this post was submitted on 10 Dec 2024

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

submitted 1 week ago by [email protected] to c/[email protected]

19 comments fedilink hide all child comments

Isn't this called fraud?

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[–] [email protected] 43 points 1 week ago* (last edited 1 week 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 1 week ago (2 children)

This should 100% be illegal

[–] [email protected] 6 points 1 week 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 1 week 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 1 week 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 1 week 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 1 week ago

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

[–] [email protected] 38 points 1 week ago* (last edited 1 week ago) (1 children)

Isn't this called fraud?

Don't be silly. Fraud is when you give £20 to your neighbour as a thankyou for feeding your cats at short notice, but they don't declare the £20 as income.

This is just "clever accounting" :(

[–] [email protected] 4 points 1 week ago

Try this one clever accounting trick! Tax collectors ~~hate it~~ really don't give a shit.

[–] [email protected] 12 points 1 week ago (3 children)

I'm an accountant and auditor, while it's incredibly misleading, not fraud. They would have to demonstrate to the auditor that the value is correct, it does appear that dividends are being issued so it would probably pass the bar required for valuation.

[–] [email protected] 14 points 1 week ago (2 children)

I'm not an accountant or auditor, but if this was a person rather than a business, they'd be going to jail

[–] [email protected] 7 points 1 week ago (1 children)

It’s as if the rules are different if you’re rich.

[–] 13esq 8 points 1 week ago (1 children)

When you're rich, you make your own rules. Laws are to protect the rich from the dirty poors, not the other way around!

[–] [email protected] 4 points 1 week ago

Forgot about that. As a poor I should know that we are awful.

[–] [email protected] 3 points 1 week ago

if this was a person rather than a business,

Not disagreeing with your point.

But when you take the idea into consideration.

This is a business creating a valueless business, then applying artificial value to increase assets So fraud.

Now your version. A person creates a person. Well not uncommon. But well, everything from there really sounds dodgy.

It really is not possible to remove the business and be talking about the same thing. And its hard to argue it would not be worse.

But yeah, I'm sorta having fun with the words. If a poor/working class human tried to increase assets via fraud. They would be spending time at his majesty pleasure.

[–] 13esq 7 points 1 week ago* (last edited 1 week ago) (1 children)

Something being technically legal doesn't make it technically OK.

If I had just started a new job and my CV was found to be "incredibly misleading", I'd expect to be kicked out the door, not because I'd broken the law or commited gross misconduct, but because I'd been found to be unsuitable for the expectations of the company/customers.

This story is just another straw on the camels back of the privatised water industry that have been using the British tax payer as an ATM for fat cat shareholders for decades, with debts so huge that our children and our children's children will be burdened.

[–] [email protected] 1 points 1 week ago* (last edited 1 week ago) (1 children)

I didn't say it was ok, only that it was probably technically fine

[–] 13esq 0 points 1 week ago

That's semantics. I take it you understood the message I was trying to convey.

[–] [email protected] 1 points 1 week ago

is it run by the spiffing brit?