James Moore: KPMG link throws a shadow over FCA boss
One of the chief problems with the aftermath of the Co-op crisis is the focus on personal conduct (namely the alleged drug taking and other misdeeds of former chairman Paul Flowers), when professional conduct and competence are the real issues.
The accountancy watchdog yesterday helped to redress the balance a bit with its announcement of an investigation into the company’s accounts, and the audit work performed by KPMG.
The obvious question the Financial Reporting Council’s investigators face is this: if the regulators at the Prudential Regulation Authority uncovered a £1.2bn capital black hole in the accounts, why didn’t the auditors.
KPMG naturally insists that it did everything properly, which is what auditors always say in these situations. It is naturally entitled to the presumption of innocence.
All the same, while the question is open another one is raised: can its former boss, John-Griffiths Jones, really stay on as chairman of the Financial Conduct Authority (FCA)?
It’s worth remembering here that KPMG was also auditor to HBOS in the run up to its near collapse and rescue by Lloyds. But calls on Mr Griffiths-Jones to resign – and they have come from numerous sources – have so far been resisted.
With public trust in the banking system, and its oversight, badly shaken by the financial crisis and the string of scandals that have emerged in its wake, it ought at the very least be time to revisit the issue.
If Mr Griffiths-Jones and the FCA still insist that resignation is unnecessary, a leave of absence while the investigation is completed ought at least to be on his board’s agenda.
Mistrust of government is no comfort for big business
PR firm Edelman has sought to create a talking point for the top people to discuss over their delicately grilled filet mignon at this year’s World Economic Forum.
It has undertaken a survey that found trust in government among those defined as “informed people” has plunged to 44 per cent, some 14 points below trust in “business” generally.
To America’s anti-government Tea Party that will be a cause for celebration, hinting that the world is moving in their direction. No wonder their medium of choice, Rupert Murdoch’s fair and balanced Fox News, was gleeful.
There are many reasons for this, of course. In Europe, where the fall in trust in government was particularly acute, there is the debt crisis and the austerity it has brought. Meanwhile, the US had its government shutdown, driven by Fox News hero and potential Republican presidential candidate Ted Cruz (and if you think trust in Government is low now…).
But chief executives eyeing the figure with a contented smile may like to reflect on the fact that they aren’t much trusted themselves. And at least part of the reason for the public’s growing distrust in government could be traced back to government’s indulgence of them.
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