It’s a Dirty Business

Geoff Hoon, the ever popular and well respected UK Defence Secretary, finds himself in a rather unusual position.

He is being called upon to resign by Samantha Roberts, widow of Sergeant Roberts (who was the first British casualty of the Iraq war), for failing to ensure that there were sufficient supplies of body armour and other pieces of kit for the troops.

However, despite this, Hoon still “enjoys” the support of the Prime Minister. Indeed, he has a guarantee that he will not be called upon to resign.

This guarantee, in political terms, lasts a very long time; one week to be precise. In one week’s time (on the 28th of January), the Hutton report into the suicide of Dr David Kelly will be released.

It is widely expected that the report will be less than “flattering” to the government. In view of this, Tony Blair knows that there will have to be a fall guy; who will have to resign and take the blame.

Heaven forfend that it would be Tony himself!

Therefore, Hoon has been lined up to take the blame and resign. Obviously he can’t resign if he has already resigned over the Sergeant Robert’s affair. Hence the one week guarantee.

This sorry little episode proves the point that politics is a dirty business; but that is more of a reflection on those who seek power and high office, rather than on the concept of public service.

The Tax Gluttons

Gordon Brown, Chancellor of the Exchequer, is faced with an ever widening gap between tax revenues and fiscal expenditure.

We provide an exclusive insight into the regular discussions, about this issue, between him and Tony Blair.

Please click Tax Gluttons to take a look behind the scenes.

This exclusive image can be purchased from KenFrost.com in the form of a pack of six greetings cards.

These are available from The Emporium

The Electric Commode

Following the request by the USA that passengers are to remain seated whilst flying in US airspace; the designers at KenFrost.com have come up with a revolutionary seat design to accommodate both the needs of passengers and the US requirements.

To view the design, please click the Electric Commode.

You can buy a set of six postcards featuring this design from The Emporium

Tony Blair’s Great Political Wheeze

First a little history lesson; back in 2000 London was about to elect its first ever mayor. At that time one of the prominent candidates was Ken Livingstone, who was a member of the Labour party.

However, all was not well between Ken and Labour; after some internal “discussions” Labour decided to expel Ken. Tony Blair then appeared on TV to make a statement robustly extolling the virtues of a “Ken free” Labour party; he noted that it was absolutely the right thing to do.

Undeterred, Ken decided to stand for mayor as an independent candidate; Labour put up the hapless Frank Dobson as their candidate. Needless to say Ken stormed home, and has been in office for the past four years.

Faced with a new election, Labour initially put up a non entity whose name escapes me. However, Tony and his team knew that Ken was most likely to win again as an independent; therefore they had to find a solution.

An idea came to them that was brilliant in both its simplicity, and effectiveness; why not make Ken a member of the Labour party again!

Arms were duly twisted, the non entity Labour candidate gracefully stepped aside (no doubt she will appear as Ken’s running mate); and Ken was readmitted to the Labour party yesterday. However, not all were happy, I understand that at the vote John Prescott (who actually has some principles) was said to resemble a man eating a mouthful of wasps.

Tony and his chums have said that Ken is now back in the fold, and “on message”. Ken, in a rather Delphian manner, said that the mark of loyalty is being able to tell someone when they are wrong. In other words he will, quite rightly in my view, continue to do and say exactly what he wants.

This political wheeze by Tony, may in fact be the straw in the wind of something much larger. If you can make the likely winner of the position of London mayor a member of the Labour party; why not apply this to a larger event, such as a general election?

In other words, why not make every Conservative and Liberal Democrat a member of the Labour party as well?

This will have the effect of nullifying the need for any future elections, and making Britain a one party state; something that Tony has in fact wanted all along.

Nice one Tony!

The Hidden Dangers of Offshore Companies

As I noted in my article “Parmalat, Europe’s Enron”, I am highly suspicious of organisations that make use of offshore companies in their company structure.

During my years as an accountant, head of audit and head of fraud investigation (see my resume) I have come across numerous examples of offshore structures based in eg; the Caymans, Bermuda, Luxembourg and Jersey.

As far as I can see there are only five reasons why an organisation would wish to use an offshore company:

1. The “less than demanding” accounting rules, and reporting requirements, of the offshore base enable the company to “hide” transactions and relationships that it does not wish the outside world to see.

2. The tax regime of the offshore base enables the organisation to avoid tax that it would have to pay if it resided elsewhere. Note, tax avoidance is perfectly legal.

3. The tax regime, and the “less than demanding” accounting rules, of the offshore base enables the organisation to evade tax that it would have to pay if it resided elsewhere. Note, tax evasion is illegal.

4. Loading the organisation chart with numerous offshore companies, which have complex cross holdings in each other, leads to an unnecessarily complex and difficult to understand organisation. This enables the organisation to hide fraudulent transactions.

5. Offshore organisations, if the share holdings are engineered in a particular way, can be excluded from the organisation structure which is disclosed in the public accounts.

I have the following advice for investors, regulators, employees, auditors and tax investigators:

 Carefully study the structure of the companies that you are dealing with, ask if there are offshore companies.

 Where there are offshore companies, make sure you understand their role and their place in the organisation as a whole.

 If you do not understand the structure of the company, or the role/purpose of its offshore holdings then treat it with extreme caution.

I have the feeling that the regulatory environment will tighten over the next few years, making it increasingly difficult for companies to use these dubious structures.

Parmalat, Europe’s Enron

The fraud at Parmalat (once Italy’s largest dairy company) is said to be Europe’s Enron. It seems that payments were siphoned off from Parmalat to prop up a failing travel business, which was owned by the founding family.

The fraud was “hidden” from the gaze of the outside world by using two sets of books; and by falsifying the accounts of Bonlat, a Cayman Island subsidiary (I really do not trust companies that use offshore accounting; take a very long hard look at any company that employs this practice see "The Hidden Dangers of Offshore Companies").

Bonlat claimed to have £2.7BN deposited with the Bank of America; however, this turns out to be no more than false accounting.

One interesting aspect of this case is the order alleged to have been given by Luciano Del Soldato, a Finance Director in Parmalat, to Gianfranco Bocchi a Parmalat executive. By all accounts, Soldato ordered Bocchi to destroy the computer that housed the false accounts of Bonlat with a hammer.

At first sight this may seem “a tad extreme”; after all, those denizens of probity at Andersens and Enron only ordered that documents be shredded when the outside world started to investigate their nefarious activities (see In Place of Strife). However, as an experienced fraud investigator I can tell you that this was in fact an eminently sensible order.

Computers have an annoying habit of recording all activity on their hard disc. Although they possess delete buttons which, when the innocent user presses them, “delete” the file from the visible area of the system; the reality is that the crafty computer still stores the information on its hard disc. Any self respecting IT hacker, or professional can resurrect this data in a matter of hours.

To counteract this problem, anyone who wishes to erase traces of data from their computer systems must destroy the hard disc with hammer and fire; ie crush the hard disc then burn it. Soldato’s orders were not extreme, he knew exactly what he was doing.

How to Waste Tax Payers' Money

I am told that Ken Livingstone, the Mayor of London, has sent every councillor in the Greater London area a Christmas card.

Call me an old Scrooge, but what a waste of the tax payers' money.

On that seasonal note, festive greetings to you all.



Ken

WMD Found in Tikrit



You can buy one of my T shirts with this design from The Emporium

Signs of Life

Back in mid October 2003 I wrote an article, “The Only Party in Town”, which castigated the disunity of the UK Conservative Party and the fact that there was no credible opposition to Tony Blair.

I forwarded it to Central Office and my local Conservative Association, I heard nothing.

Since then the Party has changed leader, and seems to have “pulled itself” together. Evidence of this renewal came to me on Sunday; in the form a belated response to the article, from my local Association.

Whilst this response may be some weeks late, and events have moved on since the article was written; it does give me hope that there are signs of recovery in the Conservatives.

This bodes well for the UK, whatever one’s political persuasion, as the current Administration most definitely needs a credible and visible opposition in Parliament.

What’s Your Definition of Freshness?

Those of you who are familiar with my website and background know that I have a passion for good, wholesome, fresh, unpretentious food.

I endorse the saying that “you are what you eat”; those of you who choose to live entirely on junk food are, in my opinion, doing yourselves no favours size wise or health wise.

However, there are occasions when the hapless gourmet has no option but to eat what is presented to them; eg when travelling by plane or train.

As a result of a recent trip to Sweden I awarded the British Airways Ham and Cheese Bloomer my prestigious “Worse Than Worthless” award.

However, I made a return journey via BA last week and was pleased to note that BA have taken my advice; they have replaced their bloomer with a hot sandwich. I noted in their in flight magazine that they have launched a new series of menus; and that the new food service is another aspect that sets it apart from other no frills airlines.

The photo in their magazine showed a plump, succulent croissant stuffed to the gunnels with bacon and cheese. It looked very appetising.

The reality was slightly different, the two options on offer were cheese and ham or cheese and tomato. I opted for the cheese and ham. This was a hot olive and tomato ciabatta; containing a modest portion of bland melted cheese, and a small slice of ham. I would like to note that it was a considerable improvement on the bloomer.

However, there is one aspect of this improvement that I would like to query. The onboard meal package comes under the title “All Day Deli”. Yet when I examined the plastic wrapping of the hot part of the meal, I noted that the expiry date was in May 2004 (some six months into the future). That’s quite a lengthy “day”.

I raised a query with one of the hostesses; she didn’t know about the date, and asked if she could take the wrapping. I chose instead to keep it as a souvenir!

However, on my return flight the same expiry date was on the hot food. I asked again, and got the same response. This time I gave the hostess my wrapper, she was still unable to provide an answer; I didn’t get the wrapper back either.

I assume that the ciabattas are frozen, and reheated on demand; ie proper health and hygiene procedures are being followed. However, it is sad to see that the impression of “freshly prepared on the day” is being given; when in fact the food being presented may well be up to 6 months old.

Maybe the use of the phrase “All Day Deli”, and its connotations with freshness, could be construed as a tad misleading? I suppose it all depends on your definition of freshness.

The Pentagon Boeing Affair

The Pentagon announced yesterday that it was putting its £16BN contract with Boeing on hold; whilst it investigates possible links between one of its former procurement officers, who now works for Boeing. It is alleged that the procurement officer was involved in the awarding of the contract to Boeing.

There may, of course, be nothing more to this than a simple internal review of the tendering process. However, it highlights an issue that is often overlooked by companies with respect to their internal controls and codes of conduct.

It is often assumed, falsely, that fraud and malpractice mainly occurs in the sales, stock and cash control areas of the business. Not so, my involvement over the years in fraud investigations (see my resume) proved, more often than not, that a prime area susceptible to fraud and malpractice would be the procurement and purchasing department.

Whether it involves the purchase of a few items of furniture, supplies for the canteen or a multi billion dollar contract; the procurement procedure may be open to abuse if there are weak internal controls eg:

 There is no tendering process, and quotes are only obtained from one supplier.

 The tendering process is not on the basis of sealed bids; this can allow one of the suppliers to find out the quotes of the others, and undercut them.

 The relationship between the supplier and the procurement officer is not “arms length”, and a “deal” is done between them.

 The staff in the procurement office have been in the same position for a number of years, forming close relationships with key suppliers.

Where the above scenarios occur the company, at the very least, runs the risk of paying more than it needs to for the product or service.

I would advise companies to take heed from the Boeing/Pentagon scenario, and review their procurement procedures.

The Light of Perverted Science

We live in an age where, at least in the Western World, technology affects and influences every aspect of our lives. Cars, planes, consumer electronics, the internet, pc’s and mobile phones; are but a few of the myriad of scientific wonders that were designed, and marketed, to improve the quality of our daily lives.

Little more than a century ago our grandfathers could have only dreamed of the power, and the uses, of technology that we now take for granted. Yet are we the masters of this technology, or are we adapting our lives to suit the technology?

This thought struck me the other day as I was leaving a hotel lobby, and walking into the windy wet London street outside. There, sheltering against the side of the hotel, were two businessmen earnestly talking into their mobiles which were pressed to their ears. They looked cold and wet; yet, presumably so that they could talk away from prying ears, they stood outside in the damp and wet.

The question arose in my mind; why not make/take the call at a more convenient time, and location? I suspect that like many others who possess a mobile; instead of using it only when they want, and turning it off when not required, they had become slaves to the idea that it must be left on at all times just in case it rings.

We have all seen fellow airline passengers who, when boarding a plane, have to be reminded to turn their mobiles off. The palpable look of relief on their faces when they disembark, and can reconnect to the ether, is enhanced by the cacophony of bleeping and shrill ring tones emitted by the dozens of mobiles that have all been switched on at precisely the same moment by the other disembarking passengers.

What is so urgent that they cannot wait for the privacy of their car, or home, before reconnecting? The prime example of addiction comes in the form of the gormless teenagers who walk around with mobile phones perpetually glued to their ears, discussing events of mind boggling insignificance; whilst they run up a phone bill of three digits or more.

The reason for this phenomenon is that people have lost sight of the original concept of the technology that they use. Namely, that it was designed to make their lives easier by working for people; not the other way around. People have instead adapted their lives to work for the technology.

I will give you five random examples of other technological innovations, introduced in the last 100 or so years, that we now serve instead of vice versa:

 The car, originally designed to improve the speed and comfort of travel for the individual, is now a hindrance to convenient travel and a blight on the environment. The road network in many Western countries is now so jammed, and the air so polluted, that congestion charging is being introduced to place a limit on the number of cars. Indeed in London, the speed of travel of the average car is in fact slower that that of the Victorian horse and carriage that it replaced.

 The television is a source of entertainment and information, it is now so popular that almost every household in the West has at least one TV set. Yet instead of entertaining and stimulating, it more often than not anaesthetises the viewer. The television age has seen an increase in obesity brought about by the “couch potato” syndrome; as people place themselves in front of the set for a solid four to five hours per day. Social interaction, eg eating together and going out, has declined; as people now order takeaways, and eat in front of the television in silence. Educational experts have noted that the TV generation of children are less adept at social and communication skills; as their parents use the TV as a form of childcare, rather than interact directly with them.

 Email was designed to eradicate the need for “snail mail”, and bring individuals written communication at the speed of light. The problem is, as with mobile phones, people have become addicted to the need to check their mailbox; witness the withdrawal symptoms of the executive away on holiday without twenty four hour direct access to his/her mailbox. The chances are that you will find them surreptitiously sneaking off to the hotel’s pc, and logging in to get their “email fix”. I would also point out that all of us with email are now inundated with spam offering us unwanted garbage, ranging from penis enlargements to Nigerian scam letters .

 Ready to eat meals were designed for the busy person, who does not have time to cook every day. The reality is that these culinary abominations were created (and marketed on television) so that people could spend even more time in front of the television, instead of devoting a little creative energy and thought to the preparation of a home cooked meal. Aside from the obvious stress reducing advantages of preparing food, I would suggest that the ready made meal has a number of disadvantages. It is more expensive than home cooking, it contains more sugar, salt and other nefarious chemicals than are good for you; and it simply does not taste like home cooking.

 Breast enhancements were designed to improve the psychological well being of those women who were seriously affected by their self perceived modest bust size. Now breast enhancement is a multi million dollar industry. Having a “boob job” is a must for every talentless model and actress; as they aspire to the plastic perfection of their childhood dolls.

Like anyone brought up with servants, we have become dependant on the technology that was designed to free us; take it away, and we show withdrawal symptoms. Our lives, as Winston Churchill once warned, are being illuminated by the light of perverted science.