Any creditor feeling an attack of sympathy should read chapter 13 of the DTI's new best-seller, the inspectors' report on the collapse. It is a good antidote.
Yes, British & Commonwealth was deceived by Atlantic over its true worth. But what happened then? On 15 April 1989, Atlantic's chief executive informed B&C that his company had pounds 160m of liabilities that had not been provided for in its accounts, the first clear disclosure that Atlantic faced serious problems.
The disclosure caused consternation to Mr Gunn and his fellow directors Peter Goldie and Andrew (Rusty) Ashman. It came after B&C had made a preliminary announcement of its 1988 results to the Stock Exchange, but before signature of either Atlantic's or B&C's accounts.
Nevertheless, Mr Gunn, Mr Goldie and Mr Ashman decided not to amend the accounts, and did not tell the auditors (Spicer for Atlantic and Deloitte for B&C) what they knew.
As the inspectors point out in their report, these three directors had a duty not only to inform the rest of the board and the two auditing firms, but also to ensure that the accounts gave a true and fair view. They did not, and Atlantic's results for 1988 were 'grossly misleading'.
The whole B&C board was not informed until late July. Worse still, the interim results on 27 September reported Atlantic profits of pounds 6.7m, without any provisions for the lease liabilities that the directors had been told about in April.
The inspectors call that profit figure a gross overstatement reached after a series of improper adjustments. If that's not a cover-up, what is?
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