THE accountants who failed to spot Christmas savings club Farepak was going
bust have been fined just £750,000.
ERNST & YOUNG was responsible for auditing Farepak before it
collapsed in 2006, owing families a total of £37million.
Farepak encouraged its members to invest money throughout the year to save up
for Christmas expenses.
Now the accountants have finally been brought to book by the Financial
Reporting Council watchdog.
But the £750,000 fine for the firm — in which partners were paid £651,000 in
2013 — has angered former Farepak members.
Louise McDaid, 49, who lost £400 and is chairwoman of the victims committee,
blasted: “We feel as if we’ve been ripped off from Day One.
“We’re seven years on and this is still ongoing — now we’re told Ernst &
Young didn’t audit the accounts properly. I think they should be paying the
fine to the actual victims.”
The FRC said the accountants did not cause Farepak’s entry into
administration. But it declared their activities fell below the standard
expected.
In particular, they were accused of failing to consider Farepak’s ability to
continue as a going concern.
Alan Flitcroft, the partner responsible for auditing the company, was fined
£50,000. He left Ernst in 2008.
Paul George, of the FRC, said the case sent a strong reminder to all
accountants of their responsibilities.
In 2012, victims got just 53p for every pound they lost, including 17.5p from
the Government’s Farepak Response Fund.
But campaigners who spent years fighting for compensation for Farepak victims
fear many have died waiting for their money. About £13.5million was paid out
to 114,000 customers and agents last year.
But over 11,300 have failed to cash cheques of £60 to £400 each.
More than £1million in compensation remains unclaimed by members.
Two bosses of the bust savings club, Joanne Ponting and Stephen Hicks, were
banned from holding posts as company directors last year.
And William Rollason, the former chief of Farepak’s parent company, was also
fined £65,000 by the FRC in June.
Ernst & Young said: “Our primary focus is the promotion and strengthening
of audit quality and the professional scepticism which underpins it.”
Bond car firm joins Germans
NEW ASTON MARTINS will be powered by MERCEDES-BENZ engines — in
a move seen as the first step towards a takeover by the German giant.
As part of a deal signed yesterday, Mercedes will get a stake of up to 5 per
cent in the British brand and a seat on the board.
Aston Martin will continue making all its cars at its headquarters in Gaydon,
Warwicks — securing 1,600 British jobs.
But the 100-year-old brand — James Bond’s favourite — looks set to eventually
follow its fellow British car-makers Rolls-Royce, Bentley and Mini into
German hands.
The deal with Mercedes will give them access to the latest engine and
electronics technology from one of the biggest car firms in the world.
Tobias Moers of Mercedes said: “This agreement is a real win-win situation for
both sides.”
Off the Mark
BAG a bargain outfit at MARKS AND SPENCER on Saturday — it is cutting
prices by 30 per cent after a gloomy pre-Christmas season.
The surprise sale comes after City broker UBS this week cut its profits
forecast for the store. M&S said the retail landscape was “challenging”
as customers were leaving Christmas shopping until very late this year.
Now critics say chief Mark Bolland may not survive the festive period.
AZ £2bn drug split
ASTRAZENECA is set for a £2.5billion buy-out of a diabetes drug it
invented with its US partner BRISTOL MYERS SQUIBB.
The pharmaceutical firms had linked up to develop Onglyza — a one-a-day tablet
that lowers blood sugar levels.
But AstraZeneca now wants to go it alone, and the Anglo-Swedish giant will
take on 4,100 BMS staff as part of the deal.
It will pay £1.6billion upfront — followed by further sums based on sales.
The split will boost its portfolio after a 36 per cent drop in first-quarter
profits earlier this year.
More than 550million people are expected to suffer from diabetes globally by
2030.
Serco in £68.5m tag rap
PRIVATE security firm SERCO has agreed to repay £68.5million to the
Government for overcharging for tagging criminals.
It follows allegations Serco and its rival, G4S, charged for tagging
people who were either dead or in jail.
The latter is still in discussions over the amount it will repay.
Yesterday it emerged that two more G4S contracts are to be investigated by the
Serious Fraud Office.
Both Serco and G4S have withdrawn from providing services for the probation
service.
Market report
THE FTSE 100 closed at a two-week high of 6584.70 yesterday after the
US reined in moves to pump cash into its economy.
But other UK economic indicators remained mixed. November mortgage lending was
30 per cent up on 2012 but below its 2007 peak.
Retail sales rose 0.3 per cent last month, after a shock drop in October. But
department store sales fell 3.1 per cent.
AGUSTAWESTLAND has landed a £1billion deal to supply 16 helicopters to
Norway — securing over 3,000 jobs.
The AW101s — successors to the Sea King — will be built at its factory in
Yeovil, Somerset.
PM David Cameron said it was “a hugely significant order”.