Price Waterhouse Cooper

[greenilex]

I know this is heresy, but should Carillion not have been bailed out and nationalised?

[Cockney Sparrow]

The best real name I've ever encountered was Wright Hassall (say it to yourself). They are actually very good!

https://www.wrighthassall.co.uk

This lot look scary, though I never dealt with them: http://www.goadandbutcher.co.uk
[/COLOR]

I think I missed an editorial pronouncement in Private Eye that they were ending the letters column with submissions signed on a similar basis - I regret that as they appealed to my (no doubt puerile) sense of humour.

Turning to the present situation - insolvency practitioners are accountants or sometimes lawyers, who of course come at a price and there are lots more of them than just the big 5 (or is it 4?). And it is always a costly matter to pick up someone else's business, make sense of it and sort it out (as it is to take over half finished building projects...). But I am sure it is a very bitter pill for creditors to swallow, that they are unlikely to receive nothing (or very little, and after a long time).

I spent my years working in the Insolvency Service and we were humble civil servants - the emphasis being on investigation for misconduct and criminality (cases with assets being shipped out to the practitioners). It is extremely exceptional for public funds to be used to continue a business but its just a manageable way to carry on paying for the services in schools, prisons, hospitals - the state would have had to pay the same, but find a different contractor at 1 or 2 days notice - impossible. And no doubt from the extreme political pressure they have approached private sector customers to see if they want to agree to fund payments for work after the liquidation date on the same basis - i.e. they would anyway. ( I doubt those private sector customers have stumped up cash in advance to cover the costs so the state is underwriting thst they will pay). This latter is to limit the bad news of small business failures and employee redundancies.

As to all these brave words about getting remuneration/dividends whatever back from the directors, shareholders, well - brave words indeed. Those guys have the money and can afford good lawyers. Check the situation in two years time and see what has happened I say. Obviously there is a real threat to the privatisation/contractorising of all functions of government* and the faction that has championed it (Jeremy Corbyn in the ascendant anyone?). That's why they have gone this far and not just left sub- and sub-sub contractors to consult their accountants about their bad debts and whether they can continue, and employees to submit their redundancy claims. This sort of stuff - the privatisation/government consulting/contracting agenda (and a lot more) has been covered for years in Private Eye, the news that they don't want us to read being the most relevant, in my opinion.
(* Forensic science service; Probation service and Armed services recruitment anyone?)

[Cockney Sparrow]

I know this is heresy, but should Carillion not have been bailed out and nationalised?

Absolutely not. I presume you have heard the phrase "privatise the profits and nationalise the losses" - which encapsulates this perfectly. Nationalising involves paying ongoing values for assets and goodwill (otherwise it would be illegal confiscation). The state should take the functions undertaken back into the public sector, or if this contract managing culture really delivers better value find other contractors.
Don't forget our children and grandchildren will be paying for the truly massive bailout of the banks after the sub-prime lending/Lehmann brothers crash which nearly bought the whole economic edifice down. And given the current tax structures that will largely be the "just getting by" and the poor who pay. Those construction and service functions ex Carillion will need to be executed by someone - so a different employer can and should be engaged.

[jean]

You will be hearing from my advisers, Messrs Soo, Grabbit & Runne.

Private Eye didn't even disguise it that much - it was Sue, Grabbit & Runne.

We haven't heard of them for a while, but the rather racially-stereotyped publishers Snipcock & Tweed are alive, if not very well.

[eighthobstruction]

....wondering if now some of those PFI contracts can now be renegotiated....

....google says: KPMG has 189,000 people working for it....

[LHC]

Speaking as a Credit Controller of many years these firms pop up every time a customer goes into liquidation. PWC, if I remember correctly, was born out of Coopers & Lybrand. Many of these firms started as local accountancy outfits but got swallowed up in merger after merger. I see the reports they send in after a liquidation in which, by law, the Liquidator must disclose his fees. Believe me, they are eye-wateringly large and way off my pay scale.

There will be some people rubbing their hands with glee over this latest one.

PWC was created by the merger of Price Waterhouse with Coopers & Lybrand in 1998. Both were long-established and pretty large accountancy/consultancy firms in their own right before the merger (PW dated back to 1849, and CL dated back to 1854).

[eighthobstruction]

>> FT:

"PwC’s role in the liquidation process of the collapsed contractor Carillion has come under scrutiny after it emerged that the auditor already has two separate, and apparently conflicting roles, including one advising the defunct company’s pension trustees.

Six PwC executives were appointed by the High Court on Monday as “special managers” in the liquidation process to help wind down Carillion, which became insolvent after building up £1.3bn in debts and a £587m pension deficit.

Deloitte and KPMG, rival Big Four firms, had been ruled out of the liquidation role because they were already Carillion’s internal and external auditors, respectively.

This left the government with the choice of PwC; EY, which advised Carillion on restructuring options before its collapse; or one of the smaller accounting firms — highlighting longstanding issues around the Big Four oligopoly and potential conflicts of interest this generates.

As special managers, PwC will work with the liquidator — also known as the official receiver — whose role is to secure the best possible outcome for all of Carillion’s creditors while ensuring that public services continue. However, questions have been raised about the appropriateness of PwC’s appointment in light of its recent work on two separate contracts involving Carillion.


Carillion’s pension trustees engaged PwC last year to advise on how to protect members’ interests amid mounting financial difficulties for the company. This contract, which is ongoing, has brought into question PwC’s ability to act with impartiality towards other creditors."<<

[eighthobstruction]

>>FT:

"The firm has a second contract with the government, one of Carillion’s biggest stakeholders. The Cabinet Office engaged about 50 PwC staff earlier this month to advise on contingency plans in case Carillion, one of the government’s biggest contractors, collapsed. Accounting experts estimated that PwC earned about £750,000 a week from this contract.

KPMG and Deloitte are limited in how much work they can take on given their audit roles with Carillion. Both firms have faced criticism for failing to flag glaring holes in Carillion’s business model sooner, and industry experts widely expect the UK accounting watchdog to launch an investigation.
" <<

[Cockney Sparrow]

If they were liquidators or administrator they would answer to creditors / the Court. As Special Managers they are directed in their actions, or parameters, by the Official Receiver. So they are not as free agents as Special Managers as they otherwise would be, and their job is to run the particular aspects of the business / assist in protecting any assets (or the value of them). The Official Receiver is provisional Liquidator until a creditors meeting appoints one (which could be the present manager). If no liquidator is voted in, the Official Receiver becomes "The Liquidator".
Its common for a bank to send in an accountancy firm to look into the status of companies where they are the major secured lender and if the decision is made it cannot continue without insolvency the same firm becomes the Administrator, or Liquidator.

[eighthobstruction]

>> Telegraph : "

The FRC would focus on the role of KPMG, which has audited and signed off on Carillion’s accounts every year since its inception in 1999 and has garnered a total of £29.4m in fees.

In Carillion’s last annual report the company described KPMG’s work as “a high quality and a very effective service” The company’s audit committee, in discussion with KPMG, concluded that judgments on revenue and margin recognition had been “reasonable”. The accountancy firm also approved Carillion’s viability statement, certifying it as strong enough to survive for at least three years.

The company’s stunning stock market meltdown, when it admitted it had overestimated revenues, cash and assets, came just three months later and its ultimate collapse this morning a mere 320 days.

KPMG said that its audits for Carillion had been conducted “appropriately and responsibly”. It added that its accountants had been involved in uncovering the shortfalls in company finances last summer." <<

[Serial_Apologist]

There seem to have been many questions before Carillion concerning whether or not auditing firms in general are doing adequate jobs when checking company accounts. Perhaps my favourite post-mortem outfit Lars, Will and Tess should be brought to bear on the problem as a whole.

[eighthobstruction]

....my goodness eighthobstruction gets to the heart of it....http://www.bbc.co.uk/news/business-44129678

[Serial_Apologist]

....my goodness eighthobstruction gets to the heart of it....http://www.bbc.co.uk/news/business-44129678

First they bring in the checkers; then they bring in the checkers of the checkers. After which the checkers of the checkers of the checkers will have to be brought in. The more complex you make a system the more checks and balances have to be inbuilt, and the longer the process of oversight, evermore sophisticaced IT systems notwithstanding, the more the likelihiood of gremlins in the best of all possible worlds. It all makes for a lot of non-wealth-creating jobs for the boys, and until we get rid of this non-trust-based, dog-eat-dog way of doing things, with so-called internal balances to prevent errors happening after they've happened, and make ordinary people informed, empowered, but above all INVOLVED enough to decide what we, our communities and environmental support systems need sustainably, it will go on wasting time, money, energy and resources.

See? As I'm writing this it's being announced that the E Coast Line is having to be re-nationalised, after all the efficiency-promulgating privatisations and cost-saving subcontractings to subcontracting subcontractors. When will we learn? NEVER is the answer while control remains in the hands of the billionaries ruling classes.

[oddoneout]

and the longer the process of oversight

There are times when the change in common usage of this word seems apposite.

[Serial_Apologist]

There are times when the change in common usage of this word seems apposite.

Oh, deliberate, of course!

(I could have added "control of all our fortunes, as well as theirs", but one knows when not to offer too much of a good thing).