By Harry Mottram: ICSM brings you the latest headline news from the business of insolvencies, administrations and firms in danger of going bust.
EY cancels split
Insolvency and accountancy consultants Ernst & Young (EY) have cancelled their plan to split into two sections. Project Everest was to separate their accountancy and auditing departments from their financial consultancy into two businesses. By all accounts the attempt to change the business had cost millions of pounds and caused internal office politics on an industrial scale.
As part of the Big Four of Deloitte, EY, KPMG and PwC, EY have come in for criticism over business practices and scandals which have cost them credibility. Germany kicked out EY this year over their failings in audition Wirecard which collapsed into insolvency leaving a trail of unpaid loans – something EY should have spotted.
In other scandals KPMG failed to see that Carillion was insolvent after giving them a clean bill of health in an audit in 2016 when the firm went bust two years later over £7 billion pounds. KPMG have just settled a £1.3 billion pound settlement with Carillion’s liquidators for ‘incompetent’ work.
Tupperware melt down
The USA plastic food container business famous for its Tupperware parties and the containing of billions packed lunches in its storage containers. This week the share price collapsed losing half of their values in a day. The shares have fallen from more than $40 dollars before the pandemic to just over $1 now. Seen as outdated the firm has been criticised for not moving with the times with its competitors selling more stylish and cheaper food containers – and like many firms has massive debts of around $705.4 million dollars forcing it to renegotiate borrowings with lenders.
CBI sex scandal
The boss of the Confederation of British Industry (CBI) has been fired following revelations of sexual harassment and even a rape amongst the industry pressure group’s staff. Tony Danker has been kicked out by the CBI after an investigation found a string of allegations concerning unwanted sexual advances by several members of staff to a number of women. The CBI have put in place an investigation to root out offenders and a training programme for staff with new boss Mrs Rain Newton-Smith to placate the Government and its 190,000 members.
The American health fraudster Elizabeth Holmes the woman behind the Theranos firm that claimed to make a blood checking device that could find all types of disease is to do time. In New York a federal judge on Monday said Holmes failed to prove her appeals process would lead to a reversal of her case. She was sentence to 11 years in jail and will now do porridge having been found guilty of fraudulently marketed a blood-testing device that was sold in its millions raking in a fortune by conning medics and celebrities a fortune.
Following the collapse of the Silicon Valley Bank (SVB) and the Signature Bank and an emergency merger for Credit Suisse with UBS plus a loss of confidence in Deutsche Bank the banking world is not out of the woods yet. To give an idea of the still shaky international banking system the Federal Reserve has pumped $400 billion dollars in the USA the banking system to keep it liquid after the reverberations of SVB’s collapsed caused panic in the markets.
Bank of England governor Andrew Bailey said the banking system is not at a 2008 Credit Crunch moment but as an industry it needs to increase protection due to the nature of online banking and instant communications that can lead to panic. Essentially, he said the levels of protection needed to rise to ensure confidence. In the USA bank accounts are protected up to £200,000 while in the UK it is only up to £85,000. He said a review was now underway to prevent further turmoil when there is a run on a bank as happened with SVB.
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