Great news…
Britain’s accounting watchdog has launched a formal investigation into KPMG’s work as the auditor of the Co-op Bank ahead of the emergence of a £1.5bn capital shortfall at the lending arm of the country’s largest mutual society.
The Financial Reporting Council (FRC) said it would look at the way the Co-op Bank’s accounts were prepared, audited and approved in the years leading up to the discovery of a the capital black hole that threatened to put the lender out of business.
And it’s not just the FRC…
The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) are undertaking their own investigations that could lead to formal action being taken against current and former senior managers and directors of the Co-op Bank.
Were there dodgy deals between beancounters and clients? We don’t know but at least with the FRC and FCA on the case if there was a lack of due diligence we should find out because an FRC/FCA investigation will be relentless….
What’s that? The boss at the FRC is Sir Win Bischoff, a former big cheese at Citigroup?
The City veteran is a contentious choice because he presided over astronomical ‘golden goodbyes’ to failed bankers during his two years on the Citi board.
This included an eyewatering £40million payment for failure to former Citi chief Chuck Prince when he was forced out in 2007, despite steering the bank headlong into the toxic debt mire.
Bischoff succeeded Prince on a temporary basis, then moved into the chairman’s job just months before Citi was bailed out by US taxpayers.
Surely this is not a case of the higher the title the weaker the talent pool?
Most people were underwhelmed when Sir Win Bischoff, former Citi chairman, was appointed as chairman of the Lloyds Banking Group to replace Sir Victor Blank. Bischoff never seemed to get to grips with Citi’s problems and gave the impression of hobbling along behind the bus rather than sitting upright at the steering wheel
After Citigroup Bischoff became chairman at Lloyds and was involved with the controversial sale of 600 Co-op Bank branches known as Project Verde.
Hmmmm
Still John Grifiths Jones at the FCA should be a safe pair of hands….shouldn’t he?
Questions have been raised about Mr Griffith-Jones because until last year he was chairman of KPMG, which is the Co-op Bank’s auditor. Last week, the Co-op Group launched an investigation into the bank’s £1.5bn capital shortfall including a review of “the role of the independent auditors”.
Tony Shearer, former chief executive of Singer & Friedlander, said Mr Griffith-Jones was “conflicted” as chairman of the banking regulator due to KPMG’s involvement with banks. The firm was also auditor of HBOS, Bradford & Bingley, and Kaupthing, all of which failed. Similar questions were raised in April about KPMG’s HBOS audit, by Mr Shearer and others.
Are these really the men who should be investigating the KPMG/Co-op Bank affair?
