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

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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

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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.

 

 

 

 

Blog in 2017: The Grenfell tragedy has resurrected the madness of fire privatisation

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Grenfell Tower: The next morning Pic credit: Wikipedia

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This year my small news site received an extraordinary boost from a five year old post which appeared to have been regenerated by the Grenfell fire tragedy.

The Grenfell disaster showed the bravery of the London fire brigade in tackling such a grim scenario. Heroism and extreme tragedy side by side.

The post that got revived in the wake of the fire was the almost unbelievable story of how an Old Etonian baronet living in a semi in Wellingborough, Northants had got his hands on the management of London’s entire fire engine fleet for £2. It is probably still the most egregious act of privatisation in this country. He of course had to hand it back after a few weeks as he couldn’t run it.

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Sir Aubrey Brocklebank: Sacked by the London Fire Brigade; Picture courtesy Daily Telegraph

The public authority had been powerless when the dodgy private company they gave the contract to maintain the fire engine fleet- Assetco London – handed over  London’s fire service to the baronet as the directors realising the game was up and fled the scene.

The good news here – though it has never been reported  by mainstream media-  is the authorities in their own slow way are ensuring the perpetrators get their just deserts.

Grant Thornton , the auditors for Assetco, have been fined  £3.5m (reduced to £2.275m  after they co-operated with the Financial Reporting Council) and found guilty of no fewer than 12 cases of professional misconduct.  The details are in this blog.

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Assetco’s John Shannon stands astride two London fire engines

Robert Napper, the individual accountant  responsible for auditing Assetco was fined £200,000, reduced to £130,000 after  he co-operated  with the inquiry. He had already retired but I traced him to an Oxfordshire village enjoying his expensive wines. 

Now Assetco directors John Shannon, Raymond ” Frank ” Flynn and Matthew Boyle are to face a disciplinary tribunal by the Financial Reporting Council on January 15. The statement is here.

The press release reads: 

“The Formal Complaint contains multiple allegations against each of Mr Shannon, Mr Flynn and Mr Boyle. The Formal Complaint includes allegations they acted dishonestly or recklessly; that they breached the fundamental principles of integrity and objectivity in the manner in which they prepared the financial statements; and that their conduct fell significantly short of the standards reasonably to be expected of members of Chartered Accountants Ireland (CAI). The complaint covers a wide range of issues which pervaded AssetCo plc’s financial statements.

Some idea of what was going on has already been covered on this blog. Don’t hold your breath that the London Evening Standard will cover the story.

The original blog attracted over 2,500 hits when it was published. This year it topped my ratings with over 14,700 hits – showing that readers are interested in such issues.

Altogether over five years it has received some 20,000 hits.

The other stories have been posted on both my blog and byline.com – so the figures on my blog will be a small proportion of the number of hits on the stories.

The second highest hit from readers tells the heroic story of a London Midland train driver whose quick reaction in nine seconds prevented a commuter disaster near Watford. It  came out in an accident report and had over 5170 hits and can be read here.

ConservativesTwo stories about the plight of the Conservative Party also rated highly. A story revealing that membership of the Conservative Party had plummeted to 100,000 attracted nearly 5000 hits and one on changes to the Tory Party constitution attracted well over 1700 hits. The two blogs are here and here and on Byline here and here.

The real block to enormous boundary changes in Parliamentary constituencies is the DUP and this blog  and byline.com disclosed this last July. The links are here and here. 

On my site it got 2600 hits – mainstream media have finally followed it up last week but put the blame on Jeremy Corbyn instead.

Also popular was a blog on how secret influencers are bankrolling right wing  think tanks by the organisation Transparify . This attracted over 2400 hits on my site and the links are here and here.

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Dave Prentis, general secretary, Unison Pic Credit: Twitter

The attempt to force Unison to rerun the election for the general secretary Dave Prentis also attracted a lot of readers. Again the public hearings by the Certification Officer received no coverage in mainstream media except the Morning Star. All the blogs received over 1000 hits – the largest being  over 1850 hits for a blog publishing the statement of a former union official who accused the union of ” anti Democratic practices”. The link is here and here. 

The issue is not quite over as a judge is due to hear the opponent’s case again  for an appeal on February 8.

Three other issues made the top slots – the  bonus payments to top DWP civil servants who set up the hated Universal Credit payments which I also wrote up for the Sunday Mirror; the scandal of 3.3 million pensioners who will have to wait years for the state pension and the prospect of two Tory Lord Chancellors facing legal action for institutional racism over the appointment of judges and tribunal members.

All this has to show that there is a  public appetite for investigative journalism and the mainstream media are increasingly ignoring important stories by sticking to a narrow agenda. Much more to come in 2018.

 

 

 

 

Revealed: The bucolic wine buff accountant who let privatisation spivs fiddle London fire brigade

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Robert Napper: Pic credit: Twitter

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He has been fined £120,000 and barred for three years from his professional body for ” professional misconduct ” by the Financial Reporting Council in April for his part in allowing a now bust private firm to fiddle its income from London Fire Brigade.

But before this happened Robert Napper, a partner with Grant Thornton, one of the big accountancy names, had already quietly retired with his pension to live in the rural Oxfordshire countryside and become a pillar of the local community.

Grant Thornton will have to pay a £2.3m fine for their part in allowing Assetco to fiddle the books after the company took over responsibility for maintaining London’s 700 fire engines in a privatisation deal which went badly wrong.

The scheme had been pushed by the now disgraced former Tory chair of the London fire brigade, Brian Coleman, to save money and curb the power of the Fire Brigades Union. Coleman was wined and dined by the director John  Shannon and given a Christmas hamper from Harvey Nicks for his trouble.

The union all along protested about the way the company was run – but even they did not know it was fiddling and inflating the books with false invoices for claims that were never made ( see my earlier blog).

To be fair neither Robert Napper nor Grant Thornton made any money out of it – indeed the auditors ended up as creditors with unpaid bills. But they did allow enormous latitude to the directors of Assetco, John Shannon and Frank Flynn, to fiddle the books and rip off the company, the shareholders and ultimately the taxpayer.

So who is Robert Napper who got duped? He lives in East Hagbourne in South Oxfordshire near Didcot.  It is a village of 1882 people with  a mixture of  modern properties (where he lives)  and many  chocolate box cottages. It has a community shop and post office which Robert Napper is one of the directors.

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Village Cross at East Hagbourne. Pic Credit: Creative Commons Rob Stallard

He was a senior accountant with 23 years experience who as a partner – one of the top paid jobs at Grant Thornton –  and should have known better. The report by the FRC distinguishes between his role and junior staff who were inexperienced in handling Assetco’s accounts.

It also turns out that he is a serious wine buff – his Twitter account includes many pictures of fine wines- and the best food to accompany it. Among these are his Christmas 2015 selection ( see below).

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Robert Napper’s Christmas wine collection

He will have to pay the fine in instalments. I contacted him to ask him if he had anything to say about the scandal or whether he knew the whereabouts of the people who had duped them.

He said he could not comment because of legal reasons though he did say he was not appealing the findings against him.

As for John Shannon and Frank Flynn they appear to have fled the country – he thought one of them could be in Thailand. Anyone who knows where they are could  they contact me and I would be very grateful.

 

 

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

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A London fire engine then owned by Assetco

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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.

 

 

 

 

 

A modern morality tale: The decline and fall of Brian Coleman

Brian Coleman: Once high on the hog now out of politics

Brian Coleman: Once high on the hog now out of politics

Last week’s local elections  which saw  a massive revival for Labour in London – also witnessed the disappearance from political life of one Brian Coleman.

The once powerful chair of the London fire authority and domineering Tory figure in Barnet Council saw defeat at the hands of  the electors of Totteridge after being finally disowned by the Tory Party and forced to stand as an independent.

Four years ago Mr Coleman was riding high and he knew it. His extortionate expenses claims from the taxpayer were one of the highest  for a councillor in the country. His disdain and hatred of  the Fire Brigades Union and anything that London firefighters stood for was beyond any reason.

 His introduction of a hated parking system in the borough and championing of outright privatisation of everything that moved were well beyond  the pale – down to tearing down posters  from small shopkeepers opposing his parking scheme and even assaulting one of the people who objected to it.

 He seemed to revel in  the role of a Pantomine villain goading and bullying opponents almost wanting  the electorate to hiss  and boo him while centre stage.in whatever political drama he had created. Even Tory mayor Boris Johnson, not one to avoid the limelight, sometimes put his head in his hands at the mention of his name. No wonder he was sometimes called Mr Toad or worse.

Obviously there is a debate to be had between the Right and Left about the running of our public services, the role of unions but there was no need to show such contempt for one’s opponents and arrogance about using taxpayers’ money for expensive  and excessive taxi journeys running to hundreds of pounds.

 His defenders tended to call him a ” colourful character ” or  “a good Conservative” but this was beyond just human foibles. In a way  his demise is a modern morality tale that would not disgrace in another century a story from Chaucer.

 His final act on Twitter as he was defeated was to report that he was at home listening to arias from Puccini’s tragic opera Tosca. Here the heroine throws herself off a parapet in the final scene. While I would never wish such a fate for Mr Coleman it seemed a fitting dramatic musical  backdrop to the end of a political career that almost brought down the borough of Barnet for the Tories and may still do so after a by election at the end of next month.

 

 

Brian Coleman Convicted: A Tory bully and now a thug

Brian Coleman: convicted of assault. No moreexpense account lunches

Brian Coleman: convicted of assault. No more expense account lunches

On the day the purple spots of UKIP started to pop up across the English shires, one former prominent Conservative councillor got even more than just a  drubbing at the polls.

Brian Coleman, former mayor of Barnet, former chair of the London Assembly and chair of the London fire brigade, pleaded guilty to assaulting a  woman cafe owner who tried to  film him breaking his own parking regulations.

Rather than acknowledge that he was breaking the law and the hypocrisy of what he was doing, Coleman resorted to violence that might be associated with a common street brawler. He hit her and grabbed her breast in his attempt to snatch her Iphone..

The representative of the party of law and order ended up with a £1400 fine and restitution for injuries to Helen Michael. For all the gory details of the hearing and the remarkable silence from his fellow Tory councillors in Barnet, read the detailed  and tremendous account by Mrs Angry,   on her very popular  Broken Barnet blog ( http://wwwbrokenbarnet.blogspot.co.uk ).

Frankly after Mr Coleman’s attack on decent firefighters in London, his botched privatisation of the London  fire service through AssetCo and his rude attacks on other Barnet citizens, including a desperate single mum, justice was done.

I am sure it is only a matter of time before Chris Grayling, the justice secretary, feels moved to disown his behaviour. Or perhaps not . it is too embarrassing for  Tory words.

Eric Pickles: No privatisation of the fire service

Eric Pickles: Amazing no to fire privatisation

Eric Pickles: Amazing no to fire privatisation

Eric Pickles, the communities secretary,thisweek made an extraordinary statement for a Tory Cabinet Minister. He categorically ruled out the privatisation of the fire service in England. This has not been reported in any national newspaper or TV network.

Even more extraordinarily he made this statement in a very public place in front of  some 80 journalists from the Westminster elite body of lobby hacks as guest speaker  at a Parliamentary Press Gallery lunch. And only one, the questioner, Rob Merrick, a freelance parliamentary correspondent who writes for the Northern Echo and other regionals, bothered to report it.

Evidently such a statement is not regarded as news by journalists.

Yet it is significant. Mr Merrick had spotted that the government was using some obscure measure to  amend an act passed by the Blair government in 2004 to allow the core of the fire service – the  full-time firefighters – to be privatised.

The reason they were doing it was that Cleveland fire authority wanted to become a mutual – a half way house to privatisation – but had found it was illegal. The Tories ever keen to end the state look like ready to oblige.

First Mr Pickles denied that the government was going to privatise the fire service only encourage mutuals. But Mr Merrick came back and said the same change in the law could permit privatisation as well as mutuals. The in an extraordinary statement Mr Pickles said: ” If this is the case we won’t go ahead with the change. I repeat there will no privatisation of the fire service.” So he seemed to suggest that even Cleveland’s mutual plan could be dead in the water.

To me this was extraordinary . First one of the big privatisers in government had actually ruled out full-scale privatisation – not a normal statement from the Tory right.

Second the press -even on the old man bites dog scenario – thought this didn’t  merit any attention.

I know that no privatisation does not equate to no cuts – see what is happening in London and elsewhere now- and it does not stop some of the services being run by private companies. But it seemed that a very senior Tory had decided that they could not turn the whole system over to the private sector. Perhaps the Assetco scandal in London has made its mark. Perhaps they have decided that it is not worth a full-scale dispute between them and the Fire Brigades Union, led by Matt Wrack. But whatever a Rubicon was crossed and nobody reported it. But now he can held to account.