An earlier posting in the wake of the Lehman’s failure criticises the insolvency sector and in particular Price Waterhouse Coopers(PwC) for its ability to rack up huge bills without proper policing. The posting also suggested that it was almost immoral that in the light of the banking failures generally, a group of prosperous accountants were going to benefit even more. I suggested that perhaps the insolvency industry should be government controlled.
You can imagine my joy when I read in the May edition of Accountancy that 234,578 hours have so far been billed by PWC at Lehmans. Apparently, that works out at 9,774 days or nearly 27 years. Yes, that’s over 230,000 hours. Even at an average and very modest rate of £150 per hour, (and I suspect the average rate is considerably higher than that), that amounts to over £35m in fees. In fact, the level of fees earned by them so far during its administration is £77m, equating to an average rate of £328 per hour.
Personally, I feel the whole thing stinks. Banks and bankers are one of the major causes of the situation we find ourselves in and I don’t like the idea that another group of greedy people in the finance sector that I am a part of, should earn so much money clearing up the mess.
I still can’t see any reason why some insolvency services can’t be run by the government. Why in theory is it any different to the CPS and the administration of legal cases. Surely it is in the public interest for certain types of insolvency proceedings to be run by central government. High profile insolvency administrations such as Lehmans, and other cases that are definitely in the public interest, particularly where there have been sizeable job losses, should be administered centrally.