Exclusive: £1bn profit but not enough staff to keep the lights on – Company blamed for Christmas blackout mismanaged holiday rota and paid chief executive £1.7m salary

MPs to demand inquiry into business that funnelled £135m dividend to Hong Kong owner

The electricity distribution company blamed for leaving thousands of homes without power over Christmas boasted of making an annual profit of nearly £1bn in its most recent accounts, as its chief executive was paid £1.7m and its billionaire Asian owners took out a £135m dividend, The Independent has learnt.

The disclosure of the huge payments and profits prompted instant calls for customers to be reimbursed from executives’ bonuses and sparked demands by MPs for a parliamentary inquiry into the company’s handling of the situation.

Figures filed with Companies House for UK Power Networks Holdings Limited, part of the business empire of the Hong Kong tycoon Li Ka-shing, highlight how it made £939m of underlying profits in 2012 – a massive increase on the £789.7m it made in 2011.

The accounts reveal that the highest paid director – believed to be the chief executive and so-called “blackout boss” Basil Scarsella – was paid a salary of £1.4m and £270,000 in bonus and pension payments.

On Sunday, Mr Scarsella admitted the company, which owns power lines across London, the South-east and eastern England, had failed customers by allowing too many staff to take annual leave over Christmas. The company’s financial details emerge as forecasters warned Britain would see in the New Year with another bout of hazardous weather. Gales and floods are set to strike again as rain continues to pour on saturated grounds and into rivers already close to bursting their banks.

As large areas of the country resumed normality after heavy rain flooded 130,000 homes and cut the power to more than 150,000, the Environment Secretary Owen Paterson hit out at power firms.

“Some of the power companies let their customers down badly,” he said. “They let too many of their staff go away for Christmas, they didn’t have enough people manning the call centres and that wasn’t acceptable.”

A parliamentary inquiry is now likely into the fiasco. David Cameron has already declared that lessons must be learnt about why so many homes were left in the dark over the holiday period.

MPs are expected to demand answers of the company, and Mr Scarsella, as to how he and his management team could have made such a catastrophic oversight in its holiday shift patterns at a time when severe weather warnings had been issued.

Basil Scarsella is believed to have received £1.7m Basil Scarsella is believed to have received £1.7m (Allsport)
UK Power Networks’ (UKPN) most recent accounts show Mr Scarsella was paid £542,000 in “long-term incentive plans” over 2011 and 2012. As well as his bonuses, MPs are likely to ask whether staff numbers could have been part of the problem. While profits at the company were rising, the workforce was cut by 300 to 5,234 in 2012, the accounts show.

The shadow Energy Minister Tom Greatrex said: “Given the level of bonus and dividends paid by UKPN, it is even more alarming that they have been so badly caught out in the last week. Both network companies and Government have been flat-footed in responding to predicted adverse weather. While individual engineers have performed heroics, not having enough staff on call and failing to answer calls for hours on end is a simply unacceptable management failure.”

He called for Mr Li to “forgo excessive payouts and instead demonstrate his contrition for their failure to plan effectively by first ensuring those affected are compensated adequately.” He added his voice to predictions that select committees would be announcing inquiries as soon as they return to Parliament in the new year.

UKPN is offering customers who were without electricity for more than 48 hours including Christmas Day £75 each. But accounts show Li businesses took a £135m dividend from UKPN last year, £5m more than the previous year. The payments were funnelled into his holding companies in Hong Kong and the offshore tax havens of Bermuda and British Virgin Islands. Mr Li’s empire owns UKPN through Cheung Kong Infrastructure Holdings, Power Assets Holdings and the Li Ka-shing Foundation.

UKPN paid corporation tax at a rate of just 10.2 per cent in 2012, less than half of HMRC’s corporate tax rate for that year of 26 per cent. There is no suggestion of any wrongdoing in the way it arranges its business or tax structures.

The company did not respond to requests for comment on its finances. Mr Li, Asia’s richest man, bought the business from EDF Energy in 2010 for £5.8bn. The company is now substantially funded through debt. In total, it owes £4.7bn, including £774m lent it by other Li family-controlled businesses and more than a dozen bonds.

However, thanks to the huge profits the company makes from householders’ bills, it has no trouble paying the annual interest charges of around £280m to cover those. While the underlying profit was just under £1bn, overall pre-tax profit was £527.2m in 2012.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Sport
football
News
Tangerine Dream Edgar Froese
people
News
Rob Lowe
peopleRob Lowe hits out at Obama's snub of Benjamin Netanyahu
News
Davies (let) says: 'Everybody thought we were having an affair. It was never true!'
people'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'
Arts and Entertainment
Over their 20 years, the band has built a community of dedicated followers the world over
music
News
Staff assemble outside the old City Road offices in London
mediaThe stories, the writers and the changes over the last quarter of a century at Britain's youngest paper
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Life and Style
The Oliver twins, Philip and Andrew, at work creating the 'Dizzy' arcade-adventure games in 1988
techDocumentary looks back at origins of the computer-games industry
Arts and Entertainment
Krall says: 'My hero player-singer is Elton John I used to listen to him as a child, every single record
music
Arts and Entertainment
The Wu-Tang Clan will sell only one copy of their album Once Upon A Time In Shaolin
musicWu-Tang Clan and The Sexual Objects offer fans a chance to own only copies of their latest albums
News
i100
Environment
Number so freshwater mussels in Cumbria have plummeted from up to three million in the 20th century to 500,000
environment
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Recruitment Genius: Outbound Sales Executive - OTE £25,000

£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Java Developer / J2EE Developer - Watford - £45,000 - £47,000

£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...

Ashdown Group: Marketing Product Manager - (Financial Services) - SW London

£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Day In a Page

Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project
Diana Krall: The jazz singer on being friends with Elton John, outer space and skiing in Dubai

Diana Krall interview

The jazz singer on being friends with Elton John, outer space and skiing in Dubai
Pinstriped for action: A glimpse of what the very rich man will be wearing this winter

Pinstriped for action

A glimpse of what the very rich man will be wearing this winter
Russell T Davies & Ben Cook: 'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'

Russell T Davies & Ben Cook: How we met

'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'
Bill Granger recipes: Our chef serves up his favourite Japanese dishes

Bill Granger's Japanese recipes

Stock up on mirin, soy and miso and you have the makings of everyday Japanese cuisine
Michael Calvin: How we need more Eric Cantonas to knock some sense into us

Michael Calvin's Last Word

How we need more Eric Cantonas to knock some sense into us