Trio facing censure for their role in fire engine firm's market collapse

The Financial Reporting Council (FRC) has rebuked former top brass of AssetCo, the firm that used to lease London’s fire engines, over an accounting scandal dating back to 2009
Gary McDonald Business Editor

THREE once-prominent Northern Ireland businessmen are facing potentially hefty fines and censure from an accountancy regulator for their roles in the alleged misconduct relating to an AIM-listed fire engine firm now based in the Middle East.

The Financial Reporting Council (FRC) has rebuked former top brass of AssetCo, the firm that used to lease London’s fire engines, over an accounting scandal dating back to 2009.

It has made a formal complaint over the conduct of AssetCo's former chief executive John Shannon (51), ex-chief financial officer Frank Flynn (53) and former financial controller Matthew Boyle.

The FRC alleges the trio “acted dishonestly or recklessly” and “breached the fundamental principles of integrity and objectivity” in relation to the preparation and approval of AssetCo plc’s financial statements for the trading years ended March 2009 and March 2010.

In 2012, the company was forced to make prior period adjustments for 2010 that wiped more than £235m off its balance sheet, and AssetCo's share price plunged from £6 to around £1.

The company - which once supplied fire engines to more than 100 London Fire and Rescue Service stations - had to be bailed out in 2011 before selling its UK business to focus on the Middle East.

If the three are found guilty, they face a range of sanctions, such as six-figure fines and/or unlimited costs.

Until October 2015 Raymond Francis (Frank) Flynn had been listed as a director of Belfast-based defibrillator maker Heartsine before it was acquired by a US company.

Shannon is still listed as an active director of minibus and ambulance maker UV Modular in Brighouse in Yorkshire, which has been in administration since 2010 but which has not yet been liquidated by PwC.

His address is given as Loughanmore Road in Dunadry, though the property has been up for sale for many months.

It is not known if any or all are still living in Northern Ireland, and it is believed they could still retain some business interests in the Middle East.

In a statement to the Irish News the FRC said: "Regarding the formal complaint against Raymond Flynn, John Shannon and Matthew Boyle, their case is due to be heard by a disciplinary tribunal, which will announce the date in due course."

Stemming from AssetCo accounting fiasco, last month the FRC slapped a £3.5 million fine on accountancy giant Grant Thornton (which was lowered to £2.3m to account for a settlement discount) and fined retired partner Robert Napper £200,000 (later reduced to £130,000) for their roles.

It also issued Grant Thornton with a "severe reprimand" for its misconduct and excluded Mr Napper from the Institute of Chartered Accountants in England and Wales for three years.

The censure applied to Grant Thornton in Britain only - and not on its Northern Ireland operation.

Gareth Rees QC, Executive Counsel to the FRC, said: “The respondents have admitted widespread and significant failings in their audit work, and Grant Thornton specifically has accepted there were serious failings in the execution of certain aspects of the firm’s quality control procedures.

"This misconduct is rightly reflected in the seriousness of the sanctions, such as the exclusion of Mr Napper from membership of the ICA and the fines on both respondents.

"These sanctions will send a strong signal to the audit profession of the importance of upholding high standards of conduct. They will also serve to protect the public and deter future misconduct in the audit profession.”

In a separate legal action, AssetCo has also brought a £38 million negligence claim against Grant Thornton in Britain over its handling of the 2009 and 2010 audits.

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