MP slams Lloyds-PwC ‘mafia’ for company theft

Parliament TV

MP Austin Mitchell revived his age-old reputation as the scourge of the accountancy profession by laying into PwC, Lloyds Bank and the ICAEW during a parliamentary debate on the receivership of a company in his constituency.

Mitchell succeeded in calling the debate last week to tell the story of what he called “the theft of a profitable Yorkshire company by the mafia”, according to the Hansard report.

He continued: “I do not mean the criminal mafia that we often speak of, but Britain’s dark-suited mafia, which in this case is represented by Lloyds Bank and PricewaterhouseCoopers, both acting in collusion and neither of them subject to police controls, because both regulate themselves.”

The saga goes back to the 2008 receivership and sale of Premier Motor Auctions...

Continued...

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Not a 'scourge of the accountancy profession '    30 thanks

tcatt31489 | | Permalink

As a sole practitioner I who actively oposes Austin Mitchell's political party I do not see Austin Mitchell as a 'scourge of the accountancy profession'. He may be a scourge of the big firms and their cosy relationship with the accountancy bodies but this is a very different thing. He is correct to bring these matters to public attention and in the long run this will be to the good of the profession as a whole.

Time for change's picture

Say what you like about Austin Mitchell but,    17 thanks

Time for change | | Permalink

from what's stated here, he's carried out his constituent's request as thoroughly as anyone could have asked for.

Regretfully, like many of us on here, even he's come up against a thunderous brick wall. For me this example has a typical rancid smell and I'm sure Mr. Mitchell would have the same suspicion.

What a peculiar place the UK is, when it comes to "justice" in the financial field. No one ever has their collar felt, do they?

mr. mischief's picture

over 300 failed banks in Europe    20 thanks

mr. mischief | | Permalink

Zero qualified audit reports.

Well done ICAEW, you've flung out some hapless member who signed a document on behalf of a client and it went wrong.

But the real scourge of the accountancy profession - the Big 4 fat cats who think of the fee and sign off any old drivel - will never get so much as a reprimand.

Why?  Because they run the ICAEW, that's why.

ShirleyM's picture

There is probably a lot more of this goes one    7 thanks

ShirleyM | | Permalink

Cheating, fraud, lining your own pockets .... some so called professionals are no better than thugs, but at least thugs don't hide behind a veneer of respectability or have the professional bodies as bed mates.

Tic - Toc?    9 thanks

redboam | | Permalink

What stands out in this story is the "Tic - Toc" project, recommended by LLoyds in concert with PWC. If this is not an abuse of process withing the Insolvency and Enterprise acts it very much sounds like it ought to be.

.    4 thanks

ireallyshouldkn... | | Permalink

This case was widely described in private eye. Smelt very rotten.

 

The Big 4    1 thanks

the_Poacher | | Permalink

Are they are a bigger threat than the Big 4 in the Agatha Christie book of the same name? intent on world domination without a thought for anyone else?

listerramjet's picture

remedy?    1 thanks

listerramjet | | Permalink

if the complaint is theft, then surely the appropriate authority is the police.  Mitchell seems to have given a long account covered by privilege, but has the chap who made the complaint raised this with the police?  Perhaps there might also be a case against the non-exec and the advice he gave.   What I find strange is the way an accountancy web site seems content to simply regurgitate the bilge from Mitchell under a salacious headline, but does not then dig down to the underlying facts.

The unfortunate case of the big 4    2 thanks

alan.falcondale | | Permalink

Why is this no longer a 'surprise' for anyone who is familiar with the dealings of these companies together with the other 'big 4' both on the high street and behind the administration mafia companies.

I wonder how many of the grunts were actually bulled up grads merely in place in order to provide a reason to invoice.

Remedy - response    2 thanks

Romanista | | Permalink

I think that perhaps Mr Mitchell is using that medium to highlight the circumstances because under the law and the way it is applied currently there would not be any real likeliehood of redress. 

Surely the finacial crises taught us something.  The people responsible for it would appear to be more or less untouchable despite having lined their own pockets very luxuriously. 

Perhaps when Mario Puzzo wrote The Godfather he should have widened his definition of who can steal more money with a briefcase than one hundred men with guns.

Mr Mitchell or Ann Robinson rant    1 thanks

The Black Knight | | Permalink

Sounds like an Anne Robinson rogue traders rant designed to reinforce the fact you can't do anything, once that belief has been established you have won the battle.

the loss making deal with the DVLA seems to have been the cause? Fancy doing risky business with the government. It is well known that they will pick the cheapest price and that in turn influences the need to employ illegals and evade/aggressively avoid tax in order to make the contract profitable.That is the advice that perhaps needs looking at.

If this was all planned as Mr Mitchel is intimating then it is fraud!!!!!! wake up plod, the insolvency service the BIS, Action fraud, used to be known as SOCA, Companies house, and all the other government filing agencies to discover they will not take any enforcement action because its not their Job.gov.

Wake up and smell the coffee Mr Mitchel MP. Who is in charge of all this?

It's a bit sad he does not know his own rules.

Hang on a Tic (Or ought that to be, Toc?):    3 thanks

Michael C Feltham | | Permalink

Surely, PwC and the other biggies divested their practices of their consultancy arms, quite some years back. Indeed, PwC sold off the consulting division to IBM.

The reasons for such compelled divestment were constant conflicts of interests and best practice and due diligence being properly exercised when the major practices wore three simultaneous hats: viz, Audit, Insolvency and Consultancy.

Yet here we have, once again, precisely the same conflicts of interests and the client's best interest being sacrificed on the golden altar of profit and venality.

Interesting further good reading.......

http://articles.economictimes.indiatimes.com/2013-04-28/news/38862562_1_...

 

 

 

 

Big 4    3 thanks

Rangith Athauda | | Permalink

The big 4 advice HMRC on policies. Very same advisers take up cases against HMRC to providing tax consultancy services to their clients.
No wonder big boys are doing well and looking after their own interest.

Insolvency Practice    4 thanks

Jack the Lad | | Permalink

This again raises the whole question of Insolvency Practitioners, their fees, their duties and responsibilities to creditors, indeed their whole ethics  ( or do they think  that is just a county east of London ?! ). The IPA and ICAEW and other accountancy bodies appear to have relinquished any form of control or censure over their members as regards IP.

ICAEW Liberty takers    3 thanks

Donald6000 | | Permalink

Just another example of "Chartered Accountants" and yet everytime I complain about this I am assailed by members of the Institute who claim that they had to work so hard to get membership, have become legends in their own lunchboxes and know everything there is to know about everything.

The most dreadful accountants I have had the misfortune to work with have all been members of the ICAEW. It's just a licence to do the wrong thing and get bags of fees for it. Why does this organisation keep doing things which give accountancy a bad name?

They claim to be the top accountants. In which case, why act like a bunch of crims? Outrageous, it really is.

 

 

the insolvency service    1 thanks

The Black Knight | | Permalink

The insolvency service and the BIS are the ones ultimately in control. It is they that decide cases of fraud should not be brought in the public interest even when these cases are reported by IP's they are rarely acted on. The problem of its not our job.gov is a national disgrace.

The IP could have reported suspected fraud to the insolvency service (the conflict of interest may have been that "we didn't see it as fraud" in case we didn't get paid or other cash deal).

If a fraud was suspected there would/should have been a SOCA report as well.

Whilst the professional bodies should be more active in maintaining the standards in the profession the failure to enforce the Law (rather than professional ethics) lies with the government.

This is an allegation of fraud, a matter in which the professional bodies have no jurisdiction. It is a matter for the police.......not our job.gov.

Surely they now have a duty to investigate whether a crime has been committed.

Looking forward to the Bain's case in January where I believe one of the defendants is the insolvency practitioner. That might lift the lid on the dark side of the insolvency world.

 

how does that work then Donald

The Black Knight | | Permalink

Donald6000 wrote:

Just another example of "Chartered Accountants" and yet everytime I complain about this I am assailed by members of the Institute who claim that they had to work so hard to get membership, have become legends in their own lunchboxes and know everything there is to know about everything.

The most dreadful accountants I have had the misfortune to work with have all been members of the ICAEW. It's just a licence to do the wrong thing and get bags of fees for it. Why does this organisation keep doing things which give accountancy a bad name?

They claim to be the top accountants. In which case, why act like a bunch of crims? Outrageous, it really is.

 

 

How does that work then Donald? PWC may have acted within the ethical guidelines and may even have taken all the appropriate actions and made the correct reports. The result would still have been the same.

What criminal offence has taken place by PWC (the MP has parliamentary protection against defamation whilst in the house) and what exactly do you think the ICAEW powers are?

If the police (or HMRC) are not going to prosecute there clearly is no criminal offence and the ICAEW are powerless.

Next was the ICAEW, which    2 thanks

ver1tate | | Permalink

Next was the ICAEW, which Mitchell suggested should be renamed the “society for the prevention of cruelty to the Big Four accountancy houses”. It did not investigate Elloitt’s claims and said he should seek a judicial review, which is now out of time.

The ICAEW should be the society for ensuring members act ethically. But like other chartered bodies seems merely to exist to prevent claims against its members.

not quite

The Black Knight | | Permalink

ver1tate wrote:

The ICAEW should be the society for ensuring members act ethically. But like other chartered bodies seems merely to exist to prevent claims against its members.

Not quite.

Has PWC actually done anything wrong here? ethically or otherwise.

I know that's going to upset the witch hunt.

As an MP Mr Mitchell should have some clue about how the country and the law's work, it is clear from watching the parliamentary accounts committee that they don't have the first clue.

Not persue, the throw some mud and hope it will stick method.

There are plenty of remedies available to his constituent but as far as I can see they are complaining to a body that has no powers in this regard.

If it is fraud then it is a criminal matter! = action fraud report and report to local police. S.9 fraud act, S.993 CA 2006 etc etc.

If it is a civil matter = find a good solicitor and sue for damages.

If it is a whiney "Miss look what he's done matter" = complain to the ICAEW

The ICAEW have already looked at this and decided they have no chance of getting a fine off the member concerned.

No one is going to answer what have PWC done wrong and what have the ICAEW done wrong. Why? Because there is no real case to answer !!!

 

jefflcbba's picture

Nothing has changed:

jefflcbba | | Permalink

No 5 is stll the worst.

http://visar.csustan.edu/aaba/heritage.html

How much is their brilliant work with the SFO and Tchenguiz going to cost the taxpayer?

 

 

Stupid is what stupid does    2 thanks

Signature | | Permalink

Lets have a look at the mistakes made by Keith Elliott

He used Lloyds Bank as his funder, why not spread the risk with other funders

He took an advisor from that bank as part of an agreement to lend instead of not borrowing or rebanking

Even worse one from a professional firm instead of an experienced business person I assume he interviewed several candidates and investigated their background?

Worse still he actually says he took advise from this person - was he not running the company?

He then lets the bank manipulate him into letting PWC and the bank carve up the company

Stupid is what stupid does !!

 

I see this and similar happen all the time - little sympathy I am afraid

 

Perhaps Mr Mitchell could look into Companies House?    1 thanks

Dave Watkinson | | Permalink

As a practising accountant we have all had situations when companies have taken the £10 route to dissolution and thus getting rid of debt, usually to resurrect themselves in a different guise.  Fine, unless HMRC object.  Companies House will then halt the process.  Anyone else object? Tough titty!  Companies House just ignores you.  A case of one rule for rulers and their lackies and another for everyone else!

Jack the lad    2 thanks

ver1tate | | Permalink

The IPA and ICAEW and other accountancy bodies appear to have relinquished any form of control or censure over their members as regards IP.

Could not agree more.

The Black Knight    2 thanks

ver1tate | | Permalink

Would selling a bankrupt's asset to a connected third party for half what had been offered by a creditor be considered ethical and in the best interest of creditors?

You clearly have never dealt    2 thanks

hammoa | | Permalink

You clearly have never dealt with the Police... "Sorry, sir. It's a civil matter! Take it up with your accountant and solicitor. We are too busy filing papers in triplicate to meet our annual quota of politically correct stop-and-search statistics, and the one cop left in Traf-Pol is churning out the speeding camera NIPs. We have a country to police don't you know? - Oy! Sicknote!, where are those donuts?"

Depends

The Black Knight | | Permalink

ver1tate wrote:

Would selling a bankrupt's asset to a connected third party for half what had been offered by a creditor be considered ethical and in the best interest of creditors?

Depends on who the creditors are. Which in this case was ?........

The creditors do have a say in all this you know.

If any thing wrong had been done then the insolvency service should have taken an interest, as it is their responsibility not a professional body with no statutory powers.

Do you really want them to waste your fees chasing PWC over byelaws (a battle they will loose) that should have been done by HM Government using the appropriate measures set out by parliament. Or are MP's just at the top of not our Job.com

Exactly    1 thanks

The Black Knight | | Permalink

hammoa wrote:

You clearly have never dealt with the Police... "Sorry, sir. It's a civil matter! Take it up with your accountant and solicitor. We are too busy filing papers in triplicate to meet our annual quota of politically correct stop-and-search statistics, and the one cop left in Traf-Pol is churning out the speeding camera NIPs. We have a country to police don't you know? - Oy! Sicknote!, where are those donuts?"

Exactly why these things are allowed to happen.

This civil service culture of not doing anything useful for mankind needs to change. It is a disgrace and why Britain is failing.

richardterhorst's picture

Dodgy dealings in the insolvency business? Yes.    3 thanks

richardterhorst | | Permalink

Interesting some of the defenses of ICAEW and the Big 4. Methinks those maybe employed or otherwise associated with them?

The main defense seems to be "they did nothing illegal". Most likely true but that does not mean ethical.

I had an experience with a client whom I advised should put themselves in administration. However the bank appointed a big accountancy firm to report that which I had already advised.  No choice to the company, no choice as to the fee and that they had to pay for it. Anyway after a 26 page report that same accountant was now transposed into an IP who promptly put the company into administration under instruction of the bank.

It screamed conflict of interest, it screamed unethical behaviour (They charged the company £24,000 for the report and got £15,000 fee for the administration) but no doubt it was all legal.

When I did my post graduate degree I had to attend an Ethical course as a required course. Thought it was a waste then but have since changed my mind. It should be compulsory for any member of a professional body, bankers and politicians. With a repeat every 2 years.

As an accountant myself sad that we often are seen by the public as bad as the bankers and politicians.

There should be a law which prohibits any IP to be a member/employed/associated with an accountancy firm and vice versa. But it will not happen.

daveforbes's picture

Does anyone have more details on what actually happened ?    1 thanks

daveforbes | | Permalink

"He advised creating a £2m account for a contract the company held with the Driver and Vehicle Licensing Agency that created a hole in the company’s finances, Mitchell told MPs."   -- what does that mean ? 

Lloyds agreed to cover the shortfall by increasing the overdraft limit to £3.75m, but only if the company was put into receivership under what it called “Project Tic” and was then sold into administration again in “Project Toc”.   -- what  ? 

ICAEW's powers    2 thanks

raj@accounts-tax.com | | Permalink

totally disagree with your comment that just because there is no criminal or civil case in place, the ICAEW are powerless to act. An example of this is when they discipline a firm or members if they were not complying with issues such as PII or CPD requirements. There have adequately qualified and experienced staff who are capable of making good judgements on whether their members have behaved or acted in good faith, and complied with all matters contained in the members handbook, such as maintaining good ethics, independence, etc. ICAEW on thousands of occasions have been accused of not being independent of the big 4 and on numerous occasions, their actions or lack of them have clearly demonstrated this. Clearly with the major bank crisis, if no audit reports were qualified, surely this in itself ought to have raised enough concerns to review the quality of the auditing standards and work carried out by big 4 firms, or for that matter, their dependency on the audit fees, consultancy fees, and receivership fees leading to clash of interest and lack of independence. Even where there has been proven cases of major shortfalls in the breach of ethics and standards, leading to substantial losses, these big firms have been let off with light smack, for them to then continue with whatever mal practices. If ICAEW wants credibility, and their vast majority of members (over 97%) are credible enough, then for the sake of the majority of members, they ought to learn to police themselves and dish out severe punishments for any major wrong doings by those minority members (even if they represent the top 4), for it is such high profile cases (where millions are lost by innocent parties)that devalues the ICAEW's and the majority of its innocent members reputation. To spend its huge limited resources on disciplining members for lesser matters, such as overlooking to update their CPD records is fine, but in all honesty, the ICAEW president ought to round up the most senior staff into seriously looking into serious concerns expressed, such as this one. If the ICAEW choses to wake up after such cases goes to the Courts, then by their lack of prior enquiry and action, the damage to the profession is already done. Everyone expects the ICAEW to be able to regulate its own members and member firms, without reliance on the Courts.

Certainly not

The Black Knight | | Permalink

richardterhorst wrote:

Interesting some of the defenses of ICAEW and the Big 4. Methinks those maybe employed or otherwise associated with them?

The main defense seems to be "they did nothing illegal". Most likely true but that does not mean ethical.

I had an experience with a client whom I advised should put themselves in administration. However the bank appointed a big accountancy firm to report that which I had already advised.  No choice to the company, no choice as to the fee and that they had to pay for it. Anyway after a 26 page report that same accountant was now transposed into an IP who promptly put the company into administration under instruction of the bank.

It screamed conflict of interest, it screamed unethical behaviour (They charged the company £24,000 for the report and got £15,000 fee for the administration) but no doubt it was all legal.

When I did my post graduate degree I had to attend an Ethical course as a required course. Thought it was a waste then but have since changed my mind. It should be compulsory for any member of a professional body, bankers and politicians. With a repeat every 2 years.

As an accountant myself sad that we often are seen by the public as bad as the bankers and politicians.

There should be a law which prohibits any IP to be a member/employed/associated with an accountancy firm and vice versa. But it will not happen.

Certainly not! just applying basic objectivity and an independent mind.

Why would that scream conflict of interest? the lender obviously had provision in their security to appoint an IP for what ever reason and that is what it did.

What has the IP done other than his JOB? The duty is to the lender/ creditors not your client (who also has a duty to the creditors)

Perhaps the client should have taken better advice as to the terms of his lending.

Ethics (independence, objectivity, integrity)  the two main bodies do have very strict guidelines, tests and repeated courses as standard. Of course you have to understand what each of those words mean to apply.

The MP is shouting theft (and perhaps only able to do so in the house) mainly because of his lack of understanding, demanding another pointless enquiry when his departments should have already have done their job and enforced the law.

Law cannot exist without sanctions and unfortunately the government fail to enforce those sanctions so we end up in a state of near lawlessness perhaps for MP's to bleet about.

Probably not Dave

The Black Knight | | Permalink

daveforbes wrote:

"He advised creating a £2m account for a contract the company held with the Driver and Vehicle Licensing Agency that created a hole in the company’s finances, Mitchell told MPs."   -- what does that mean ? 

Lloyds agreed to cover the shortfall by increasing the overdraft limit to £3.75m, but only if the company was put into receivership under what it called “Project Tic” and was then sold into administration again in “Project Toc”.   -- what  ? 

Probably not! It doesn't make much more sense in the extended drivel.

listerramjet's picture

Mitchell - the motive    1 thanks

listerramjet | | Permalink

AW is correct that Mitchell is a scourge of the accountancy profession - in that he likes to take regular potshots.  So his motive is fairly easy to guess.  But your main thesis I reject.  If a crime is committed then the criminals are certainly not untouchable.

A wee bit of a generalisation    3 thanks

Michael C Feltham | | Permalink

@Donald6000

 

A wee bit of a generalisation...

The vast majority of practising members of both ICAEW and ACCA are sole practitioners and/or small firms.

The culprits are the large firms, who for far too long have been hand-in-glove with government and Big Biz.

Naturally, co-ordinated and led by CCAB.

And it is in majority a progression of the from the FRC thru ASB and APB in cohorts with CCAB who fail to rectify the core problems.

Remembering, greater oversight and accountability were the core thrust of Cadbury; and executive restraint on remuneration (And stock options, golden parachutes et al) were expected to follow Greenbury.

Back in the late 1980s, when corporate insolvency became a growth industry, the top ten were seemingly in cohort: where one firm had held audit remit and a competing firm carried out the insolvency, no complaints were levied: mainly since it had become a sort of quid pro quo.

They were all tarred with the same brush.

After Enron and the US government invoking Sarbanes-Oxley, one might have hoped things would change and a new breath of real accountability and integrity might sweep thru the profession.

Considering Northern Rock and RBS as exemplars, then clearly nothing changed whatsoever: personally, I fail to comprehend how and why any auditor could have repeatedly signed off Northern Rock's and RBS's annual report and accounts as a clean going concern??

If anything, probity, due diligence and client's best interest have been utterly ignored in the dash for growth and profit.

 

Michael C Feltham - post above    2 thanks

Donald6000 | | Permalink

Don't worry, most of the practitioners I worked with who are qualified were at it as well - I know from the tone of the answers they gave me when I was working out people's tax, or in most cases never coming up with an answer. And they had the cheek to keep on billing these customers thousands. I am not an utter fool. I know that these practitioners were bent.

Their poor customers must have wondered what the hell they were being billed for.

 

Nothing

The Black Knight | | Permalink

Donald6000 wrote:

Don't worry, most of the practitioners I worked with who are qualified were at it as well - I know from the tone of the answers they gave me when I was working out people's tax, or in most cases never coming up with an answer. And they had the cheek to keep on billing these customers thousands. I am not an utter fool. I know that these practitioners were bent.

Their poor customers must have wondered what the hell they were being billed for.

 

Nothing you could put your finger on though!

OR

Perhaps you should have done something about it then!

Same old politics of envy then?

the FRC and insolvency? I am confused

The Black Knight | | Permalink

The responsibilities of the FRC are as below. I think they may have been trying not to hurt Mr Mitchell's feelings by saying WT_ has it got to do with us!

 

www.frc.org.uk/Our-Work/Conduct/Professional-oversight/Oversight-of-Audi...

 

 

 

depends

ver1tate | | Permalink

The creditors do have a say in all this you know.

I wish you would tell that to the AIB and the ACCA

This is Britain to -day    1 thanks

Roland St Clere... | | Permalink

This is yet another element of the third biggest heist in the history of crime,

(the first and second biggest heists beinmg the looting of Russia by the Communists from 1917 and the looting of Europe by the Nazis between 1933

and 1945).

Those believing that the law, professions, regulatory authorities, and politicians are on the side of the victims of this crime are deluding themselves. The law is written specifically to ensure such criminality is lawful and to enable the perpetrators to keep the proceeds of their crimes and escape any punishment..

As for the police, they are one of the biggest, if not the biggest, organised crime gang in the country. They are too busy covering up their previous crimes

to investigate this one!

 

Same old politics of envy then

Donald6000 | | Permalink

Same old personal abuse then. I don't need to be worried about Chartered Accountants. I am sufficiently academically qualified to be on a level with any of them.

I did do something about it; I left their employments and refused to have anything more to do with working with them. I don't like immoral and unethical practices in any profession. So tough.

 

An explanation    2 thanks

keithelliott | | Permalink

1.Irving Warnett (the PwC Director who arrived to be a non executive) advised (and then insisted to the Bank, Lloyds) that almost £2m of DVLA funds (and therefore cash flow) be separated and if not then they should look to their security.

2.The Bank provided the £2m, but then  immediately insisted that the company be sold "vigorously and robustly" by an AMA (accelerated mergers and aquisitions) process. ie put it into admin.

3.Unknown to me, Lloyds Development Capital (LDC) were in discussions to buy the company at that time , this was known as "Project Tick". LDC had for many years wanted to invest, but there had been no need for them.

4.I was given a PwC engagement letter to sign, giving the Bank authority to sell the company (as the client) and  PwC was to act for both the company and the Bank under this letter.

5.I refused to sign that and was advised to simply pay back the £2m, to get the borrowings back to "as was" before PwC arrived.

6.I did that firstly, with Endless LLP, but Lloyds demanded 50% of the company and a formal offer to put it into admin was made and a Newco owned by Lloyds/Endless would be formed to purchase the business from administrators.That was known as "Project Tock"

  I refused that as;

7.Secondly,  within days, I obtained another £2m from a competitor and a deal was agreed with Scottish Motor Auctions, who sent the offer to all parties and pleaded against administration. That should have been the end of the matter, but it was not. However within exactly 24 hours and again behind my back, that had been changed to one of putting the company into administration, Lloyds gaining a shareholding (via a warrant) and unusually, all "business critical" creditors being paid. This had been pre arranged by a pre-packaged administration.

8.With my back to the wall, I had no alternative but to appoint administrators as the Bank were going to withdraw funding.

9.This all happened after a sale of the business had fallen through in April 2008 for a considerable sum. Full due diligence had been carried out and PwC were the accountants acting for the purchasers.

 

DMGbus's picture

Cosy arrangements    2 thanks

DMGbus | | Permalink

I do not know if it applied in the case stated above, but it has been suggested to me that cosy arrangements might exist between banks and one or more "top six" auditor firms / liquidators.

 

The "cosy arrangement" has hallmark features (one or more) as follows:

  1. The bank gets more return on its debt than otherwise would be the case
  2. The liquidator firm charge higher than market rate fees
  3. The bank either get a kick back (commission) from their "pet" liquidator (who can afford this due to inflated fees) or are involved in cosy arrangements with the "pet" liquidator to benefit the bank
  4. There are two winners - the bank and the "pet" liquidator, paid for by the losers who are the other creditors and the business owner - there is third class of loser: liquidators who would charge lower fees to do the job right but don't get a look in due to the "closed shop" arrangement between the bank and it's "pet" liquidator
  5. Professional regulatory bodies are in denial that any of the above takes place, or alternatively will say that all rules have been complied with and everything is perfectly OK  therefore
  6. Conflicts of interest are either not properly investigated or alternatively if investigated and proven will be overturned on appeal (or fines will be reduced on appeal)

So, everything's OK isn't it?

I think NOT.

daveforbes's picture

@keith - thanks for the explanation    1 thanks

daveforbes | | Permalink

So on the vehicle registrations side of the business there was a timing difference between receiving the money from sales and having to pay the DVLA. This resulted generally in around £2M in the current account reducing the overdraft to £1.75M. It was then decided that this had to be kept separate (in effect saying you were just holding this money on behalf of the DVLA - much like an accountant or solicitors client account) so Lloyds simultaneously lent £2M and borrowed £2M, resulting in two accounts one with a positive £2M and the other overdrawn by £3.75M with no actual money changing hands. This level of overdraft then facilitated the nasty (or highly profitable) series of events. What % share holding did Lloyds end up with of the final business and how profitable is it (after tax and interest) ?

The explanation

keithelliott | | Permalink

You are correct Dave.

An auction house is entitled to use the funds as cashflow. In this instance, we had operated like that for 7 years and the contract did not require the funds to be held separately.

Lloyds will not answer the level of shareholding and will not allow an independent investigation by a liquidator to investigate all matters, which I have offered to pay for. They are insisting on the ability to choose a liquidator, thereby putting their own man in.   

This is just a small part of the cover up by all parties, wanting to kick this into the long grass.

I am unsure of the level of site profitability as it is  now part of a group, but the income has risen and the company has extended the site to cope with the level of business. 

bankruptcy

ver1tate | | Permalink

dependsver1tate PM | Thu, 21/11/2013 - 19:45 | Permalink

The creditors do have a say in all this you know.

I wish you would tell that to the AIB and the ACCA

What, No answer

jefflcbba's picture

Nothing has changed since this century?    1 thanks

jefflcbba | | Permalink

Keith

I had a vaguely similar experience to you-----same bank------different accountants (Grant Thornton).

KPMG were our auditors.

We had a LSE listing

IF you want to see what I am attempting to do about it, go to my blog on AccountingWeb:

"Mad Lemming"

I am saddened to hear it is still going on: saddened to hear it is still going on under Antonio Osorio, who I admire.

I will not tell you my view of Brian Pitman, who set the culture at Lloyds Bank, which I would like to believe AO had dealt with.

Good Luck!

Jeff

Depends on who the creditors

ver1tate | | Permalink

Depends on who the creditors are. Which in this case was ?........

The creditors do have a say in all this you know.

If any thing wrong had been done then the insolvency service should have taken an interest, as it is their responsibility not a professional body with no statutory powers. (But did not do so satisfactorily)

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This is a case where the creditor made an offer to buy the bankrupt's house for full value, and rather than raise a costly eviction order to evict the bankrupt's wife, offered to allow her to rent the property at a fair market value rent. However the AIB completely ignored this offer, and it was transferred to her at less than fair value, plus she was allowed some very dubious expenses which the AIB has stated that he is unsure about, and her solicitor has not yet given details of.

This case is by no means finished.

daveforbes's picture

@ver1tate

daveforbes | | Permalink

Just checking, your "This is a case" is not referring to the case in the OP but something different and also that you are referring to the AiB (the agency of the Scottish Govt) rather than the  AIB (Allied Irish Bank) or I am more confused than normal.

Then    1 thanks

The Black Knight | | Permalink

ver1tate wrote:

Depends on who the creditors are. Which in this case was ?........

The creditors do have a say in all this you know.

If any thing wrong had been done then the insolvency service should have taken an interest, as it is their responsibility not a professional body with no statutory powers. (But did not do so satisfactorily)

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

This is a case where the creditor made an offer to buy the bankrupt's house for full value, and rather than raise a costly eviction order to evict the bankrupt's wife, offered to allow her to rent the property at a fair market value rent. However the AIB completely ignored this offer, and it was transferred to her at less than fair value, plus she was allowed some very dubious expenses which the AIB has stated that he is unsure about, and her solicitor has not yet given details of.

This case is by no means finished.

Then you need to rattle the chains of government. Or persue a civil action. The ACCA cannot help you as it does not have any jurisdiction especially if the Insolvency service has already found no case to answer. As they appear to have done in the Op posters case as well.

No one seems to know who should be responsible for policing the system. MP's included. The Reality is no one is policing the system and therefore criminals can do what ever they want.

If the member has acted unethically or is in breach of professional rules then the ACCA/ICAEW can take disciplinary action against that member, and issue a fine or disqualify. HOWEVER if it is more serious than this CIVIL action or CRIMINAL then the correct and only course of action is the courts or Law enforcement via the courts.

Why don't you seek the advice of a reputable insolvency practitioner? There are some out there. (for clarification I am not an IP)

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