Published on: 17 Dec 2012
What’s the link between a Financial Controller, a £140 million apartment in London and prison?
Ross Smith, the former Financial Controller of property developer Candy and Candy will have plenty of time to contemplate the link as he is currently in prison serving a sentence for stealing nearly £100,000 from his employers.
As the Financial Controller of the Property Developer Candy and Candy, Mr Smith was able to access funds that clients had deposited with the company to pay for improvements on a number of luxury properties in the UK.
One of these properties for example was at the prestigious “One Hyde Park” Development in London.
Now, One Hyde Park isn’t your average property development.
It contains over 80 properties and the “cheapest” one starts at £20 million.
The UK’s most expensive property – a 6 bedroom apartment – was sold there for the staggering sum of £140 million!
Even though Candy and Candy had some of the best properties in the world on their books it’s fair to say that their internal controls weren’t up to the same standard.
Mr Smith simply created false invoices to redirect funds into his personal bank account. He actually got away with the fraud for a number of years until it was spotted as part of a routine check.
Going back to One Hyde Park though and if anyone is interested there is currently an apartment for sale there.
Full details are on the Estate Agents website and the good news is that it’s a lot cheaper than the £140 million that the penthouse went for.
This one is on the market for a mere £65,000,000.
Now, before you all go and rush out and buy this property it’s worth remembering that the average property price in the UK at the moment is just under £250,000. So, instead of buying the one apartment why don’t you spend your £65 million on 260 “average” properties instead…
Published on: 01 Nov 2012
James Bond – fast cars, fast women and saving the world. It’s all in a day’s work for 007.
A lot of the readers of this blog are accountants and as accountants we all know from personal experience that driving fast cars, entertaining fast women and saving the world can be a very tiring business.
So, what better way to unwind at the end of the day than with a drink of Mr Bond’s famous “shaken, not stirred” vodka martini?
Mr Bond has been drinking his vodka martinis (shaken, not stirred) since the Dr No film was released 50 years ago.
Anyone that goes to see the latest Bond movie Skyfall that was released last week though won’t see him drinking the famous “007 drink” but instead will see him drinking a nice cool Heineken beer.
We’ve highlighted before how good Heineken are at guerrilla marketing and the latest Bond movie is a great example of product placement.
Product placement is where a company’s products are “placed” into films and TV shows. They aren’t explicitly advertised but rather it’s a more discrete promotion where people “subconsciously” see the product.
Heineken no doubt paid a significant amount of money to have their product in the hands of the legendary spy and I have to say that it works well.
After all, a quick meeting in the office today amongst the male members of the team came to the conclusion that the photo above of bond girl Berenice Marlohe holding a bottle of Heineken beer was one of the finest examples of post-modern contemporary photographic artwork.
One final thing though and now that you’ve driven your fast car, entertained a fast woman and saved the world today, before you settle down tonight in front of the TV with your slippers and you reach for your Heineken beer, remember that a bottle of beer doesn’t react well to being shaken or stirred…
Published on: 29 Oct 2012
One of the general duties of company directors is to exercise reasonable skill, care and diligence.
Three directors by the name of Robin Reichelt, Stephen Nathan and John Gibbs were clearly not exercising any of these attributes though.
Whilst on the face of it their plan to reclaim VAT on the purchase of a hotel sounded ok, in reality there were a number of things which didn’t quite work or to put it more bluntly, a couple of things which were completely illegal.
The background to the situation was that one of their group companies sold a lease to a central London hotel to another of their group companies.
The company that “sold” the hotel went into liquidation after selling it and the company that bought the hotel then submitted a claim for a refund of over £200,000 of related VAT.
The whole thing was completely illegal however as not only did they not pay the VAT in the first place (so had nothing to claim back) but the hotel didn’t even belong to the group company that had claimed it had sold it!
So, in summary they claimed to have sold a hotel that they didn’t even own to another group company and claimed back VAT that had never been paid. What could possibly go wrong??
Well, they will have several years in jail to contemplate what went wrong and to plan their next great money making idea…
Published on: 26 Oct 2012
Such is the spread of large accounting companies around the world that there are very few countries left where you can’t find an office of one of the Big 4 or mid tier companies.
Myanmar in Asia was until recently one of the few countries that hadn’t had the pleasure of international accounting companies being present.
Things are changing though and the people of Myanmar (also known as Burma) will shortly be seeing the KPMG logo on offices as KPMG has just announced that they will be the first Big 4 company to open up offices in Myanmar.
According to KPMG, Myanmar is widely seen as the “next economic frontier” in Asia and recent easing of international sanctions against the country has “sparked a great deal of interest from investors globally”.
Kaisri Nuengsigkapian, CEO of KPMG in Thailand has led the initiative to extend operations to Myanmar and says that “Myanmar is the second largest country in Southeast Asia, and literally at the center of opportunity in the region. Investors are flocking to the country and are excited about the possibilities they are finding.”
Initially the company will be offering Tax and Advisory services with the plan being that Audit services will follow later (presumably not to audit the tax advice given by their colleagues though…)
So, congratulations to KPMG for being the first and how long will it be before the others join them?
By the way, the photo above shows Taung Kalat in Myanmar and is not a photo of KPMG’s new offices.
Published on: 15 Oct 2012
Ok, so he jumped from a height of 39 km (24 miles) and he’s travelled faster than the speed of sound but surely Red Bull was taking more of a risk than Felix Baumgartner.
If you were like me and were one of the millions around the world who last night watched the inspirational (or some would say mad) Austrian break world records by parachuting from the edge of space then I think the risk was surely with Felix.
As I watched it I was so impressed. Not only by the bravery of Felix but also the technology that allowed people around the world to watch live footage from the edge of space.
If you look at some business concepts around the event though there are a couple that spring to mind.
First of all, whilst it turned out to be a huge success for the sponsors Red Bull, if there had been some problems for poor Felix and he didn’t make it back to earth in one piece the negative publicity would have been pretty bad (admittedly not as bad a feeling for Red Bull compared to what Felix would have felt but still pretty bad none the less).
The business risk of undertaking such a stunt by Red Bull would no doubt have been reviewed in detail and numerous precautions put in place. One simple precaution was that the live footage was in fact with a 20 second delay so that in the unfortunate event of something going dramatically wrong, the live feed could be cut before millions around the world saw Felix explode into thousands of small pieces live on TV.
Red Bull is an energy drink that has a brand image of “speed and adventure” and have sponsored numerous events such as aerobatic flying and extreme mountain biking. This was their most ambitious event yet though and its success has been reported as being equivalent to £100 million of advertising spend.
In other words, the publicity that Red Bull got from the event was equivalent to them spending £100 million on advertising.
The second business issue that occurred to me was that I saw the event live on YouTube and I wasn’t the only one. A record number of 8 million viewers saw the event live on YouTube.
Is this going to be the way forward for viewing live events?
Will more and more events be shown live on YouTube and will more and more people watch things on YouTube?
If you’re working in the strategy department of a TV company for example then you should definitely be reviewing the rise of importance of sites such as YouTube.
On the subject of YouTube I’m delighted that we’ve recently put some free ACCA, CIMA and FIA courses onto YouTube at www.youtube.com/theexpgroup
One thing for certain though is that we will never get anywhere near the number of YouTube views that Red Bull’s historic event received but then again making our videos wasn’t quite as dangerous…
Published on: 12 Oct 2012
McLaren are one of the top Formula One motor racing teams. They are not only experts at ensuring cars are driven fast around racing circuits but they are also experts at ensuring that £34m fines are tax deductible…
Back in 2007 McLaren were fined £34 million pounds because it “had possessed and in some way used proprietary information belonging to Ferrari, and had thereby breached the rules of the FIA’s International Sporting Code to which McLaren was contractually bound”.
Or to put it another way, they had cheated by photocopying an 800 page technical document belonging to Ferrari that detailed the designs of the 2007 Ferrari cars.
Formula One’s governing body, the Federation Internationale de L’Automobile (FIA), weren’t happy about McLaren taking this approach and ordered McLaren to pay a £34m fine which they duly did.
The interesting thing though is that in their UK company tax return McLaren claimed a tax deduction for the fine.
In the UK as well as most countries around the world, fines are not tax deductible. This means that the expense does not reduce the level of profits on which tax is calculated.
McLaren argued though that this particular fine was tax deductible (i.e. the expense could be used to reduce the level of profits on which tax was applied). They said that it wasn’t a statutory fine for breaking the law (which would be non tax deductible) but instead was a fine imposed by their governing body and as such was a genuine business expense incurred in their trade which should be tax deductible.
The UK tax authorities understandably didn’t agree with this viewpoint and the argument went to an independent tax tribunal who surprisingly agreed with McLaren and said that the fine was tax deductible.
A surprising decision and there’s no truth in the rumour that the head of the independent tax tribunal is currently driving around in a McLaren…
Published on: 04 Oct 2012
Whilst wearing Louboutin shoes and eating Cadbury chocolate would probably represent a pretty good night out for lots of women around the world, they are two very different products.
Louboutin shoes are top of the range designer ladies shoes that can cost well in excess of £1,000. They are worn by
female auditors undertaking inventory counts in dusty warehouses some of the most famous (and wealthiest) women in the world.
Cadbury on the other hand are a UK company that has been producing chocolate bars since 1824.
So, what have they got in common?
The answer is colour and both companies have managed to get a trademark for the distinctive colour that is used in their products.
Most major companies will have trademarks on their name or logo but having a trademark on a colour is pretty unusual.
Louboutin shoes have a distinctive red sole and a couple of years ago they were successful in trade marking these red soles.
Cadbury has just been successful in registering its right to use their distinctive colour purple on their chocolate packaging. It wasn’t an easy process though as they first registered their right to use the colour purple back in 2004.
After they applied for the trademark 8 years ago, Nestle, a major competitor to Cadbury argued against the registration by Cadbury and the matter went to court.
The court case was finally settled this week with the judge deciding in favour of Cadbury.
This means that Cadbury are now the only company in the world that can have chocolate wrappers with the colour purple. Well, to be precise, they are the only company in the world that can have the Pantone 2685c purple colour on their chocolate wrappers.
Now, I’m an accountant and not an artist or designer but I do wonder just how different the Cadbury trademarked Pantone 2685c purple is from Pantone 2684, 2686, 2687…
Published on: 02 Oct 2012
I think that Ernst & Young (EY) are a great company but if I’m honest I think they are missing something.
I know a lot of people that work at EY and overall they seem to be both pretty switched on and very professional but I think they’ve got something seriously wrong.
For several years now there has been a financial crisis in most countries around the world. The term “recession” has been in all the papers and on the TV.
Companies around the world have been cutting back on staff and their sales are down.
But what about EY?
Surely they should also be following suit with a reduction in sales and staff cuts?
Well the impressive news is that they have just released their latest annual results and they appear to have got it completely “wrong”.
Their combined global revenue for the year ended 30 June 2012 grew by nearly 8% to US$ 24.4 billion (personally speaking I always feel that billions look far more impressive when written with all the zeros so US$ 24,400,000,000)
All of their service lines showed good growth (Assurance revenues were up 4.1%, Tax 7.0%, Transactions 9.4% and Advisory 16.2%).
Jim Turley, Global Chairman and CEO of EY said that “we are pleased that our business showed good results, the best since 2008, in the midst of what has been several years of uncertainty.”
In terms of regional growth then the emerging BRIC nations did particularly well with Brazil growing 17.5%, India 19.8%, Africa 10.2%, China 11.8% and the CIS 15.6%.
In the UK the growth was 11% and this was the highest level of growth in 6 years. Over 1,200 new jobs were created by EY in the UK last year and Steve Varley, UK Chairman and Managing Partner of EY appears to be committed to making EY in the UK a diverse and inclusive employer.
He said “Continuing to lead on gender diversity among the Big Four is something I am very passionate about – 28% of our UK leadership team and 18% of our partners are female. I know we can do more and I know we need to move forward so that we focus not just on gender, but also on the ethnic diversity of our people and partners.
So we have been bold, setting an aspirational goal that at least 30% of all our new UK partners are women and at least 10% are BME (black, minority ethnic) by 2015. We’re clearly not there yet and aspirations alone won’t drive change, but we believe diversity and inclusiveness is a business imperative.”
So, in summary there’s a global recession on and yet EY have increased sales in all their service lines, their global revenue has increased by nearly 8%, they’ve recruited significant numbers of people and are committed to a diverse workforce going forward.
Somehow I don’t think that EY have got it wrong…
Published on: 30 Sep 2012
It’s human nature that most people would probably prefer to pay less tax. To be honest though taxes need to be paid as without them the government wouldn’t be able to pay for, for example hospitals, schools, the police, infrastructure such as roads and if you’re in Italy then if taxes weren’t paid there wouldn’t be any private planes, parties and yachts for tax collectors.
Hang on a moment. What did that last sentence say?
“Private planes, parties and yachts”.
Yes, that’s right as earlier this week Italian police arrested Giuseppe Saggese, the head of Tributi Italia (Italy Taxes) and he has been accused of stealing some pretty significant amounts of money.
Tributi Italia is an agency based in Genoa that collects taxes for 400 town councils in Italy and as head of the agency Mr Saggese was no doubt earning a pretty good salary.
Unfortunately for the town councils (and in fact, unfortunately for Mr Saggese now that he’s been arrested) it looks like he was tempted to increase his “remuneration” from the job by some illegal methods.
Together with four colleagues Mr Saggese is accused of arranging for some of the taxes to be paid into the other bank accounts rather than the bank accounts of the town councils. The money was then used to pay for private planes, yachts, expensive cars and extravagant parties.
Even after Mr Saggese no doubt attended some pretty impressive parties on some private yachts this wasn’t enough to satisfy him as he is also alleged to have taken Euro 20 million in cash for his own use.
As I said at the start, it’s probably human nature to prefer to pay less tax and I should imagine that the residents of Genoa in Italy will be especially upset knowing that their taxes were spent on private planes and parties rather than hospitals and schools.
Published on: 26 Sep 2012
Here’s an interesting question. If you resign from your job, what should your resignation letter look like?
Should it be simple, brief and straight to the point or should it be sent to the whole office and include various accusations about your boss including a certain, how shall we say it but, adult liaison in a meeting room with a colleague?
Well if your name is Kieran Allen then the second option appears to be the correct answer.
Mr Allen used to work for MEC, one of the leading media agencies in London. Yesterday he resigned and his resignation letter contains some pretty juicy accusations.
Now whilst this isn’t the first resignation letter that contains some juicy accusations it is the first resignation letter with juicy accusations that has gone viral on the Internet and as a result has been seen by millions around the world.
To avoid a knock at the door from some lawyers, I’ll keep the manager’s name anonymous (although if anyone wants to see the full letter then a simple search on the Internet will reveal it!) but Mr Allen claimed that he left MEC after 2 1/2 years of “loyal service” because of the treatment he received from his manager.
Mr Allen claimed he was forced to take time off work due to stress after being overloaded with work by the manager and he claimed the manager made him feel like a complete outsider on his return.
We’ve all been overloaded with work at some stage or other so this is initial claim isn’t that exciting.
The more interesting accusations though were when he claimed in his letter that the manager “regularly made sexist and other bigoted remarks” and “took a female colleague out for a drink on the day he interviewed her, then took her back to the MEC offices that night and had sexual relations with her in the meeting room on the 3rd floor”.
Mr Allen then went on to say that all of these allegations were “common knowledge throughout the team”.
Some people will applaud Mr Allen for his resignation letter whilst others (no doubt including his manager) will say that he should have kept his issues to himself.
Either way there are some serious lessons to be learnt from all of this. For example, it’s probably advisable to make sure you knock on the door of the meeting room on the 3rd floor at MEC before opening it…