value of the firm.

Fraudster John Shannon when he was boss of Assetco

The court were told Mr Shannon and Mr Flynn told GT that the “unitary payments” due under the London Contract had increased by nearly £47,000 per month (£564,000pa) from April 2009 and produced documents to establish it. The statements were dishonestly made, and the documents were forged. It was only on the basis of these alleged payments that the London Contract appeared to be profitable.

Grant Thornton argued unsuccessfully that they couldn’t be responsible for all the losses. The judges found in the company’s favour.

The Financial Reporting Council did pass its findings to the Serious Fraud Office but so far it appears nothing further has happened. Mr Shannon has thought to have moved to Thailand while Mr Flynn remains in Northern Ireland.

The most important development is this judgement could form a major piece of caselaw if any other major accountancy firm does not do its auditing job properly. It is a big shot across the bows of the big four accountancy firms to be more diligent.

Government concede victory to unions over pension discrimination for over 4.1 million public sector workers

Stephen Barclay, chief secretary to the Treasury. Pic Credit: gov.uk

Judicial review forces ministers to open negotiations and defer major changes to pension schemes until 2022

Steve Barclay, Chief Secretary to the Treasury,chose a heavy news day today to slip out an announcement that the Treasury had finally given way to the courts and dropped pension discrimination against 4.1 million workers in Whitehall, the NHS,teachers, prison officers and firefighters and ambulance staff .

This came after losing legal battles to the FBU firefighters union, the GMB, the PCS Whitehall union and the Prison Officers Association over what was seen as age discrimination over cuts to their workplace pensions.

The announcement means that terms offered to staff will revert back to the original position – and that includes a lower retirement age – until 2022 and everything is up to grabs during fresh consultations.

£2.4 billion in pension surpluses

It could also mean that some £2.4 billion at present held in pension surpluses, particularly in Whitehall, may have to be redistributed back to the workers in reduced pension contributions or better benefits.

The sting in the tail is that the government want the costs of the victory won by the FBU at the Court of Appeal – which scrapped a discriminatory system that put younger people employed at a disadvantage – should be taken out of the pension surpluses.

The story of the FBU victory appeared in an article in December on this blog.

Any such moves are to be fiercely resisted by the unions. As one GMB official put it: ” We are not going to accept we should pay when we won the argument and the government lost.”

“They knew they were wrong”

Rehana Azam, GMB National Secretary said: 

“It’s welcome that Ministers have in the face of sustained pressure finally U-turned on the pause they imposed on the drawing down of pension benefits. Their indefensible decision has left public sector workers facing financial hardship. 

“GMB has long campaigned for the lifting of the benefits pause the Government unilaterally imposed on our members without consultation. Hard-working public sector workers should now get what they’re owed. 

“The Government has had to make a U-turn because they knew they were in the wrong and were poised to lose the Judicial Review GMB and others had brought against them.  

“Any suggestion that it should now be public sector workers who now bear the costs of Ministers’ discriminatory errors will be fiercely resisted. GMB will not stand by if the Government intends to break its word and force public servants to pick up the bill for its own mistakes. “

The timing of the climb down is interesting as it comes a week before the court of appeal hears the case against raising the pension age from 60 to 66 without proper notice brought by BackTo60 on behalf of 3.8 million women demanding full restitutionb for the loswt money.

The GMB which led the charge over part of the fight is 100 per cent behind the 50swomen and their cause to get their money back.

My piece in Union News: How grass root trade unionists are backing 1950s women to get back their pensions

Earlier Times: Unison delegation with Jackie Jones, BackTo60 campaigner and expert on the UN Convention for the Elimination of Discrimination Against Women.

The success of the crowdfunding appeal by BackTo60 campaigning group to run a series of films exposing the plight of 1950s born women yet to get their pension has been partly due to campaigning trade unionists.

As well as getting a large number of small donations from many of the women themselves, two grassroots campaigners from the trade union movement managed to raise an astonishing £3400 towards the campaign.

The full story is in Union – News today.

Mac Hawkins from Unison and Louise Matthews from Unite – both women’s officers at their local branches – and strong supporters of BackTo60.

Mac Hawkins got support from the Wales region of Unison and Louise Matthews got support from Unite’s Equality Team and Unite Companions.

But the key thing is how much money they got from their local branches Mac Hawkins raised some £1400 from her Caerphilly branch while Louise Matthews got support from her Unite branch in Southampton.

Tireless campaigners

Both have been tirelessly campaigning to get money for the films which will form a key part of keeping the issue in the public eye before BackTo60 appeal the judicial review decision on July 21.

The one sad thing in this story is that at national level in both unions there appears to be a cooling off in financing the campaign. Before the general election, Unison and Unite contributed to the campaign, and Unison came alongside BackTo60 to deliver a petition to Downing Street.

This time the national unions are still supportive – but possibly because of the divisions within Waspi on what they want from the government, they may be holding back.

BackTo60 is sticking with full restitution and compensation for all the 3.8 million 50s women – while some other Waspi groups still have to spell out exactly how much compensation they want.

Big pay out for 3.8 million 50swomen will never happen – Tim Loughton MP

Tim Loughton MP

The All Party Parliamentary Group on Women’s State Pension Inequalities is to be revived and will try and persuade the Tory government to make a offer to the 50swomen.

Tim Loughton, Conservative MP for Worthing East and Shoreham, used his response to the Queen’s Speech, to say both he and Carolyn Harris, Labour MP for Swansea, East will approach ministers again to try and get some money. Mr Loughton was returned with an increased majority while Carolyn Harris saw her majority severely reduced.

If the deal is anything like the last one it is likely to cost some £2 billion and probably only cover a small portion of the women who may get £73 a week. Before the election Mr Loughton said as a condition BackTo60 would have to drop its legal action against the Department of Work and Pensions, according to the Daily Express.

Image
Tim Loughton’s appeal before the election

He used his latest speech to attack Labour for offering to spend £58 billion over five years to remedy the situation describing it as having ” disgracefully raised false hopes in vulnerable women. “

This is the full extract of his speech on the issue:

“It is an issue that featured rather disgracefully during the election campaign, and it is that of the so-called WASPI women.

Many on this side and, of course, on the other side have championed the case of the 1950s pension women who were hit disproportionately by those changes in the pension age under previous Governments. Many of us have been lobbying the Government to acknowledge that disproportionate disadvantage and to do something about it.

I will call on the Government again and, working with my co-chair of the all-party group on state pension inequality for women, we will continue to put pressure on the Government to acknowledge that and do something about it.

The Labour Opposition’s uncosted promise of £58 billion, which did not appear in their manifesto, disgracefully raised false hopes in vulnerable women.

That amount was almost half the NHS budget, and it was never going to happen. I do hope that we can come up with a realistic, deliverable, doable offer for those women who have suffered and are suffering disproportionately, because that is the right thing to do. “

His speech cut no ice with BackTo60. They are to continue pressing ahead with their application for an appeal in the New Year to get full restitution for the women with the support of the trade unions.

Unison, the largest public service union, are donating £700 to the cause on top of the £80,000 already raised.

Meanwhile I expect some more lobbying from Connect Public Affairs and Waspi to press for a reduced deal. Below is an example sent to me of an earlier lobbying campaign captured in Portcullis House in the House of Commons.

Firefighters and Judges win £5 billion pensions battle with the government

A victorious Matt Wrack points the way for firefighters to get justice Pic credit : FBU

The new government has suffered two major losses within days of winning the general election over economies made to workplace pensions in the public sector.

First on Monday judges won a victory which will benefit up to 1000 part time judges who lost out on their pensions when they moved from part time to full time work.

They claimed they while they were working part time they were being discriminated against by the government because they were denied pensions. The case had originally been thrown out by a tribunal because it was ruled ” out of time”.

However the Supreme Court, in one of the last judgments presided over by Lady Hale overturned this, and said: ” in the context of judicial pensions, a part-time judge may properly complain: during their period of service that their terms of office do not include proper provision for a future pension; and, at the point of retirement, that there has been a failure to make a proper pension available. “

The ruling could cost the government £1 billion.

Then a few days later after a long campaign by the Fire Brigades Union an Employment Tribunal ruled that following the government’s defeat at the Court of Appeal when current cuts in firefighters pensions were ruled as discriminatory the only remedy was that the pension scheme introduced in 2015 to impose such cuts should be scrapped.

The ruling will not only affect 6000 firefighters who would have had to save an extra £19,000 to offset such cuts but also applies to  schemes for the NHS, civil service, local government, teachers, police, armed forces and the judiciary. This will leave the new government with a £4 billion bill.

A triumphant Matt Wrack, FBU general secretary, said:

“Last Christmas, we gave firefighters the gift of a victory in the courts. This year, firefighters can celebrate knowing that their union has secured their rightful retirement – a gift borne of solidarity that proves what unions can achieve.

“The law has now changed and our FBU claimants will be entitled to return to their previous pension schemes. Legislation will need to be amended, but there can be no delay in implementing this remedy. Firefighters were robbed, and they must now be repaid.

“To the new Tory government, let me be clear. We fought tooth and nail against your attacks on our pensions and won. If you dare to try to pay for these changes by raiding the pensions of current or future firefighters, we will come for you again – and we will win.”

Ministers had spent nearly £500,000 fighting the case which basically left firefighters on a two tier system – with substantially worse conditions for the latest recruits.

In 2015, the Tory-Lib Dem coalition imposed a series of detrimental changes to firefighter pensions, which included a built-in “transitional protection” which kept older firefighters on better pension schemes while younger members were moved onto a new, worse pension scheme, which included a requirement to work until aged 60.

The victory shows once again that the courts can overturn decisions made by governments. Since this applies to workplace pensions rather than the state pension. sadly it is not a parallel case which would bring justice for the 3.8 million women born in the 1950s who have had to wait up to six years for their pensions. But it is another reason for them not to give up hope that they can convince the courts of the justice of their cause.

John McDonnell explains the Labour pensions offer to 50swomen over more than tea and sympathy.

John McDonnell with Azhar Ali, Labour candidate for Pendle, explaining the offer to some of the women

For those who are following the fight by all groups to get compensation for 3.8 million women who have waited up to six years for their pensions, here is a detailed video with John McDonnell, the Shadow Chancellor on how he intends to implement the £58 billion package

There are a number of new points revealed in this video.

  1. Labour is looking at offering both a weekly payment and a yearly lump sum depending on whether the women would like it.
  2. The implementation of the plan would begin as soon as Labour enters government.
  3. Labour has already talked to Whitehall civil servants so they can work up the scheme immediately Labour gets into office.
  4. Every woman will get a letter to prevent the previous debacle under successive governments where women did not hear of the offer
  5. He discloses he has talked to Michael Mansfield, the QC, who is drawing up the appeal for BackTo60 who are seeking full restitution to make sure it cannot be legally challenged.
  6. Labour ruled out means testing the offer because they found it would be complicated and expensive to do this and would delay payments. Bad luck economist Frances Coppola your idea wouldn’t work
  7. Yes it would mean Theresa May and Harriet Harman would get payments – but because it is taxable they will have to pay a big chunk back.
  8. Means testing would also break the principle that it is a national insurance based payment – based on entitlement not a benefit.
  9. He reveals the BBC had great difficulty understanding what the deal was about and why he had decided to pay it.
  10. Finally for tech lovers the end of the video he talks about introducing a national free broadband system – citing a small tech company in a rural area which devises new games – but can’t expand because of the poor quality broadband in its area. He points out this will be a boost for business.

On Byline Times: BackTo60 group to seek permission to appeal Judicial Review blocking compensation for 50swomen pensions.

Campaigners after the judicial review.

Tonight I have written a story for Byline Times disclosing that lawyers have decided to seek permission to appeal the Judicial review which rejected all the discrimination claims for the 1950s born women who face a six year delay in getting their pension. The story is here.

BackTo60 have also launched a £72,000 crowdfunding site to raise money for this action. The crowdfunder site is here. Already at time of writing it has raised over £10,000.

Labour’s top people start at last to move to compensate 1950s born women pension losers

In conversation at the private meeting. Left to Right: Moira Ramage, prospective Labour Parliamentary candidate for Paisley and renfrewshire South;myself; Laura Alvarez and Baroness Blower

Senior Labour figures are preparing to improve their offer to compensate 3.8 million women born in the 1950s who are facing hardship by having to wait up to six years for their pensions.

John McDonnell, the shadow chancellor, indicated that the party is now looking at a new offer as the general election approaches.

 He made the comment after a private meeting at Labour’s annual conference this week organised by his office which enabled leading figures from campaigning organisations fighting the women’s cause to pitch their case to senior people from the Labour Party.

The meeting came as the two largest trade unions affiliated to Labour, Unison and Unite, backed the case for full restitution for the women. Len McCluskey, leader of Unite, personally endorsed full restitution, in a tweet. The party is also discussing putting the offer in its general election manifesto.

Among the leading figures at the meeting were Laura Alvarez, the wife of Jeremy Corbyn: Andy Whitaker and Rory Macqueen respectively head of strategic communications and chief economic adviser at John McDonnell’s office; Mike Amesbury, shadow employment minister, and Fran Springfield, co chair of Labour’s disability organisation and one of the people drawing up the party’s manifesto. Mr McDonnell came to the end of the meeting.

The whole cast of #50swomen and their supporters at the meeting pose for the camera

The organisations represented included BackTo60, Waspi Scotland, Waspi Ltd and Waspi 2018.

 They were backed up by two women from Unison in Wales, Lianne Dallimore and Mac Hawkins who also addressed the meeting.

Jackie Jones, Labour MEP for Wales, also pressed the case for full restitution and explained how it come done by a special temporary measure through Parliament using the UN Convention on the elimination of all forms of discrimination against women (CEDAW) which was ratified by Margaret t5hatcher in 1986. This allows the money to be paid without amending the present pension age of 66 for men and women.

At present Labour’s offer is confined to backdating payments for two years from 66 to 64  for 1950s born women but no further compensation.

Labour is also waiting the result of the judicial review held in June where Michael Mansfield, QWC put the case for full restitution for all 50s women. It has now been announced it will report on October 3 – next Thursday.

Among other people who attended the meeting were Christine Blower, former general secretary of the National union of Teachers, who is about to be ennobled as Baroness Blower; Labour MP for Ipswich Sandy Martin; Labour MEPs Jude Kirton-Darling and Richard Corbett. Moira Ramage, prospective Labour candidate for Paisley and Renfrewshire South.

In Union News: Britain’s biggest public sector union Unison supports BackTo60

From Left to right: Unison’s national pensions officer, Alan Fox; Jackie Jones, Labour MEP for Wales; Sian Stockham, senior vice president Unison and Gloria Mills, national secretary, equalities,Unison.

At the TUC I was commissioned to write an article for Union News, the website that reports on all trade union action, about Unison’s decision to back the 1950s born women for the full restitution of their pension from the age of 60.

Unison were keen enough to support the BackTo60 campaign to come to Downing Street to hand in a letter to Boris Johnson, supporting their case which has been backed by a Parliamentary motion, started by Anna McMorrin, Labour MP for Cardiff, North and now signed by 190 MPs from all parties.

Next week Unison will be backing the campaign at a fringe meeting supporting the cause of the 3.8 million women at the Labour Party conference on Tuesday in the Metropole Hotel, Brighton.

You can read my article on the Union News website here.