You may have read recently that the Secretary of State for Business, Innovation and Skills is refusing to discuss the landmark £14 million fine imposed on Deloitte & Touche for their advice to the MG Rover Group and the “Phoenix Four” directors, which is expected to be paid to the Institute of Chartered Accountants in England and Wales (ICAEW).
I have requested a meeting with the Secretary of State to discuss the significant public interest issues surrounding the sanction, because I believe the scale of the fine raises real questions over compensation for the workers and community hit by the carmaker’s collapse in 2005.
Deloitte appealed the £14 million fine, imposed by the Financial Reporting Council (FRC) for failing to manage conflicts of interest in their advice to MG Rover and the Phoenix Four Directors, in October 2013. It was the biggest ever sanction imposed by the Council, whose previous largest fine had been £1.4 million for PricewaterhouseCoopers in 2012.
The Secretary of State, Dr Vince Cable MP, stated in his reply to me that a discussion would “not be appropriate” and that the Government was “not able to intervene” in the proceeds of the fine.
I am astonished that the Government appears to be washing their hands of this matter. This unprecedented fine demonstrated that there were major ethical breaches by Deloitte in their advice to MG Rover and the ‘Phoenix Four.’ But the £14 million fine imposed on Deloitte, if it is upheld after the appeal, is expected to go the Institute of Chartered Accountants. I know that many people will be shocked to hear that a fine that is meant to punish accountants for failing to adhere to expected professional standards will be going straight back into the same profession. And it’s extremely disappointing to hear that the Government seem to have no opinion on where the fine should go to all.
This record sum has clearly been imposed in the public interest. I think that means doing the right thing by the people who lost most – the employees. After five years of supporting the Phoenix Four Directors, and buying time for the West Midlands economy to diversify and modernise from it’s dependence on Rover, it was the workers who lost everything when the collapse finally came in 2005. The wider community around Longbridge was also hit hard, and unemployment in this area is still well above the national average.
The Phoenix Four made a promise to set up a trust fund for the MG Rover workers. But after seven and a half years of waiting, the money – initially anticipated to be in the millions – from the directors never appeared, and the trustees had to wind up the fund in 2012.
That’s why I, along with the Justice for Rover Workers campaign group, am calling for some of the proceeds of this landmark fine to go to the workers and wider community. The £14 million must not only deter accountants from acting in this way again. It must mean change for the people, and the community, who suffered so much from the collapse of MGR and are still yet to be repaid.
