Isn’t this called fraud?
Severn Trent Water
The complex accounting trick started in March 2017 when a shell company, with no money or assets, called Severn Trent Trimpley was set up as part of the group. Another Severn Trent company called Severn Trent Draycote - which owns the water company - agreed to buy Trimpley for £2.
Trimpley then issued additional shares and Draycote bought them for a staggering £3bn.
No money actually changed hands, however, as Draycote paid Trimpley with a £3bn loan note - effectively an IOU. But, on paper, Trimpley immediately appeared to be worth £3bn because it had the IOU.
Severn Trent Water then acquired 49% of Trimpley - and that investment was valued in the water company’s accounts at £1.47bn. A hugely valuable asset appears to have been created for Severn Trent Water out of thin air.
Panorama discovered the Trimpley investment through the work of retired auditor Stanley Root.
Yep.
At the very least, it should make shareholders not trust the numbers. But according to another post, it is not uncommon.
But it’s hardly surprising we see crap like the Tory politicians over the last few parliaments. When the corps, they rely on for funding, see this as normal.
If they’re paying bonuses based on the valuation that they effectively made up, surely that’s defrauding the system and their customers? Especially at a time when all these water companies are claiming abject poverty?
I understand that the UK is a safe haven for money laundering, but aren’t we supposed to at least pretend?
I’m an accountant and auditor, while it’s incredibly misleading, not fraud. They would have to demonstrate to the auditor that the value is correct, it does appear that dividends are being issued so it would probably pass the bar required for valuation.
I’m not an accountant or auditor, but if this was a person rather than a business, they’d be going to jail
When you’re rich, you make your own rules. Laws are to protect the rich from the dirty poors, not the other way around!
if this was a person rather than a business,
Not disagreeing with your point.
But when you take the idea into consideration.
This is a business creating a valueless business, then applying artificial value to increase assets So fraud.
Now your version. A person creates a person. Well not uncommon. But well, everything from there really sounds dodgy.
It really is not possible to remove the business and be talking about the same thing. And its hard to argue it would not be worse.
But yeah, I’m sorta having fun with the words. If a poor/working class human tried to increase assets via fraud. They would be spending time at his majesty pleasure.
Something being technically legal doesn’t make it technically OK.
If I had just started a new job and my CV was found to be “incredibly misleading”, I’d expect to be kicked out the door, not because I’d broken the law or commited gross misconduct, but because I’d been found to be unsuitable for the expectations of the company/customers.
This story is just another straw on the camels back of the privatised water industry that have been using the British tax payer as an ATM for fat cat shareholders for decades, with debts so huge that our children and our children’s children will be burdened.
Isn’t this called fraud?
Don’t be silly. Fraud is when you give £20 to your neighbour as a thankyou for feeding your cats at short notice, but they don’t declare the £20 as income.
This is just “clever accounting” :(
is it run by the spiffing brit?
