Cable Calls for ICAEW Probe into Comet Administrators
A government agency of United Kingdom (UK), Insolvency Service, has referred some of UK’s most experienced liquidators for disciplinary measures with respect to their services on closure of Comet administration.
Vince Cable, business secretary of Insolvency service, declared that they have referred the services of three partners of Deloitte, Christopher Farrington, Nicholas Edwards and Neville Kahn to Institute of Chartered Accountants of England and Wales (ICAEW).
The service has raised two main issues. First of all, there may be a conflict of interest as Deloitte was providing services to Comet before its dissolution. Secondly, there was no proper consultation with employees on probable termination as required by law. This issue has been subject to legal battle where an employment tribunal has ruled that 2000 ex-employees of Comet should receive £10 million as laying-off payment. Another verdict is soon to be issued whether 4,000 other former workers of Comet are subject to such payment which shall result in £26 million termination bill to be borne by tax payer. Cable said that Deloitte’s negligence is about to cost millions of pounds to tax payer.
He further stated that law is very clear and there cannot be any justification for not obeying it. He said that it is important for regulator to identify the reasons for this negligence, so rightful actions can be taken against liquidators.
He stated that situations like these highlight the need for stronger liquidation regulation administration which ensures that appropriate actions are taken for any wrongful acts.
Deloitte stated that they will provide full cooperation in any inquiry. However they did not agree on the matter of conflict of interest. They said it is not rare to have provided advisory services to firm and then later get appointed as its liquidator as it is beneficial to have prior knowledge of its operations.
They further added that all workers were informed in writing of potential termination and consultations were made at sites where union representatives were also summoned. They said a lot of hard work was done to save the Company but could not do so and employees had to be terminated. They said that job fairs were conducted which were attended by lots of ex-employees of Comet.