His brief is "to ensure that participants in nuclear new build deal with these costs". How effective will he be? Perhaps looking at his past might give us an idea.
KPMG and PFI
KPMG is an accountancy firm relied upon heavily by New Labour especially in connection with PPP/PFI schemes.
These are well documented (eg, in Private Eye) as being bad for public finances as they appear to be 'off the balance sheet' for the Treasury, yet commit taxpayers to decades of funding for what by then will be old infrastructure, eventually costing far more than they would have otherwise.
Stone's past
KPMG partner Dr Tim Stone was the Ministry of Defence’s adviser on the ‘Future Strategic Tanker’ PFI scheme, which is estimated to have a value in excess of £13billion. Under the scheme aerial tankers that enable planes from Diego Garcia in the Indian Ocean to bomb targets in distant Iraq by refuelling them mid-air were supplied and partly staffed by private firms.
Stone is also a lead advisor on the £20billion Military Flying Training Services deal.
Stone advised the Department of Health on the PFI, while his company acts at the same time for firms bidding for hospital privatisation. KPMG advised on the first ever hospital PFI, at Dartford. The firm’s fees soared from an original £152,000 to £960,000.
The National Audit Office (NAO) found the scheme made no financial savings, but did reduce bed numbers.
In 2001, KPMG handled the figures on the PFI contract for the West Middlesex University Hospital in Isleworth. The NAO found that when KPMG worked out privatisation would be disproportionately expensive the accountancy practice discovered £12.5m of imaginary public-sector ‘risks’ so the sell-off could go ahead.
Stone has been heavily involved in many major acute hospital transactions, road and IT PFI deals, including the NHS' infamously wasteful and inefficient £3.2bn national IT programme and the similarly disastrous Department for Work & Pensions Accord deal which is the largest non-military IT procurement in Western Europe.
Involvement in fraud
In 2001 Xerox paid the US' Securities and Exchange Commission (Sec) $10m after admitting it had inflated its accounts by £3.9 billion between 1997 and 2000. Guess who passed the fraudulent books? Yep, KPMG, which was then also subject to a Sec investigation and in 2005 was ordered to pay $22m to settle the litigation.
In April 2002 a new auditor took over from KPMG at its client German software firm Comroad. It found that 97 per cent of Comroad's reported 2000 sales came from a non-existent company.
Also in 2002 KPMG paid $45m to creditors of German drilling firm FlowTex. A KPMG audit had approved the firm's books even though they were padded with pretend business.
Par for the course in the nuclear industry
Is this how the nuclear industry is going to appear to be dealing with all the costs of decommissioning?
It has a long and noble tradition of deceit and fraud, cover-up and evasion, not to mention cooking the accounts.
Darling evidently has found the perfect man to continue the tradition.
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