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Major water company uses accounting trick to inflate balance sheet by £1.68bn - BBC News (www.bbc.co.uk)

submitted 2 weeks ago by [email protected] to c/[email protected]

19 comments fedilink hide all child comments

Isn't this called fraud?

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[–] fartsparkles 44 points 2 weeks ago* (last edited 2 weeks ago) (1 children)

Severn Trent Water

The complex accounting trick started in March 2017 when a shell company, with no money or assets, called Severn Trent Trimpley was set up as part of the group. Another Severn Trent company called Severn Trent Draycote - which owns the water company - agreed to buy Trimpley for £2.

Trimpley then issued additional shares and Draycote bought them for a staggering £3bn.

No money actually changed hands, however, as Draycote paid Trimpley with a £3bn loan note - effectively an IOU. But, on paper, Trimpley immediately appeared to be worth £3bn because it had the IOU.

Severn Trent Water then acquired 49% of Trimpley - and that investment was valued in the water company's accounts at £1.47bn. A hugely valuable asset appears to have been created for Severn Trent Water out of thin air.

Panorama discovered the Trimpley investment through the work of retired auditor Stanley Root.

[–] [email protected] 28 points 2 weeks ago (2 children)

This should 100% be illegal

[–] [email protected] 6 points 2 weeks ago (1 children)

Yep.

At the very least, it should make shareholders not trust the numbers. But according to another post, it is not uncommon.

But it's hardly surprising we see crap like the Tory politicians over the last few parliaments. When the corps, they rely on for funding, see this as normal.

[–] [email protected] 6 points 2 weeks ago (2 children)

If they're paying bonuses based on the valuation that they effectively made up, surely that's defrauding the system and their customers? Especially at a time when all these water companies are claiming abject poverty?

I understand that the UK is a safe haven for money laundering, but aren't we supposed to at least pretend?

[–] [email protected] 3 points 2 weeks ago

PS, money laundering doesn't describe this. That requires a money source that must be hidden. (IE, to clean it)

This is simple fraud, as the money never existed. It just allows them to convince shareholders they have assets worth investing in. Instead of cleaning dirty money. They are stealing clean money by lying to investors. Then crapping in the pool.

They have the perfect CV for this.

[–] [email protected] 3 points 2 weeks ago

defrauding the system and their customers?

Yes to 1. 2 is the same thing.

Customers have choices. The current water system only gives those choices to the government. We are water company serfs paying taxes to the gov equivalent of lords.

They are allocated land and rights to charge for exclusive distribute on that land. In exchange for service to the rulers.

Yeah, we ain't the customers the system is. We just pay taxes to the local lords.

[–] [email protected] 4 points 2 weeks ago

This is how a lot of things for rich people work tho