Revealed: Faked bills and dodgy deals How Assetco conned auditors and ripped off London and Lincoln’s firefighters

london fire engine

A London fire engine then owned by Assetco


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.






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


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


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.






Something rotten in Ruritannia

Fillingham,Lincolnshire – the most unaccountable parish in England

Picture Credit: Ian Sykes
By David Hencke and Anne Hassan ( my daughter who has been training to be a journalist)

Updated: Since this blog appeared BBC Radio Lincolnshire have followed up the situation in Lincolnshire where some of the councils – who spend up to £140,000 a year – have said that they have prepared accounts but not submitted them to the Audit Commission. The effect of the local broadcast has been to highlight the councils’ behaviour in the county which had until then gone completely unnoticed.

Would you ever pay a bill without the slightest idea of where the money has gone? If you happen to live in 14 parishes across England you would have been doing this for up to the last ten years.

This extraordinary fact is buried in a  report by the Audit Commission on parish council spending (see ). It reveals that these parishes have levied a tax on all the householders in their area but have never produced any accounts of how they spent it for the last three years.

The worst place in England is the tiny parish meeting of Fillingham, near Gainsborough, where people have paid taxes- a precept with their council tax- for the last TEN  years and the meeting hasn’t bothered to produce an audited account of how they spent it since 2001.

Despite repeated warnings and rude letters from auditors the councillors there have obdurately refused to publish anything. They are not alone.

In Lincolnshire  there are five other parishes which have not produced accounts for between six and three years running. They are Wycliffe cum Hungarton Parish Meeting (six years);Little Ponton and Stroxton Parish Council (four years) and Fenton, Greatford, and Saxilby with Ingeby parish councils ( all three years).

Outside Lincolnshire there are eight parishes which have not produced accounts for three years or more, two in Leicestershire (Barleythorpe and  Burton Overy), and one each in Shropshire (Bromfield), Dorset (Church Knowle), Lancashire(Carrington), Suffolk (Ilketshall St Laurence),Warwickshire (Luddington)  and Cumbria (Newbiggin).

In addition 133 parish councils  which had submitted accounts have had them qualified for three years running and 567 have received qualifications this last year. This means their basic accounts are at best incorrect, at worst, a work of fiction.

Why should we care? The general opinion that these councils are so miniscule  that  the unreported cash is meaningless (Private Eye does  not even consider them for Rotten Boroughs).

Not so, these bodies – there are 9600 in England – raised a staggering £500m from householders last year.

As the Audit Commission says in its report: “Local electors are entitled to see how their parish council has spent taxpayers’ money. Those parish councils that fail to publish an audited annual return are not providing this most basic level of accountability.”

And it adds: “It is unacceptable that parish councils should fail persistently to produce an annual return, yet still be able to raise a precept.”

My daughter tried to contact three of the parish councils without  any success. Fillingham Parish Meeting’s chairman Mr Andrew Carter at Lake Farm was never available for comment. Mrs Mel Brown, the clerk at Wyeville cum Hungerton slammed the phone down with shock when asked why they had hot submitted accounts for six years . Ms Natalie Bowes, clerk of Little Ponton and Stroxton parish council numbers were unobtainable, despite being on a public website.

I began to  have sympathy with the Audit Commission in trying to chase up our money and whether it had been spent wisely. This is not a good advertisement for localism.