Why these liars, cheats and fraudsters should be prosecuted for ripping off taxpayers and cheating London’s firefighters


John Shannon , former chief executive of Assetco. now exposed as a liar and fraudster, banned for 16 years from practising as an accountant and ordered to pay £550,00 in fines and costs


This month one of the most devastating reports into a privatisation rip off was published by the Financial Reporting Council, which regulates chartered accountants. It involves a saga much reported on this blog, the failed privatisation of London and Lincoln’s  fire engines, handed over to what are now revealed to be liars and fraudsters who ran Assetco at the time.

The three top directors, chief executive, John Shannon; chief financial officer, Frank Flynn; and group financial controller, Matt Boyle, could not even be bothered to attend a tribunal hearing to defend themselves against 27 allegations of misconduct. Shannon and Boyle are thought to be somewhere in South East Asia Flynn is in Northern Ireland

Between them they lied and hid millions of pounds ripped off from income paid by London fire brigade – the London Fire and Emergency Planning Authority – through a string of Northern Ireland companies and a consultancy to Abu Dhabi and falsified invoices from the London authority to boost the income of Assetco  duping shareholders so  they could live on the hog with large salaries.

The worst culprit was John Shannon  who has been 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. This was the same man who wined and dined the now disgraced former Tory chair of the London fire authority, Brian Coleman, while simultaneously ripping off the authority for personal gain.

His story included in a damning  FRC report  is a trail of dishonesty and improper financial gain for himself and his family, His first act  in 2008 was to take £1.5 million out of Assetco, ostensibly to invest in a Northern Ireland property company, Jaras Property Development. In fact the report found  the money was transferred almost immediately from the company to Mr Shannon’s personal bank account to pay off a loan.

To compound his action when Assetco’s accounts were prepared for 2010 he created a false invoice and lied about the use of the money to fellow directors and the auditors, Grant Thornton.

The second dishonest act involved Assetco’s take over of Graphic, a company that provided lettering for vehicles, in 2010. Mr Shannon claimed he was owed £685,000 by the company. No documentation was ever found to prove the debt but the money taken from Assetco was the exact same money owed by this son, Joel, to clear a debt with another business he was running. The report concludes this was a sham.

He then moved to fiddle the accounts of another Assetco business, Assetco Abu Dhabi, which was launched with a  £15m share issue. Included in the costs was a management fee to a firm called XYZ2 for £900,000. In fact there were no management services provided by this company, instead the money was used to pay off  interest owed.

Earlier Mr Shannon and his fellow directors Frank Flynn and Matt Boyle inflated the goodwill value of three other companies,UV Modular Limited (“UVM”), The Vehicle Application Centre Limited (“TVAC”) and Simentra Limited (“Simentra”). All three had been bought by Assetco and had huge operating losses, all became insolvent, yet between them they were valued at over £15m.

UVM which built ambulances and mobility vehicles for the NHS was ” in a parlous financial condition ” and collapsed. It got contracts from the NHS by offering cheap deals which meant it lost money.

TVAC built chassis and fire appliances was acquired in 2007 and went bust in 2008 and was an operational disaster. But it was obviously intended to service fire engines for London.

Simentra had just three staff and was supposed to provide management advice for emergency services.

The report found Mr Shannon was well aware of this yet  allowed the £15m for goodwill to be included as an asset in the company’s accounts.

Mr Shannon, Mr Flynn and Mr Boyle also inflated income from the London fire authority on purchasing equipment and  providing emergency crew training. All this led to inflated accounts which Mr Shannon claimed he had not seen but the report found that he had lied to them about his knowledge of what was agreed to be published in the accounts. There is an earlier report on my blog here.

The conclusions against Mr Shannon are stark :” While there have been no actual convictions, certain of the activities contained within the allegations could be characterised as causing or facilitating fraud. The Jaras and Graphic Allegations amount to fraud on AssetCo by Mr Shannon. The XYZ Investment was also a fraud.”

The report also says the level of dishonesty even put the fire fighters  work at risk. It is as well that Assetco  operations in London and Lincolnshre went bust before the tragic Grenfell fire or their services would have only compounded the problems.

Most of the misconduct by Flynn and Boyle was to assist in covering up rather than exposing the dishonesty of Shannon.

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.

The Financial Reporting Council has a memorandum of understanding with the Serious Fraud Office which could launch a criminal investigation.

The SFO told me that they were aware of the case but could neither confirm nor deny whether they would take action. In my view they should pursue these people – even if they have left the country- with the aim of securing convictions so they can spend some time in British jails.





Fire Privatisation was flawed says AssetCo Chairman in £50m claim

london fire engine                                                                      London Fire Engine: Pic courtesy i.newsrt.co.uk

The scandal over the privatisation of the vehicles owned by London and Lincolnshire  fire brigade is a never ending saga. First the company pulled out of the UK to concentrate on the Middle East  and then sold its London assets to a baronet for £2 only to have them taken over by Babcock in an emergency deal by the London Fire Brigade. ( see previous stories on this blog).

Now with a new interim report from the firm the real cost to the people who invested in a” couldn’t fail” take over of public assets is revealed in the balance sheet.

And astoundingly the chairman of the rump company, Dr Tudor Davies has now admitted publicly that the  PFI deals with the London and Lincolnshire fire brigades to take over and replace all the brigades’ engines were  based on a ” flawed business and financial model.. without any reasonable prospect of shareholder value.”

For the public record this is his signed statement in the latest interim accounts:

“The new Board has been considering claims to recover value for shareholders given the very significant decline in value following the four separate fundraisings amounting to £53m between 2009 and 2011 when, from the published accounts it appeared the Group’s financial position was satisfactory.

“As explained in the 2011 Annual Report, the massive restatements to the 2009 and 2010 financial accounts and the requirement for a Scheme of Arrangement subsequently showed a very different situation, and the differences arose from the UK businesses.  The funds raised between 2009 and 2011 had primarily been utilised in support of an apparently flawed business and financial model associated with the UK vehicle leasing and maintenance business, without any reasonable prospect of shareholder value.

“Following expert advice, the new Board is at the early stages of pursuing claims against those associated with the past for in excess of £50 million.”

His proposed launch of a £50m claim against dismissed chief executive  John Shannon and chief financial officer, Frank Flynn, among others who quit, may have little chance of success. As this blog has already reported Shannon is selling his mansion in Northern Ireland and was on the way to be declared bankrupt. Flynn’s fate is not known.

But the figures speak for themselves. The accounts reveal that by offloading the company’s UK assets to the baronet, Sir Aubrey Brocklebank, some £84m  of losses was averted.  Last August net liabilities were £51m for the two fire brigades and that  was after creditors had to settle for a £4.9m payment –  losing around 78 per cent of their investments.

Shareholders lost virtually all their money – when the shares were reduced to junk statues – some 300 times below their best value.

Shares are still trading in the remainder of the company which now is exclusively providing fire services in Abu Dhabi in the United Arab Emirates where it has made a £3m profit. One wonders what  Arab Investors would make of the shennaghins in the UK if they knew the full picture.

The lesson of this privatisation exercise seems very clear. It was bad for public services in London and Lincolnshire, bad for the banks and other big investors and even bad for the ” get  rich quick ” small shareholders who lost most of  their cash. Anybody who thought they were going to make a quick buck  out of the emergency services should think twice.

Exclusive:Going bust, the man who fleeced London Fire Brigade

John Shannon when he was riding high

There may be a God after all or at least an element of rough justice. John Shannon, the former chief executive of AssetCo, the company awarded a massive contract to service and replace London and Lincolnshire’s fire engines  is facing bankruptcy.

He is the man who wined and dined Brian Coleman, the former Tory chair of London fire brigade who is now facing assault charges, and gave Coleman a £350 Harvey Nicks hamper for Christmas.  He also got the notorious strike breaking contract to supply cheap labour to replace firefighters in the capital.

He brought AssetCo to the brink of bankruptcy leaving a trail of unpaid bills – one for the use of a personal executive jet  – and forcing backers of the firm to take a 78 per cut in their debts, including taxpayer-funded Lloyds TSB, now proud and reluctant owners of London’s fire engines. Small shareholders who were daft to bet on privatisation as a one way ticket to riches were ruined when they became worthless.

He lived a life of Riley claiming a salary of around £300,000 a year and paid himself dividends easily equal to that amount while the gravy train lasted. He was actually thrown off the company by his fellow directors after they discovered they were deep in debt and he tried to get a Bahrain bank, Arcapita , to take over the firm. When the dust settled they then discovered – on top of all that – he had taken out loans  of over £500,000 in AssetCo’s name on other failed businesses and overvalued property.

john shannon – now on a creditors’ petition list for debt

But it now looks as though events are catching up with him. A  journalist contact in Belfast has spotted that he is facing a creditors’ petition ( see picture) from people he owes money and they are moving to bankrupt him.

His Northern Ireland seven bedroom mansion set behind electric gates and in seven acres of grounds is up for sale  for £750,000. You can view this here ( http://www.btwcairns.com/property_specific.aspx?ID=18390) .  You can see a sideshow of  the extensive improvements he made  using money from taxpayers in London and Lincolnshire on the estate agents site.

In a way this is a great morality tale of our time. And it is not to the credit of the management of the fire authority who did nothing while AssetCo burnt. Indeed Coleman cosied up to him more than ever. And even top officials took the AssetCo shilling when they retired from LFB, hoping to make money out of the privatisation for themselves.

It will be interesting to see how James Cleverly, the new Tory chairman of  the authority, handles the rest of this contract. He appears to be ignoring the fact that it is in the hands of baronet, Sir Aubrey Brocklebank, living in a three bed semi. So far the dealings done by London Fire Brigade are no pin-up boy for privatisation  anywhere.

Exclusive: London fire company former bosses investigated as shares suspended

John Shannon , ex ceo, high flying and an alleged trail of AssetCo debts

Update: Judges are expected to approve tomorrow( wed july 28)) a deal allowing to dilute shares by 1000 per cent, raise fresh cash from foreign investors and pay off creditors so the company can save its Middle East operations and plan to sell off its London and Lincolnshire fire brigade contracts. Advisers, the current chairman,Tudor Davies, will also get big success fees for pulling this off.

Update:  Trade creditors- from American Express to Grant Thornton – today (Thursday) accepted a 23p in the pound settlement for over £1.5m owed -writing off over £1m debts and AssetCo subsidiaries -including London- accepted a  peanuts settlement (0.1p in £) for the £100m owed -paving the way for first step to save firm from total collapse but also pointing to sale of London and Lincolnshire fire contracts.

An investigation into the  financial dealings of  former bosses  of AssetCo, the private owner of London and Lincolnshire’s fire engines, is underway by the firm, shareholders have been told.

A statement from the company says: “”The Company has recently received details of allegations in respect of the activities of its former management team. The Company is investigating these
claims and following the completion of its investigation may initiate proceedings.”

The disclosures come as shares have been suspended after  the company sought yet another £14m from investors and massively diluted  junk status share price, last traded at a mere 1.75p. The move comes as Bob Neill, the fire minister, will be urging fire authorities across England to privatise their services and hand over their equipment , training and vehicles to  any private company that wants to make a profit from them.

Arcapita, the only bidder for the stricken company, walked after demanding auditors crawl over AssetCo’s accounts before it would talk any further about a take over. A statement was issued today saying it was not proceeding with the take over.

Worse, documents released to creditors reveal  up to £5m of unpaid bills – including unpaid debts for corporate entertaining at sports fixtures ( £31,000 )and the use of  private jets (£7000). The company blamed its former management and senior staff for leaving this trail of bills for high living, running up an unpaid card credit bill to American Express totalling £134,000.

Now one of the creditors, Bookajet, has told this website that it was left with unpaid bill of £7000 for a hired jet from John Shannon, the former chief executive, after AssetCo refused to pay it. According to a spokesman Mr Shannon appeared to have taken the jet for a personal trip and not on company business. AssetCo are not commenting about this but it looks like Mr Shannon is contesting it.

Bookajet say they have contacted debt recovery lawyers with the aim of seizing AssetCo’s assets.

A taxpayer owned Lloyds Bank fire engine

It has also been revealed by AssetCo and the London Fire Authority that all the capital’s fire engines have never been owned by either of them – they are the property of state-owned Lloyds banking group- owners of the Halifax and Bank of Scotland. The new difference is that Lloyds along with other London banks is now a creditor as well as an owner. There are massive unpaid loans  now totalling  some £30m since AssetCo was launched.

So firefighters are combating riots and blazes in vehicles courtesy of Lloyds Bank ,giving a new  meaning to the Black Horse’s advertising slogan ” for the Journey.” Lloyds are now both the owner and creditor to AssetCo London and promise not to auction them off to get their money back. London Fire Brigade issued a  statement assuring their fire engines are safe.

Two highly embarrassing documents  (see http://bit.ly/px5djv )have been sent to shareholders and creditors revealing the dire state of the company – and pleading with shareholders to accept a massive dilution in shares and creditors accepting less than a quarter of the money they are owed. Banks are being asked to reschedule debts.

Over £100m is owed by AssetCo to its subsidiaries,there are £17m in contingent liabilities to Lloyds, Barclays, Lombard and the Co-operative banks.

Grant Thornton, their auditors – the same company that missed the MetPro security company scandal in auditing Barnet Council’s accounts – are owed £267,000. EDF owed £18,000 in unpaid electricity bills, and even McGrigors, their solicitors based at the Old Bailey who are hosting creditors’ meeting for them, are owed £52,000. The Retained Firefighters Union, is also owed £12,000.

Even  the pension scheme for London staff is at risk if it is not bailed out – the company admit taxpayers will have  to pay out 90 per cent of the cost if it collapses.

Assuming the company is saved, the scandal is not yet over. Further litigation between the firm and John Shannon  over money  will come to court on December 5 as he likely to contest allegations of misusing AssetCo’s cash. Both Lincolnshire and London fire engine contracts are likely to be put up for sale. Only the interest in Abu Dhabi, where the firm works for the military, are likely to be saved.

London AssetCo will only be able eliminate £20m of its debts and be sold off with £30.6m debts. with Lloyds holding on to the fire engines. Lincolnshire has debts of £12m.

Anyone for privatisation after this debacle? Over to you. Mr Neill.

AssetCo crisis: Shares in doldrums as investors lose faith

John Shannon - forced to stand down. Pic courtesy Belfast Telegraph

 Assetco, the badly bruised owner of London and Lincolnshire’s fire engines, is still in trouble despite seeing off winding up petitions from Revenue and Customs and law firm, Nabarros, for millions of pounds.

Shareholders hoping to make a quick buck on a rebound have instead seen their investments fall below 10p a share despite attempts by stockbrokers to recommend the company as a strong buy. Shares have fallen to just 8.20p – the lowest so far.

One commented today:

” I remember posting only a few weeks ago that IMO 8.5p would be a fair price for these shares, but now I’m not so sure. Although I am sure that all the lackies at AssetCo will be posting on hear(Sic) to give all sorts of reasons why this is just another temporary blip and that soon the price will rocket on up! When will this day come? Never in my opinion”

However there are other disturbing signs in the wind – offshore investors like Bermuda Bank have been buying in – and Verdes Management, a company turn round specialist, are demanding a more ruthless management team.

 Recently Rock Nominess Ltd- a company formerly owned by Lord Ashcroft- but now owned by City stockbrokers, Sir Charles Stanley, has increased  its shareholding. The company’s  chair is Sir David Howard, former Mayor of the City of London, obviously hoping for a long term gain.

 Previous updates:

March 25: John Shannon, chief executive of AssetCo, has resigned after being defeated by other directors over the massive dilution of its shares  caused by the  placing to pay off debts and a huge Revenue tax bill. He still has a subsantial shareholding.

This followed two days of high drama with Shannon derailing the company’s meeting by refusing to vote for the extra cash, approaching Arcapita a Bahrain bank to invest, and then being forced by a court injunction brought by other directors  to let the £26m bail out through a share placing go through.

Shareholders are divided about this. Discussion on two investment sites can be shows this  and the man in charge of Assetco’s industrial relations is offering advice to investors, showing how nervous they are . See http://bit.ly/g6Qiqq and http://bit.ly/f2YTY7

March 18: Desperate AssetCo has had to raise another £10m -making £26m in all- from shareholders in a rush to pay creditors demanding their money in case it goes bust. Shareholders worried- London fire brigade should be.  Earlier update:since writing this it is reported that creditors will face delays in payments because of the debt crisis hitting the firm. See http://bit.ly/hxmAUh

The extraordinary crisis surrounding AssetCo, the private company which owns and maintains London and Lincolnshire’s fire engines, has taken a dramatic new turn with the decision of its three main directors to quit their posts.

John Shannon, the company’s founder and chief executive; Tim Wighton, chairman, and Australian Scott Brown, the recently appointed chief financial officer, are all standing down as part of a desperate move to regain public confidence in the company.

 The company has been forced to raise £16m from the stock market to reschedule its debts and fight a winding up order from Revenue and Customs after failing to pay a £4m-£8m demand for tax.

The company’s stockbrokers, Arden Partners, are confident that they will raise the cash – but it seems to have come at the price of  John Shannon losing complete control of the company that he founded. Only weeks ago he and his top directors were thinking they could become multi-millionaires by selling off the firm on the back of the London fire dispute and fire minister Bob Neill’s promotion of private companies to take over  the ownership and maintennace of fire engines across England.

Cadogan PR ,who handle the company’s financial press, confirmed the directors were going. They pointed out that Tim Wightman, the chairman, would have stood down at the annual meeting but was leaving early. John Shannon, who has a huge stake in the company will keep his big shareholding, guarantee the company’s multi-million pound overdraft, and probably stay as a  director. They did not know what Mr Brown intended to do. All are likely to be replaced by outsiders.

Shareholders , hoping to make a fast buck from privatisation contracts, are now seeing a massive dilution in their holdings and are speculating on the Interactive Investor website whether they are going to have to pay out lots of cash to the outgoing directors. They have now seen an amazing 80 per cent drop in the company’s share price and have no chance of it going back to its original high because of the massive dilution of shares.

FBU general secretary Matt Wrack said today:
“This has the feel of a company in meltdown.  But this is not any old company suffering from the economic climate.  Because of the contracts it has obtained from the London and Lincolnshire fire authorities, every person in London and in Lincolnshire depends for their safety on the health of this company.  If AssetCo goes down, the banks own all our fire engines.  Even if the fire authorities manage to buy the fire engines back, there will be no one to maintain them.
“All this unnecessary danger stems from a bit of political dogma which says that there is nothing the public sector can do which the private sector cannot do better.  We had no concerns about the maintenance of the fire engines while the fire authorities did the job themselves.”

He called for fire authorities to take back the maintenance of the engines. London Fire Brigade are unlikely to do this and Brian Coleman, the Tory chair, must be very upset to see John Shannon stand down.  No more wining and dining from him in Westminster or free £350 Harvey Nicks Christmas hampers.