MP calls for DTI review of Heritage case

Labour MP Rudi Vis is urging the Department of Trade and Industry to investigate the conduct of the accountancy firms involved in the 1995 collapse of Heritage plc, which was chaired by his constituent, Jeff Lampert.

After his enquiries were rebuffed by KPMG, Vis wrote to trade secretary Alan Johnson last week asking him to set up an "independent and transparent" investigation into the affair.

Heritage has already been the subject of at least 17 complaints raised by Lampert with the ICAEW with regard to the company's administrative receiver, Grant Thornton.

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Comments

Similarities with Enron?

AnonymousUser | | Permalink

John

Allegedly in February 2004 KPMG wrote to the ICAEW stating that from information NOW available to them each company in the Heritage Group operated a seperate bank account.

KPMG have repeatedly refused to allow the ICAEW to show me the original of that letter. That is why my attention was drawn to KPMG's alleged audits. That is the main document that I feel should be released to me under the Freedom of Information Act.

To me there is little or no value in debts from insolvent companies. Whether or not they are subsidaries is not that relevant. Whether or not they can pay those debts is extremely relevant. There may well be similarities with ENRON, Safeways (another KPMG audit) and MG/Rover.

I understand that Dr R Vis MP has suggested that all companies that show inter-company debts as an asset on their published Balance Sheets, should be required to publish audited accounts of those subsidaiies.

This suggestion could throw some transparency on accounts of companies where the public are invited to invest.

Jeff Lampert

Heritage case

premsikka | | Permalink

I have a number of observations on this case.

The DTI is unlikely to do anything as it is more keen to promote confidence in British business unless the stench of scandal is so strong that it has to be seen to be doing something.

The ICAEW rarely does anything about the incompetence of major firms who provide officeholders, money and other support. It is totally unfit to be a regulator and has no independence to adjudicate on disputes involving auditing firms.

The ICAEW is a regulator and all its reports, findings and related documents should be publicly available. Without this there is no way of assessing the nature of its decisions. Without the documents, there is no way of knowing how the ICAEW considered, weighted and filtered the evidence.

Auditor working papers should also be available to shareholders. They have paid for the work and should be entitled to see the work done. Anyone hiring a lawyer can see and even keep his/her files on the ground that s/he paid for it. Why should auditors be different? The claims of confidentiality only strengthen the stench.

Heritage case

AnonymousUser | | Permalink

Prof Sikka

Whilst I cannot disagree with your comments relating to the ICAEW "no prima facie case" (20 in the case of Heritage) style of regulation of the big 4; I do feel I have received substantial support from Westmisnter.

Most particuarly my MP Dr Rudi Vis MP, but also others such as Lord Nazir Ahmed of Rotherham, Alan Keen MP (and his group) and Austin Mitcell MP, all of whom have taken an interest in Heritage.

The Heritage case has changed the Law following the debate on 7th May 1999. It is no longer easy for Reporting Accountants to become Administrative Receivers.

In June this year, following correspondence from Dr Rudi Vis MP, Gerry Sutcliffe MP (Minister for Employment Relations and Consumer Affairs) wrote in relation to handicapped employees (Heritage employed eight deaf and dumb machinists)in an insolvency situation:

"However, if a company goes into administration, where the aim is to rescue the business, it is open to employees' representatives, or employees, to negotiate redundancy arrangements with an insolvency practitioner, whereby employess who may be handicapped in new situations are retained as long as possible."

Prof Sikka, the above article raises some extremely important issues in relation to the auditing of companies, most particuarly those quoted on the LSE. It also raises queations in relation to the ICAEW's ability to deal with auditors who are the cause of such issues.

I have every reason to believe the DTI will now take this matter extremely seriously.

Jeff Lampert