As a business journalist you mostly get to see the measured, diplomatic side of people. The side which says: 'I'm going to demonstrate I'm intelligent, well balanced and, most of all, in control. But I'm not going to tell you anything that you don't already know or that Private Eye would feel the need to publish.'

So when Simon Freakley, CEO of restructuring specialists Kroll, says: '...not being frightened by financial information helped me. Without a CA qualification, people think they can bullshit you with financial information. But they can’t if you have a grounding in it,' I'm impressed.
It's not so much the view of his qualification and training that grabs my attention, it's the use of the word 'bullshit'.
Without being gratuitous, using words like that in front of a journalist speaks, I think, volumes about his confidence in his ability and the approach he brings to his work. It's frank and it's direct. It means: 'I can tell it like it is, and what's more I don't need to make it palatable for oversensitive shareholders.'
You don't often hear that kind of talk from people at the top. Mostly, they sound like the products of a business finishing school where the media component is run by the same people who school Premier League footballers in empty headed post-match quotes.
I like it, it's refreshing. Let's hear more of it.

October 30, 2007 | Permalink | Comments (0) | TrackBack (0)

It’s been a great week for sending finance directors to prison. First of all Dennis Lomas, FD at Independent Insurance, got four years after being found guilty, along with the chief executive and the deputy managing director, of defrauding directors, employees re-insurers and sundry other people when they decided to hide the true state of the accounts.

Then there was Sharon Bridgewater who got five years for stealing more than £2m from employers, buying flash cars, going to expensive restaurants and taking some very up market holidays.

I’ve said it before FDs are very well positioned to fleece the company if they want to. They know how the accounting works and can quickly become very adept at covering their tracks. Fortunately few do it.

But in the words of a policeman I met some time ago ‘crime does pay.’ I won’t reveal his name for fear of embarrassment, since he has broken with the key tenet of crime fighting – don’t admit it pays.

His point was only a percentage of crime, especially of fraud gets detected, an even smaller proportion of the money is recovered and only a fraction of the perpetrators are brought to book.

Why? Because of a simple cost benefit analysis. If it’s not a really big fraud it’s not worth the police getting involved – they employ very few fraud experts. If company bosses discover a fraud internally they are more likely to bring in a freelance expert track down who is responsible, fire them and keep the whole affair under wraps. Far better to stop the fraud, and fill the hole in the system rather than spend time on criminal proceedings, which may or may not work.

This kind of approach to financial crime creates open season for people like Bridgewater. We can look forward to more lurid fraud stories in our courts for a long time to come.

October 29, 2007 | Permalink | Comments (0) | TrackBack (0)

Listen, if you're brave enough, the Oxera report on audit firm ownership, out today, is worth a read.

I say that because it is 250 pages and, because it was written for the European Union, it's in the kind of style that insomniacs might find useful.
But it does, in a way, lay the foundations for a new kind of audit firm - one that isn't owned by auditors.
It concludes, surprise surprise, that loosening up the ownership rules could allow someone to grow a firm up to Big Four size and thus resolve the lack of audit choice that currently persists.
And, in a statement I'm sure will annoy many, it says investment from outside the profession might just be the way to do it.
Now all that's left to do is figure out exactly how the ownership rules have to be changed. Any suggestions on how long that will take to figure out?

October 24, 2007 | Permalink | Comments (0) | TrackBack (0)