There is an excellent article today in the Independent (thanks, Stephen) about the massive contribution to the Tories from accountancy firms.
Analysis by The Independent has revealed that leading companies including PricewaterhouseCoopers (PwC) and KPMG, have given the Tories nearly £500,000 since the start of last year as they attempt to build ties with the party that has a double-digit lead in the polls.
The firms involved already hold government contracts worth millions of pounds between them. More consultancy contracts would be on offer for auditors and consultants as the party would be forced to grapple with making vast savings across the public sector should it form the next government.
The Independent reckons these firms already have £4 billion worth of government contracts. Of course not only are they accountants and auditors, but “management consultants”. The idea that private sector consultants always know better took full wing under Thatcher and was enthusiastically adopted by New Labour. I have always found the argument that accountants know best how to fight wars, run hospitals and teach to be complete tripe. As the Independent says:
A single KPMG consultant working in the Department for Children, Schools and Families costs the taxpayer £1.35m over three years, a parliamentary inquiry found.
That’s ten teachers. We could make a start to saving public funds by banning the use of external consultants.
But the Tories’ dependence on these people should shatter any illusions that the Tories will better control the financial services sector. The financial services sector will, as always, control the Tories,
Newly elected Norwich North MP Chloe Smith was of course one of those seconded from the sector – from Deloitte – to the Conservative Party. It is an instructive case. After university, Smith worked for two Tory MPs, Gillian Shepherd and James Clappison – the latter famously bought 156 trees at taxpayer expense to mark the boundary of his country estate.
Chloe’s theoretical “Transfer” to Deloitte – while still in fact working for the Conservative Party on secondment – appears to be not only a subvention from Deloitte in taking a full time Tory hack onto their books, but a deliberate attempt to build up Chloe’s CV by making it appear she had not only worked for the Conservative Party.
As the Times put it:
She describes herself as a “business consultant” but is vague about what she does for Deloitte. Perhaps this is because she is on secondment to the Conservatives’ implementation unit
http://www.timesonline.co.uk/tol/news/politics/article6719526.ece
There may be one problem for them from this subterfuge strategy – unlike the secondments and donations mentioned in the Independent article, and unlike other secondments from Deloitte, Chloe Smith’s secondment has not been declared to the Electoral Commission as a donation to the Tory Party.
That is illegal.
Deloittes were, of course, auditors to the Royal Bank of Scotland/Natwest before the massive crash. A comment from Praguetory on a post below argued that nothing was wrong with the RBS audit. Well, that is true, if you overlook the failure to flag up the incredible over-valuation of worthless toxic assets, and the failure to warn that the biggest crash in corporate history was imminent.
I posted on this before, and hugely upset a (usually very interesting) accountants’ blog called The Sharpener, which had given a super review to Murder in Samarkand. But the plain truth is that all the first class financial scandals you can name – Polly Peck, BCCI, Enron, Equitable Life, RBS, Allan Stanford, Bernie Madoff – had blue chip accountants who signed off regularly on accounts giving a wholly false picture.
In not one of those case was it the auditors who blew the whistle.
The entire Western accounting system is based on the compliance of morally corrupt little pen pushers. The fact that it is the company which chooses its own accountants and auditors, who have a vested interest in keeping their mouths shut and are never prosecuted when a scheme folds (along with the hopes and savings of millions of investors), is a scandal.
Our jails should hold less desperate social security scammers, and a great many more accountants.
Praguetory,
“Rather than coming out of Enron smelling of roses, Arthur Andersen’s role in that corporate disaster took down that 90 year old institution. Who was the auditor of the fraudulent Versailles Group? Are there any other examples of a FTSE 250 firm being audited by a small name auditor? And have you seen who audits the Labour Party?”
Rather than posting presumably rhetorical questions, could you spell out your argument as clearly as Craig spells out his, for the benefit of those of us that are not specialists on this matter?
Judging by your malicious exagerations in your second paragraph, I expect that you rather wouldn’t.
Please tell us. Just where does the fault lie for the financial crash?
I think the the most logical answer as to who Chloe Smith works for is the intelligence services.
If you take my belief that the political party in power is the executive of the Establishment/permanent unelected government the executive must be compliant. The executive must also have some support of the populace. If people feel they have no say then they may revolt.
So it’s very important for those in power to maintain the three party system and to control those members of each party. It’s also very important for the incoming party to have a large majority so that it can pass legislation with a big majority. As the economy dips further and people become embittered then some very unpopular measures will have to be taken.
How better to enhance a party’s image than with pretty young women. This I presume is aimed at bringing young people into political fold; the young are probably going to be the hardest hit in the recession and it’s the young who are more likely to go for violent revolution.
So are the ‘babes’ the answer? How many of the ‘babes’ will have odd employment histories? Have these ‘babes’ been groomed by MI5 not just to be MPs but to rise as high as possible so that they can carry out the wishes of the Establishment/permanent unelected government all the whist the rest of the country happily believes it’s living in a democracy.
Ingo – I think you will find that not all posters are down yet. Some of them, secured to lamp posts on pedestrian footpaths in the Cromer Road area, have slipped and are now at such a height that they pose a health and safety risk to the general public as the bottom of the boards are now at “head height”.
It is beyond belief that the height of lamp-post posters are being “whipped up” into some kind of vital piece of illegal practice on a thread which is attempting to draw out the possibility of actual serious criminal activity.
Who was the auditor of the fraudulent Versailles Group? Are there any other examples of a FTSE 250 firm being audited by a small name auditor? And have you seen who audits the Labour Party?”
Allow me to help. 1. Nunn Hayward 2. No. 3. Horwath Clark Whitehill
By the way, bribery and accepting bribes are criminal offences. If you were more significant, Craig, the defamatory statements that you have made without any substantiating evidence against both the auditors and the Conservative Party would probably be actioned.
Interesting item about the new Norwich North MP by Stephen Glover in yesterday’s in Mail:
http://www.dailymail.co.uk/debate/columnists/article-1203113/STEPHEN-GLOVER.html
“Chloe has not had experience at anything – apart from politics, and then to a very limited extent.”
praguetory
you can’t defame a political party, or a profession, silly.
anon,
a secondment isn’t paid – that’s the nature of a secondment. Otherwise it’s just a consultancy contract, which is quite a different thing. I fear you are rather grasping at straws.
You can defame an oraganisation like Deloitte – it has a legal personality.
You can defame an organisation like Deloitte – it has a legal personality.
It’s all about revenue streams.
Getting consultants into juicy positions in this or that government dept provides a secure revenue stream from public funds. Just as winning a PFI contract to build and run a school/hospital/whatever. The private sector has gazed hungrily at the whole domain of public services in this country for decades, and while Thatcher/Major laid the groundwork for PFI and other scams, it took a Labour government to throw open the gates and let the pillaging wolves descend upon health and education.
The question I always want to know is how much public money goes on the profits, exec bonuses and share dividend payouts of private companies contracted under PFI? I think we’d be stunned if we found out the actual figures.
Praguetory,
I see you’ve posted answers to your own questions. Now please state the significance of these answers and link them into a coherent argument.
Maybe I’m just thick, or maybe people like you wish to convince people like me that we can’t possibly understand the business of people like you. But I tend to find that most things can be understood, so long as they’re explained clearly enough. Even quantum physics makes sense.
You never answered my question. What is your angle on how tens of billions of taxpayers money ended up being given to those who gambled it away? Where was the Tory opposition to this, and to the policies that led to it?
Please note that these questions come from CLARK, not CRAIG. Yes, Clark is an unusual name, and I sometimes get called Craig by mistake. I see Craig got called Clive the other day, another name I get called occasionally. But I suppose that if you want to sue CRAIG because CLARK is asking questions, that’s up to you.
Clark – there is a term for what the misconceptions that Craig has put on display here and in his campaign. It’s called the audit expectations gap – google it. An audit is first and foremost a regular check of PAST results and position. Although audit reports do opine on the company’s ability to continue as a going concern, auditors aren’t supposed to act as an early warning system and they are not there to regulate the behaviour of companies – that’s the role that the regulator failed to do in many of the cases that have been listed.
To acquaint yourself with the limitations of the external audit process I suggest you look at the excellent results reported in Northern Rock’s 2006 annual report. How were they (or PwC their auditors) to know when that report was issued that the inter-bank lending (on which their business model was based) would dry up within months?
If the UK went bust should we blame the National Audit Office? Of course not. The fault would be Gordon Brown’s and his team. As you can probably guess, I could go on, but the reason I am contributing to this thread is first and foremost to illuminate the lack of basic knowledge Craig has into finance, banking, accounting and the accounting profession and knock down a few of the more obvious false premises under which he is operating in the hope that he will get himself up to speed before spraying around his poorly thought through catalogue of ‘ideas’ for change.
I can almost hear the ‘the whole system needs to change’ replies this post may provoke, but if you’re up for tearing down the current system, you’d better have a coherent alternative and it would be handy if those ideas came from well informed people.
I find it utterly baffling that a qualified, or at least an experienced, accountant can look at the unravelling of the credit crunch and not see a case for reform in financial audit.
The auditors fulfilled their duties within the letter of the law. But the law, or the regulatory framework, clearly needs to be changed. As it stands now, audit is almost completely pointless. It’s not worth the paper it’s written on. The idea of using a company’s audited accounts as a decision-making tool is ridiculous, for shareholders or directors.
Incidentally, risk management is an accountancy function that was clearly not working either. The extreme leverage of Northern Rock and its Granite obligations against vulnerable market margins was sort of tucked away as a footnote in the bank’s accounts and brushed under by the board of directors. While perfectly legal, it clearly fails to conform to any definition of truly professional behaviour.
The audit expectations gap needs to be closed, or we might as well give up on audit, because it does next to nothing, and costs a fortune. Hell, might as well nationalise it. It’s a Big Four monopoly already, and however badly they do, the FRC has made clear none of them will ever have to “leave the market” a la Andersen.
“I can almost hear the ‘the whole system needs to change’ replies this post may provoke” — anon
Indeed.
Didn’t I read that “Banks watchdog ‘role-played’ crisis at Northern Rock ?” three years before crash”
http://tinyurl.com/mcngvd
Wasn’t much help, was it.
Having listened to some waffled non sensical reasoning on Radio 4 this morning, on how this Government is not going to regulate the banks, but will try and publicise their actions should banks err in future, has not filled me with the required confidence, nor does it deal with bonus driven haste, shady derivative packets or tax havens, something everyone has conveniently forgotten about, bar Mr. Stanford in the US, nobody will get arrested here for defrauding the taxpayer, so what has this and any future Government learned?
answers on the back of a stamp please.
Thanks for pointing out a few lone some posters, July, unfortunately I was not with the crews putting them all up and noLabour’s activists must have missed some when taking them down.
SO CAN THOSE WHO PUT THEM UP PLEASE send me an email telling me exactly were these posters are…. thanks in advance.
July should you come accross one you have my permission to take it down, thanks.
” at July 31, 2009 12:36 PM”
Was that you, Praguetory? If not, who was it? Coherent argument is more difficult when the participants can’t be identified.
I certainly haven’t suggested “tearing down” anything, let alone the whole system. I do suggest opening the curtains and letting in the light. Any objection?
Rob Lewis: thanks for your clear post.
An auditor’s independence could be improved as follows: (1) prohibit the firm from auditing AND providing consultancy services to the client; (2) insist a third party appoints the auditor, perhaps on an annual basis.
Turning to the regulators. Generally I find these are unsatisfactory (e.g. FSA’s handling of Equitable Life and Northern Rock) because there is a reluctance to thoroughly investigate because if wrongoing is discovered then regulation has failed. Also, even when wrongdoing has been proven HMG is reluctant to pay out (see Equitable Life). A better alternative may be a compulsory insurance levy, as suggested by John Nott in his autobiography.
As strange as it may seem, I was never aware of what I would deem as corruption during the vast majority of my working career. I never fiddled my expenses, and the companies I worked for were actually very strict about maintaining a high level of integrity.
I think I first became aware of what I thought was certainly bordering on the bent about 15 years ago. My niece was a journalist working at the Premier UK Monthly Computer Magazine, and she used to test and write reviews about new kit. She was telling me about how she got wined and dined and flown all over the world courtesy of some of the main manufacturers. She was never passed any dodgy packets containing wads but she was treated exceedingly well by some of the companies.
So when she came and reviewed their products, rather than the companies that hadn’t treated her so well, she slagged their products off remorselessly – even when they performed better than the companies who hadn’t wined and dined her.
I made the last bit up.
I haven’t a clue whether she wrote what she was paid to write. But she couldn’t stand it for long, and left and went back to university.
Now, things have got considerably worse since then. Most internet websites are crawling with people giving the impression of just being ordinary punters who have been paid to slag off other company’s products as are even magazines like…
I know for a fact that internet review sites and magazines are full of blatant lies, and I know that the very biggest companies are the worst offenders and I know that some companies don’t do it at all, and their products sell, simply because they really are the best.
Some companies still have integrity.
Tony
I confess to a degree of corruption myself. During the final year of my employment, I was actually working very hard.
You see the company had changed, and I didn’t want to work for them any more. I nearly just walked out twice, I was so angry and frustrated about the way things had changed.
My management did their best to humiliate me , because I was so critical of their ridiculous decisions. They made a young colleague of mine redundant, because he criticised their idiotic decisions even stronger than I did. And he was technically completely Brilliant, far better than me – yet with a very similar skill set. I volunteered that they make me redundant instead of him – he wanted to stay and change the system – I had just had enough of having complete fucking idiots telling what to do and not do.
So they broke UK law by refusing to make me redundant instead of him.
And I thought YOU CUNTS.
So the management did everything to be absolutely horrible to me – hoping that I would just FUCK OFF without compensation.
So I had no respect for my management – just complete contempt. But I had enormous respect for the people within the company and outside who were dependent on my work.
So I continued doing my job to the best of my ability, but refused to get my hair cut
After 3 years I looked like Gandalf, but I thought this is not going to work
So realising that the hire and fire decisions were made by complete fucking bullshitting idiots, who judged the staff on the amount of work they were perceived to do, which included evaluating expense claims cos my job did indeed involve some travel, I decided to do something rather strange.
I continued doing all the travelling I needed to do to do my job, but I didn’t claim any expenses whatsoever. I paid all the company expenses out of my own pocket.
So when the next wave of redundancies came up, they got the impression that I was doing absolutely nothing, because according to the information they had re my expenses – I hadn’t travelled anywhere or done anything.
So when I got invited into the room to be given the decision, that they unfortunately had to lose me…I tried not to smile..
And went straight to the barbers and Chris said – Where the hell have you been?
Tony
This is confession time. The corruption was even worse than that. My immediate boss was desperate that I did not leave, because if I did – he would have to do my job (I did train him as best as I could – he used to work for me)
But I managed to get his boss, not him to do my annual review…
Now this guy new the score – he understood – how bent the Senior Management were and how they had broken the law by not making me redundant instead of the much younger guy…
So he did a fair annual review of me…
And it was totally complimentary – he had recognised how hard I was still working…
He said to me – if that goes up to Senior Management – you will stand absolutely no chance of being made redundant…
He then produced his other version of my annual report – which highlighted everything wrong I had done, and most importantly downgraded my overall score from something like an A+ to a D-
He said like in the Matrix
Do you want to sign the Red Version or The Blue Version?
I said Thanks Mate
Tony
Rob – I may name names at some stage but not right now. I am still trying to negotiate with the new company to accept the debt owed in its previous incarnation. Wish me luck.
But even if I did reveal his identity, I could guarantee that the senior Tory involved would spout some bull about “the overriding imperative to safeguard British jobs”, or about the tragedy of “being a victim of this economic crisis caused by the Labour government” etc etc.
If I can think up excuses this easily then you know that these professional liars can do even better. None of it would change the facts: that a company has dodged all of its responsibilities and the principals involved have walked away scot-free.
Ingo – I’ve emailed you about the only ones i remember seeing still up when i was leaving Norwich.
An open letter sent to the Lord Chancellor on July 1st (widely copied)
An Open Letter to Britain’s Establishment
The Norman-English Empire [sic] has enjoyed a better reputation than it has deserved, but it should be credited, at least from the time of Edward VII, with having a sensible regard for public opinion.
Crown immunity has long been used to secure and preserve that reputation by keeping inconvenient facts from the public. Because so much corruption has accumulated at all levels, the government cannot afford to be honest.
The first charter of his dynasty was granted by William the Conquerer in 1067 to the Corporation of the City of London, making it self-regulating. The current royals, his direct descendants, have had little choice but to continue to placate associations of powerful self-serving men.
Sir Kenneth Cork (deceased), a City insolvency practitioner and government ‘fixer’, was the driving force behind the creation of ‘instant’ livery companies in his term as Lord Mayor (1978-79). His autobiography makes it clear that the intention was not just to increase the influence of the City, but to make that influence impossible to resist.
William the Conquerer and King John had to defer to the combined might of City men and their own barons by granting them charters setting out privileges which were not granted to ordinary people.
Royal charters are anti-democratic. They almost always concentrate power at the top. Most of them (if my survey is at all representative) place the powerful above the law, even specifically excusing fraud (‘non-recital’ and ‘mis-recital’).
The government has never been a democracy, but as a weak monarchy it can plead duress and belief in a greater good.
The plea of duress carries substantial weight. Readers of the attached documents will see that men acting in association have semi-covertly dictated government policy for their own financial gain and, in all too many cases, to the detriment of the common good.
If the government’s belief that it was serving a greater good (stability) by allowing self-described ‘wealth creators’ to drive public policy might have been defensible in the past, this is no longer the case. A government which has enabled privileged people to ride roughshod over others will struggle to be respected.
Walter Bagehot’s ‘middle and lower orders’ are angry. We are angry that bankers were bailed out while small businesses have been allowed to fail and people have lost their homes through no fault of their own.
We are angry that MPs not only gave themselves allowances to cover both luxuries and necessities, but even then cheated the system.
We are angry that we have no economic security, long and often unsocial hours of work, an environment under constant threat and countless petty restrictions on our everyday activities.
The British people will now come to understand how their basic rights have been disregarded, not just through Crown immunity, but through royal charters which have been exploited by specific professions and commercial interests. At public expense. At great cost to the environment. Adding to the sum total of human misery.
The perceived greater good–based upon the greatest gain for and the least damage to the established order–is inferior to the common good which benefits everyone.
The revelations in the attachment are no threat to the monarchy. To the contrary, they can liberate it from its powerful supporters, allowing a new social contract.
What Can Be Done Now?
1. Our common goal should be increased security for everyone regardless of status. This can be done by forgiveness of debt and the secure possession of a primary residence.
2. People in positions of power should conduct themselves from this time forward to qualify for mitigtion in any amnesty or other resolution.
3. Amnesty can be based upon the admission of wrongdoing and appropriate expressions of remorse.
4. Restitution of or compensation for property which was obtained by fraud or other unconscionable manipulation can be decided by lay allocation boards.
5. Common law should be established as superior to statutory law and issues of ‘right and wrong’ settled by juries charged with giving reasoned decisions.
6. Never again should corporations be allowed to profit from activities which are detrimental to human life and the environment.
7. A progressive land tax would, over time, reduce inequality and increase everyone’s well-being without causing major disruption.
Our common fears have been based upon (1) the assumption of scarcity and (2) the knowledge of our personal vulnerability. The former can be shown to be false. The latter may best be dealt with by understanding that, despite every wrong and disaster we see in the foreground, the human race has become ever more concerned, more principled and more determined to address what is wrong.
Terrible damage has been done. There is now a fortunate opportunity and a moral obligation to mend and heal.
Suzon Forscey-Moore, BA, LLM
Cambridge
1 July 2009
N.B. This open letter and the documents in ‘The Corporation 1067-Present’ are being distributed in the public interest to academics, office holders, journalists, campaigners and (separately) other individuals in the UK and elsewhere. Along with the full research, it has also been circulated in hard copy and on CD-Rom.
http://bankruptcyandinsolvency.blogspot.com/2009/05/cork-insolvency-dynasty-story-of-four.html
Four generations of Corks all well embedded in the City and financial establishment. Knights of the Realm etc.
Cork Gully>Moore Stephens>Coopers & Lybrand>Price Waterhouse Coopers
Latter’s revenue niw £28.2 billion.
http://en.wikipedia.org/wiki/PricewaterhouseCoopers
Craig, I know this is offtopic, but did you know that there was a shortage of volunteer vote counters for the by-election?
http://bloodandtreasure.typepad.com/blood_treasure/2009/07/abstainers-from-the-process.html
If the Conservative party is paying the lady’s salary then her secondment cannot be considered a political donation. I think you ought to clear this up, Craig, as you will appear most unfair otherwise.
In my view Craig is doing a public service for highlighting the close ties between the Conservative party and large financial organisations, because it reeks of corruption of the democratic process.
It makes the UK Political system look nearly as corrupt as the US Blatant system of Lobbying where multi-millions of US Dollars change hands between large corporations and the people who have been elected. It is buying crucial decisions for large corporate profit and not in the interests of the vast majority of the people.
This point is quite fundamental to the principles of democracy and a healthy honest society.
Where I disagree with Craig Murray, was in digging up the personal history of Chloe Smith, and jumping to conclusions about the person he assumed she is.
I think its highly probable that he knows absolutely nothing about her and what her thoughts and motivations are.
He is trying to give the impression that she is just a young female puppet of the Establishment, yet for all he knows, she might have even stronger views with regards to human rights abuses, justice and honesty, than he does.
She may realise that the only way to really change the system is from within.
I hate prejudice in all its forms.
Tony
Chloe Smith failed to be upfront about her employment. This conjures up all sorts of negative ideas; the worst of which is that she may in fact work for the intelligence services.
Chloe Smith failed to be upfront about her employment. This conjures up all sorts of negative ideas; the worst of which is that she may in fact work for the intelligence services.