In 2013, accountancy firm Deloitte was fined £14 million by the Financial Reporting Council for failing to manage conflicts of interest in relation to its work as corporate advisers. Deloitte was criticised for acting as an adviser to both MG Rover and the “Phoenix Four” directors. The recent Appeal Hearing overturned some findings but found ‘significant issues of misconduct’ in this case concerning the need for accountants to act with objectivity.

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The FRC sets the framework within which auditors, actuaries and accountants operate in the UK , but with the exception of one lawyer and one civil servant, board members are drawn from the financial services sector which they oversee.

The whole episode has taken more than a decade: an absolute shambles”

Professor of Accounting Prem Sikka (Essex Business School) concluded (by email) that the outcome means FRC’s judgement is suspect.

He pointed out that though Deloitte could appeal, the victims – taxpayers, MG Rover creditors and employees – have no right of appeal. And continued:

“The accountants’ parallel system of courts (disciplinary panels) does not have the same rigour as that of a court. The Appeal was not in the open: people could not see the evidence which was considered by the original hearing or the Appeal Panel”.

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In the Post, Richard Burden, Labour MP for Birmingham Northfield and Professor David Bailey, Aston Business School, pointed out that  the Phoenix Four, who continue to flourish, kept the millions extracted from MG Rover before it collapsed and the workers lost their jobs.

They suggest that the FRC could direct some of the recalculated fine for Deloitte to compensate the workers and their families, recalling that the Phoenix Four had promised to set up a trust fund to do that. Richard Burden and David Bailey end:

“In April it will be exactly ten years on from the closure. We shouldn’t forget the workers”.

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