Contributing Member of the Accounting & Financial Analysis Councils

All News Analyses by this Author

Royal Bank of Scotland and Lloyds - The Price of Failure

November 3, 2009

Analysis of:U.K.’s Darling Says RBS, Lloyds Sell-Off Will Boost Competition | www.bloomberg.com

Given that RBS and Lloyds are in a complete mess, thanks to their own inept management, I don't fully "grasp" how it is that any senior manager is entitled to receive a bonus.By paying part of the bonuses in shares, the current shareholders will find their holdings diluted, and the management will be incentivised to talk the value of the shares up in future (a la Enron) in order to maximise their personal gains.Is this really an improvement in the corporate governance of these two failed banks?

The DPRK (North Korea) Location, Location, Location

September 21, 2009

Analysis of:Goldman Sachs Has a Different View of Korean Unification | online.wsj.com

The DPRK (North Korea) represents one of the last “green field” economies in the world with exceptional investment opportunities.As such it provides an unparalleled opportunity for business professionals who know and understand the risks, the people and the country. As estate agents are fond of saying it is a case of “location, location, location”.

The Driver for The De Beers Marketing Campaign

September 16, 2009

Analysis of:The Everlon Diamond Knot | www.jckonline.com

The marketing campaign can be viewed as a "test" campaign to determine whether other products can be individually branded in this manner.The question is, does De Beers have enough money to finance an ongoing campaign that it hopes can renew its image?

Bank of America and The Lesson of Parmalat

September 15, 2009

Analysis of:Bank of America liable for fraud, judge told | www.thestar.com

Parmalat (once Italy’s largest dairy company) was "Europe’s Enron".In my experience, fraud and corruption in an organisation can only be rooted out if my “five principles of good governance” are followed.When something stinks, you open the window and throw it out.

Snouts in The Trough - The Lessons of MG Rover

September 11, 2009

Analysis of:UK government seeks to bar directors over MG Rover demise | www.reuters.com

It would seem that it is not just bankers and politicians who can't resist putting their snouts into the trough, seemingly the ex directors of MG Rover could not resist taking a dip either. Rewards should only be commensurate with abilities and results.

The Basel Group Plays a Reactive Game

September 8, 2009

Analysis of:Basel Group Agrees on Bank Standards to Avoid Repeat of Crisis | www.bloomberg.com

There is no perfect solution, at best the regulatory authorities will only ever be able to play a reactive game to economic shocks such as the banking crises.

The Lesson of Lehman Brothers

September 6, 2009

Analysis of:Lehman Brothers, the bank that bust the boom | www.telegraph.co.uk

It is self evident that Lehman Brothers would still be in existence today had they rewarded Fuld and his cronies for not changing the risk structure of the bank, and not leveraging it into oblivion. The lesson here is one that all professional business people know full well, but some seem to have forgotten, bonuses should be aligned to key performance indicators (KPI's) that genuinely add value to the company's bottom line.

Advice To Google Re Its Gmail Outage Fiasco

September 2, 2009

Analysis of:Google apologises for Gmail outage | www.guardian.co.uk

There are several lessons to be learned here: 1 Have a second email account that is with another company, and ensure that your email contacts know of it. 2 Ensure that there are other means of communicating urgent messages, other than via email. 3 Ensure that there is a robust and well tested disaster recovery/contingency plan in place. 4 When you are explaining to your customers why the system failed, don't lie

The Consequences of The UBS Tax Evasion Cases

September 1, 2009

Analysis of:IRS Corporate Audit Division Will Examine UBS Tax Evasion Cases | www.bloomberg.com

As the IRS examines the 4,450 UBS AG Swiss bank accounts it would do to remember that companies offshore as well as individuals. If you do not understand the structure of the company, or the role/purpose of its offshore holdings then treat it with extreme caution. The international regulatory environment (wrt offshore companies and tax treaties) will tighten over the next few years, thus making it increasingly difficult for companies to use these dubious structures.

The Financial Services Authority Plays To The Gallery

August 28, 2009

Analysis of:FSA Chairman Suggests a Tax on Banks, Drawing a Lot of Fire | online.wsj.com

The Financial Services Authority (FSA), fearful of being shut down by the incoming Tory government, has indulged in popular politics and made some suggestions that play to the gallery wrt taxing bankers' bonuses. This suggestion is a non starter, as Britain (like it or not) needs a robust financial services industry, given that it has no manufacturing base to speak of.

HMRC's Island Haven

August 26, 2009

Analysis of:Closing the Havens | www.ft.com

HMRC scored something of an embarrassing own goal, when it signed up with Mapeley.

The Reality of UBS and Liechtenstein Tax Settlements

August 25, 2009

Analysis of:Swiss Don't See Defeat in Deal to Give Names to U.S. | online.wsj.com

The settlement between the Internal Revenue Service and UBS AG has been hailed around the world as a victory for U.S. tax authorities. In the UK similar moves against offshore tax evaders have been made by Her Majesty's Customs and Revenue (HMRC). As HMRC resorts to increasingly desperate measures, it should consider the cost benefits of such "fishing trips". Will the extra tax raised cover the administration costs incurred by both HMRC and the banks?

An Idiot's Guide To Assessing Organisational Performance

August 24, 2009

Analysis of:Buffett Payouts Climb on Credit Swaps After Defaults | www.bloomberg.com

The biggest surge in corporate failures (and near failures) since at least 1970 (some high profile eg; Royal Bank of Scotland (RBS), Northern Rock, Lehman Brothers etc), lead me to conclude that effective corporate governance is merely a phrase to be trotted out to the media by management. I have put together a basic checklist of questions that one should ask, when making a judgement as to the effectiveness of an organisation’s management. How does your own organisation measure up?

Hands Off Government - Non Intervention in Pay Deals and Diversionary Tactics

August 22, 2009

Analysis of:Obama Taking Hands-Off Stance on Citi, AIG Pay | www.bloomberg.com

The financial services industry in the UK does not care one jot what the Financial Services Authority (FSA) does, or says. The FSA truly is a creation of the politicians!

Royal Bank of Scotland To be Spot Checked - Who Cares?

August 21, 2009

Analysis of:City regulator 'spot-checking' bankers' pay deals | business.timesonline.co.uk

As and when the FSA is abolished by the next Conservative government, who are likely to win the next election, the only people who will mourn its passing will be those in the financial services industry whose interests it has protected since its creation.

The “Road to Nowhere”- The Delusion of the Burgeoning Public Sector

August 20, 2009

Analysis of:Government debt soars as tax receipts fall | www.citywire.co.uk

The resolution to the problem of the state sector, and Britain's burgeoning public sector debt will not be painless. Whichever party wins the next general election they will need to implement: - cuts in jobs, public sector salary freezes and an ending of defined benefit pension schemes in the state sector - tax rises The outlook for the UK is far from rosy.

Contingency Planning - The Basics

August 19, 2009

Analysis of:In case of emergency: Business contingency plan needed | www.nydailynews.com

Given the current global risks wrt terrorism, swine flu, and general "sod's law", it is appropriate to address the much overlooked issue of contingency (disaster) planning. Do you know what to do in the event of a disaster? Should you work for an organisation where there are gaps in the contingency plans, then draw their attention to this checklist.

Ongoing HMRC Data Security Issues

August 18, 2009

Analysis of:ICO: HMRC breach - where were the tech safeguards? | www.silicon.com

It seems that there are still security issues wrt HMRC. It is regrettable but HMRC still don't seem to "get" data security.

De Beers Finances - The Dangers of EBITDA

August 17, 2009

Analysis of:De Beers Finances, Contd. | www.jckonline.com

To rely on EBITA and highlight it to one's shareholders/bankers is at best misguided, at worst misleading.

Royal Bank of Scotland Under Investigation

August 17, 2009

Analysis of:Taxpayers take 70% of Royal Bank of Scotland | business.timesonline.co.uk

The timing of the FSA investigation into the Royal Bank of Scotland is "interesting", to say the least, coming as it does hot on the heels of a class action by local government pension funds who are trying to sue RBS. Could it be that the FSA investigation is a whitewash?

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