The banker loving, baby-eating Tory party thread (regenerated)

[snowychap]

Mogg to be the new chair of the 'ERG'.

[peterms]

I suppose if there's one vaguely amusing thing to come out of the Carillion scandal, it's learning that the Carillion boss, who has presided over a shocking (and possibly criminal - we'll see) failure of corporate governance, was appointed adviser on corporate governance to Cameron and seems to have continued that role with May.

[peterms]

9 hours ago, Risso said:

I find myself broadly in agreement with peterms, creditors should be the first in line for whatever is left to be paid out, with banks and HMRC way down the list

Whereas what's happening is this, with people who have done work for Carillion in good faith being hit hard, and some of them will go under.

 

[snowychap]

6 minutes ago, peterms said:

I suppose if there's one vaguely amusing thing to come out of the Carillion scandal, it's learning that the Carillion boss, who has presided over a shocking (and possibly criminal - we'll see) failure of corporate governance, was appointed adviser on corporate governance to Cameron and seems to have continued that role with May.

I believe the cabinet office said he didn't continue that role under May.

He's called Philip Green. No, not that Philip Green but this Philip Green:

Quote

Carillion's former chairman Philip Green has been previously found in breach of trust by the Pensions Ombudsman.

Green was one of three to be censured by the body back in 1994 over their handling of wallpaper and home furnishings group Coloroll.

Coloroll chairman John Ashcroft was found to have abused his control of a company pension fund to inflate his pension benefits at the expense of fellow directors, according to reports at the time.

Michael Platt, the Pensions Ombudsman, found that Ashcroft and his fellow trustees - Philip Green and Eric Kilby, respectively Coloroll's managing and financial directors - were guilty of a breach of trust and of maladministration of the pensions scheme.

...more on link

 

[peterms]

36 minutes ago, snowychap said:

I believe the cabinet office said he didn't continue that role under May.

He's called Philip Green. No, not that Philip Green but this Philip Green:

 

So, statistically, there seems to be a close correlation between being called "Philip Green ", and shafting the people who work for you by not providing for their pensions while looking after yourself very well indeed?

[peterms]

Here we go.

Quote

Subcontractors lay off staff as Carillion crisis spreads

There was talk of a bailout the other day.  It seems what was being discussed was bailing out the company and the banks to whom they owe money, not the innocent victims like the staff and the supply chain.

The government should cover these debts, and recoup it at least in part by seizing all the personal assets of the directors (and probably the partners of the auditors as well). 

[chrisp65]

7 minutes ago, peterms said:

There was talk of a bailout the other day.  It seems what was being discussed was bailing out the company and the banks to whom they owe money, not the innocent victims like the staff and the supply chain.

The government should cover these debts, and recoup it at least in part by seizing all the personal assets of the directors (and probably the partners of the auditors as well). 

 

funny thing is, she paid the DUP a billion to save her own job

[Brumstopdogs]

[tonyh29]

22 minutes ago, chrisp65 said:

 

funny thing is, she paid the DUP a billion to save her own job

The money goes to NI  doesn’t it ? The way people present it suggest it went direct to the DUP for them to spend on booze or something 

 anyway , what’s another £1bn ( over 2 years / 5 in some cases  ) amongst friends

 

 

[snowychap]

4 minutes ago, Brumstopdogs said:

Sir Desmond Swayne.

[chrisp65]

Just now, tonyh29 said:

The money goes to NI  doesn’t it ? The way people present it suggest it went direct to the DUP for them to spend on booze or something 

 anyway , what’s another £1bn ( over 2 years / 5 in some cases  ) amongst friends

We don't know what they'll spend it on, but being the DUP, it's more likely to be a giant Hollywood style sign pointing at Dundalk, reading NEVER! NEVER! NEVER!

 

I will confess, unusually for me, the point was made somewhat glibbly.

I'd read it in the Morning Star and thought this would be a safe place to share it among friends.

[tonyh29]

13 minutes ago, chrisp65 said:

We don't know what they'll spend it on, but being the DUP, it's more likely to be a giant Hollywood style sign pointing at Dundalk, reading NEVER! NEVER! NEVER!

 

I will confess, unusually for me, the point was made somewhat glibbly.

I'd read it in the Morning Star and thought this would be a safe place to share it among friends.

Is this glibness a New Years resolution , I hadn’t  noticed  it before

Short version is Porn and looking at cats who look like Hitler as a chunk  of it is going on broadband infrastructure   ... but they must have known VT would scrutinise the deal as some of it is going on nurses and healthcare .... 

[Amsterdam_Neil_D]

Carillion,  big enough to bring down a government ?  

It's starting to look a bit murky at the moment.   

 

[Risso]

18 hours ago, blandy said:

The Institute of directors thinks 

Presumably because

Which looks extraordinarily clear cut to me (as a non-director and non-accountant and non financial auditor).

I don't think it is that clear cut, unfortunately.  The remuneration policy including bonuses isn't decided by the executive directors themselves, rather it's the supposedly independent non-exec Remuneration Committee, so that's one defence they'll have.  In any case, I can't see looking at the circumstances that it really matters.  The accounts MUST have been materially misstated in which case those are the circumstances under which the bonuses can and will be clawed back.  

[peterms]

What do you do with the former head of the serially incompetent Carillion?

Put him in prison?  On the dole?  Have him clean the toilets or count the paperclips?

No, you put him in charge of inspecting the safety of nuclear power plants, obviously.

 

[bobzy]

Have we done this one yet?

 

 

NHS 'haemorrhaging' nurses as 33,000 leave each year

The NHS is "haemorrhaging" nurses with one in 10 now leaving the NHS in England each year, figures show.

More than 33,000 walked away last year, piling pressure on understaffed hospitals and community services.

The figures - provided to the BBC by NHS Digital - represent a rise of 20% since 2012-13, and mean there are now more leavers than joiners.

 

(Link:  http://www.bbc.co.uk/news/health-42653542)

[Risso]

Also on the topic of bonuses, I believe that the Liquidator has the power to make them return the cash as well.

[HanoiVillan]

I thought this from Mr Timoney was quite interesting:

The Legacy of George Osborne

'The collapse of Carillion has been heralded as a watershed moment for privatisation. I doubt that's true. The deficiencies of public sector outsourcing and PFI deals have been known for decades, while the prospect of a major change in public sector management is probably only going to occur with a change of government, which may not happen before 2022. The refusal to bail out the business, even though it means more write-offs for state-owned RBS, suggests that the government is keen to avoid the distraction of both a specific inquest into the company and a general debate about public services and infrastructure investment, as much as a desire to protect taxpayers' money. Given the competing demands of Brexit, that is hardly surprising. While the Labour Party's robust insistence to the opposite has been predictable (imagine how this would have been handled pre-Corbyn), the failure of George Osborne to make his now habitual dig at Theresa May has been less so.

The former Chancellor's editorial in yesterday's Evening Standard, which relegated the topic behind the scourge of plastic waste, suggested the root cause was a combination of the excessive size of Carillion and the tendency of civil servants to prefer the devil they know: "The failure to use a variety of smaller, mid-size companies undermines innovation and leaves services hostage when things go wrong". What is missing from this timid analysis is political accountability. The push for government contracts to go to more and smaller firms was a cosmetic gesture during Osborne's tenure at the Treasury that has resulted in minimal change for pretty obvious structural reasons. It has little to do with civil servants' aversion to novelty. His claim also obscures that the material change in circumstances in 2010 was the imposition of austerity. This led to Whitehall putting the screws on suppliers to reduce contract costs, which was one of the contributory factors to Carillion's eventual demise. As the old Ernest Hemingway joke has it, "How did you go bankrupt? Two ways. Gradually, then suddenly".

Osborne, not for the first time, is being disingenuous. Dealing with a single big supplier is easier for the client, particularly when cuts erode the public sector's capacity for supplier management, while big companies with extensive portfolios of public revenues are more likely to secure the financing necessary to initiate large contracts without the need for the state to make formal guarantees that would appear on the national accounts. This tendency towards the big also encourages suppliers to operate essentially as intermediaries (hence the way they morph into empty brands with meaningless names), willing to facilitate any new service required by the client regardless of their actual competence or history, if only to maintain the relationship and the advantages of incumbency. The result is the consolidation of companies handling government contracts, not a flowering of supplier variety, and an ever more desperate search for low-cost sub-contractors and cuttable corners rather than a commitment to innovative service delivery. 

What was being outsourced to Carillion was financial and project management, not innovation or risk. For this reason it is pointless to talk of nationalising the company, or to wonder why it is being liquidated rather than being put into administration. It isn't a going concern and it has little in the way of tangible assets. There aren't any means of production to put into public ownership and the company's institutional capital centres on the ability to win public sector contracts, which would be redundant if it were nationalised. Of the 4.43bn total assets it reported in 2016, only 144m were fixed assets (property, plant, equipment etc). Cash, receivables, inventory and investments made up 2.4bn and goodwill (representing the intangible cost of historic acquisitions) a further 1.6bn. In other words, its tangible assets were largely money or near-money, most of which appears to have been haemorrhaged over the last year. That creditors may receive only a few pennies in the pound tells you not only that the cash has gone but that the contracts represented by the receivables aren't sufficient to meet the liabilities, confirming that the proximate cause of collapse was evaporating margins and an inability to secure further financing. 

Both of these will have been evident for months, if not years, which is why it is entirely legitimate to demand scrutiny of the apparent under-estimation of the risk of collapse by both Carillion's board and government ministers. But we shouldn't lose sight of the fundamental issue here, namely that the outsourcing sector and PFI contracts have both been pushed by structural forces towards financial arbitrage rather than competitive service delivery, a situation exacerbated by the contingent demands of austerity, which has reduced both the number of contracts and their margins. The result is a "market" made up of fragile suppliers who are obliged to grow or die; or at least keep winning new contracts (no matter how small the profit) to keep the life-support machine turned on. When even the FT describes Carillion as "a lawful sort of Ponzi scheme - using new or expected revenues to cover more pressing demands for payment", then the cat is well and truly out of the bag. This was an unsustainable model and plenty of people must have known that for a long time.

Carillion's executive remuneration was geared to winning contracts and growing, which meant that there would always be a reluctance to retrench, even when the warning signs started to flash, such as in 2014 when hedge funds began short-selling the company's shares. Other obvious signs of distress were the growing deficit in the pension fund and the imposition of abusive supplier payment terms, which were increased to 120 days in 2013 (another example of financial arbitrage - client terms remained at 30 days in most cases). This was evidence in the public domain. The apparent failure to raise any of these issues at board level points to the uselessness of non-executive directors who share the same cultural values (growth at all costs, the primacy of shareholder value, the need for superior executive rewards etc). This failure also extends to ministers, who in respect of the governance of public sector outsourcing and PFI deals have a de facto non-executive role. Their inability to read the signs, and the suggestion that they may have deliberately ignored some in order to cut the business more slack, points to a similar cultural weakness.

The centrist debate on outsourcing revolves around the concept of "drawing the line", which is a mixture of Coasian theory and liberal propriety. This suggests that getting it right is a matter of refinement and judgement. As Simon Jenkins harrumphs, "How to find the ideal mix of public sector loyalty and private sector incentive has bedevilled state procurement since the dawn of time. But there should be clear rules, as with monopoly regulation, such as limits on market dominance, debt and remuneration". The suggestion that we lack clear rules on all these matters is absurd. Public procurement is highly regulated and rule-bound, not just because of political sensitivity but because suppliers themselves appreciate the advantages that accrue to incumbents through high barriers to entry. The flaw in this abstract thinking is that in the real world public sector loyalty and private sector incentive constitute a volatile mix. There is no stable combination; no clear line. This is not necessarily a problem if one is dominant. The problem arises when a dynamic like austerity erodes both loyalty and incentives. As the public sector struggles to recruit and retain staff, and as outsourcers collapse, the government is waking up to the legacy of George Osborne.'

http://fromarsetoelbow.blogspot.co.uk/2018/01/the-legacy-of-george-osborne.html

[blandy]

4 hours ago, Risso said:

I don't think it is that clear cut, unfortunately.  The remuneration policy including bonuses isn't decided by the executive directors themselves, rather it's the supposedly independent non-exec Remuneration Committee, so that's one defence they'll have.  In any case, I can't see looking at the circumstances that it really matters.  The accounts MUST have been materially misstated in which case those are the circumstances under which the bonuses can and will be clawed back.  

That's surely missing consideration of what both you (when quoting from the accounts bit about bonus recovery in the different years) and the IoD person have asserted - which is that until 2016 bonuses could be clawed back if the thing went belly up, whereas that was changed, strangely co-incident with higher belly up risk  to bonuses can only be clawed back only if results had been misstated or gross misconduct has been proven (to paraphrase).

So while the company was heading towards disaster, the directors were "co-incidentally" having the financial risk to themselves in the event of disaster removed. It stinks.

The non-exec remuneration committee is not independent if their appointment / removal is dependent upon or can be influenced by the directors.

 

[Risso]

5 hours ago, blandy said:

That's surely missing consideration of what both you (when quoting from the accounts bit about bonus recovery in the different years) and the IoD person have asserted - which is that until 2016 bonuses could be clawed back if the thing went belly up, whereas that was changed, strangely co-incident with higher belly up risk  to bonuses can only be clawed back only if results had been misstated or gross misconduct has been proven (to paraphrase).

So while the company was heading towards disaster, the directors were "co-incidentally" having the financial risk to themselves in the event of disaster removed. It stinks.

The non-exec remuneration committee is not independent if their appointment / removal is dependent upon or can be influenced by the directors.

 

I honestly don't know Pete.  Being a bit of an accounts geek, I've looked at a few 'clawback and malus' provisions in various Plc accounts today, and most of them have that misstatement line in.  Corporate Governance says that big companies have to have the provisions in their accounts, but the act doesn't prescribe what the triggers for clawback should be.  It could be that "corporate failure" is just too wide a definition to have any chance of being legally enforceable?  I mean, it's possible to think of circumstances where a company goes bust through no fault of the directors, and in that case would it be legal to strip them of their remuneration?  Obviously that isn't the case with Carillion, but I would think that in general clawback might only be enforceable for actions that the directors themselves were responsible for, and if so, the 2015 accounts might just not have drafted it very well.  

Another point is, there are surely times when you'd want to take a bonus back, even if the company hadn't gone bust?  If say the profits had been overstated and bonuses had been paid accordingly, you'd surely expect the bonuses to be paid back?  If the only trigger is corporate failure, then theoretically the directors would be free to keep the cash.  By putting the misstatement and fraud line in, I would think that would lead to more refunds than when companies go bust, albeit that very obviously isn't the case here.