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

CROSS POSTED ON BYLINE.COM

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. Neither Grant Thornton nor Mr Napper made any financial gain out of the scandal.

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.

 

 

 

 

 

The blog in 2015: Driven by Aaronovitch and Amy Winehouse

The unlikely combination of combative Times columnist  David Aaronovitch and the tragic pop star Amy Winehouse drove traffic to my blog last year.

I doubt either have met each other but in different ways it reflects the present obsession with controversial names and celebrity culture.

The Amy Winehouse blog is three years old and is a travelogue based on the fact that I found myself and my wife staying at the same tourist complex in St Lucia that acted as a retreat for Amy when she was chilling out from drugs. I suspect the film about her has driven the traffic but the blog got over 1500 hits last year – 50 per cent more than the combined total of the two previous years taking it to nearly 2700 hits.

David Aaronovitch’s critique of my journalism in The Times led to 3537 hits when I decided to respond – though it was eclipsed by my critique of Dominic Lawson’s take on the Leon Brittan alleged child sex abuse scandal which attracted 6447 views.

Interest in the case of child sex abuse survivor Esther Baker was reflected in two high scoring blogs- at 2674 for an analysis of the challenge facing Staffs Police in investigating her case and 2096 when the first arrest was announced.

The scandal over former justice secretary Chris Grayling seeking contracts from the despicable Saudi Arabian justice system – which this blog  and Tribune broke- was a big highlight – with 4250 hits when his successor Michael Gove faced court action and 2795 when the story originally broke.

Otherwise the biggest hits were reserved for the attempt to get rid of the Speaker, John Bercow, on the last day of Parliament – with 3933 on a piece criticising William  Hague’s botched action  in changing the election rules and 2497 on the midnight email to MPs from Julian Lewis MP which alerted everyone to the dodgy deal.

The most controversial blog has been my reporting of a Northern Ireland judge’s decision to compensate a paedophile for a campaign against him by one of his victims -comments were both virulent in their hatred and support for the judge.

Altogether the number of hits  recorded by WordPress on my blog – 127,725 were down from 182,000 the previous year. I also wrote fewer blogs as I was away some of the time. But this is not the full story as the blog is getting increasing additional traffic from Linked In, Facebook and is now run on Byline.com so I am not longer sure how many hits I am getting any more.

WordPress also records I have had hits from 155 countries. Over 80 per cent (107,000) is from the UK but there were over 7,700 from the United States and over 1000 each from Australia, Ireland and France. I have had just one hit from Iran, Syria, Armenia and the Turks and Caicos Islands to name but a few.

The blog’s rating on http://averypublicsociologist.blogspot.co.uk/ has gone up from number 62 to number 50 on the top independent bloggers This partly reflects my twitter following increasing to 8085.

For a small one man blog however it is gratifying that so many people are interested – given I do no promotion.

 

 

New year and a new defence for bloggers over defamatory comments

The law offering a new defence and a remedy for bloggers besieged by defamatory comments from unknown sources will come into force on New Years Day 2014.
The regulations highlighted in a previous blog on this site have now been approved by both Houses of Parliament and will form the first move under the Defamation Act affecting websites.
The law will also set out a procedure on how complaints should be handled and also put an onus on the person complaining to explain what grounds they have for a complaint.
The changes on the law are outlined pretty comprehensively on the Inforrm blog which also includes a comment from a sceptical blogger about how useful they will be.
The new law was welcomed in the Lords. In a debate Lord Lester waxed lyrically about them. He said ” my noble friend Lord McNally [the Lib Dem government minister] is like Moses in the splendid portrait, bringing down the tables of the law to the Israelites, in seeking the approval of the House to the regulations what he is doing is important not only in this country but throughout Europe and in the wider world.”
Other peers admitted they knew nothing. Labour’s Lord Beecham said “when it comes to the world of computers, information technology and social media, I confess to being an utter novice. At risk of being labelled a Marxist by the right-wing press or Conservative Central Office, I recall some words of Marx—Groucho, I hasten to add, and not Karl. In one of his films, which might have been “A Night at the Opera” but I would not swear to that, he is seen poring over a map and declares that a child of five could understand the map. He continues: “Bring me a child of five”. I am tempted to make the same request when confronted by matters of the kind encompassed by these regulations.”
At least one peer was honest!

Barnet blogger row takes website hits to over 75,000:Twitter following tops 2000

Interest in Barnet council’s appalling attempt to criminalise and censor Mr Mustard, a local blogger, took the total number of hits on this website to over 75,000 – they are now over 76,500.

 The blog attracted over 3150 hits last week – making it the second all time most popular blog. The only blog that has been more popular is one exposing how Tony Blair’s millionaire donors are now charging 6.5 per cent on their loans to the Labour Party – which has had 4258 hits. Thanks to local Barnet bloggers,Guido Fawkes, the Guardian, Liberal Conspiracy and the Taxpayers Alliance for highlighting the Barnet blogging scandal.

 The Barnet row even surpassed interest in the ever popular audit of Brian Coleman, Barnet councillor and chair of the London Fire Brigade, whose  greedy expense claims,   £100,000 plus council allowance payments and use of cheap subsidised housing has now attracted 2738 hits.

And  thanks to some 27 kind souls are now regularly subscribing free to the blog – so they can follow every word if they want to.

 Armchair audit is about to be revived – so watch for some new analysis of  the wealth of top people leading the charge to cut pay, jobs and services.  Meanwhile Twitter following has jumped over the 2000 mark – so thanks for that!