Daily archives: July 29, 2009

Auditors Bribe Tories

 in The Election by | View Comments

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.

http://tinyurl.com/kuqmul

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.

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Tilting At Windmills

 in UK Policy by | View Comments

There is a theory in Holyrood that “King Nuke” Brian Wilson’s support for the proposed 550 MW wind power project on Shetland, is based on a desire to see wind power terminally discredited by this over-large scheme.

Of Wilson’s motives I have no view – he was a good man forty years ago at, and immediately after, Dundee University, but like so many his morals appear to have been skewed by contact with Tony Blair.

But wind power needs to generate in serious units like 550 MW if it is to have a real impact on the future of British energy policy. Interestingly, if the Viking project can really be built for £800 million as stated, that is only twice the cost of installing conventional gas turbine plant – and the gas turbines will burn their construction cost again in fuel inside five years, while the fuel for the wind turbines is free.

I confess to having little time for the anti-wind turbine lobby. There are environmental consequences to any energy generation, of course, inclusing wind turbines. All human activity impacts the environment. But compared to the environmental costs of extracting and combusting fossil fuels, the impact of wind turbines is much less damaging.

Yes, you have to join them with roads and cable ducts. Of course that has an impact on the environment – as does mining and smelting the steel, etc. But I am not a fan of closing down human activity altogether to end our environmental impact. Nor is there a great deal of evidence that birds suffer wholesale massacre. The construction will but scratch the surface of the Shetland wilderness – there are no dams flooding valleys, no mountains being moved. That the wilderness should remain pristine for the benefit of occasional sightseers from the cities – who actually never really visit, they just like to think it is there – is not a major priority.

So I hope Viking, and as many other wind projects as possible, speed ahead. Which is why I am furious at the government allowing the closure of the Vestas blade factory on the Isle of Wight. Any amount of public money is available to bail out casino banking young sharps in the City of London – even though it has put us in debt for generations. But it would be “Wrong” to help our too small stake in the wind turbine industry, according to “Lord” Mandelson.

Meanwhile, the taxpayer has been heavily subsidising the nuclear industry for my entire lifetime…

Returning to Norfolk has re-awakened my fury at the government’s abandonment of much of our coastal defences, as impractical and too expensive. Yet the East Coast is full of reclaimed land, around Kent, North Norfolk and the whole of the Fens. We were doing it for centuries armed only with picks, shovels and buckets. The obvious response to the government’s miserable policy is “tell that to the Dutch”. Infuriatingly, erosion on the Norfolk cost is being increased by the Crown Estate dredging sand offshore – to sell to the Netherlands government to improve their coastal defences.

There are offshore wind farms planned around here, including on the shoals off Sheringham. It seems to me that there must be a tremendous opportunity to combine major new coastal defences with renewable energy capture through wind, tide, wave and current. This is the kind of major and imaginative public works project, like building the Hoover Dam, which adds to the investment capital of a nation and provides jobs and economic activity as we enter serious recession.

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