(^) Daily Mail, Friday, August 16, 2019
Deloitte facing court fight
DELOITTE faces a court battle
and a probe by regulators over
its failure to spot a £160m fraud
at a collapsed telecoms firm.
The Big Four auditor was in
charge of checking the books for
H2O Networks but is accused of
missing warning signs that led
to the company’s demise.
Its alleged failings have now
been passed on to the Financial
Reporting Council (FRC) watch-
dog by former H2O chief execu-
tive Elfed Thomas, who has also
launched legal proceedings.
H2O, which laid fast fibre-optic
broadband cables in Britain’s
sewers, collapsed into adminis-
tration in 2011 after it was found
to have taken out loans from
banks through a firm called
Total Asset Finance, based on
contracts which were inflated in
value or did not exist.
Four men, including H2O’s
former finance chief Carl Cumis-
key, were found guilty of con-
spiracy to make corrupt pay-
ments and conspiracy to commit
fraud in 2017 after a Serious
Fraud Office probe.
Thomas, 59, was acquitted and
has since commissioned a report
into H2O’s books by forensic
accountants. He says this found
that Deloitte missed clear warn-
ing signs that could have led the
fraud to be uncovered sooner.
His claims have been submit-
ted to the FRC and he has also
instructed lawyers to begin pro-
ceedings against Deloitte.
It comes as the audit industry
reels from a string of scandals.
Deloitte was fined £4.2m last
month for failing to spot out-
sourcer Serco had falsely billed
the Government for electroni-
cally tagging criminals who were
dead, back in jail or abroad.
Deloitte declined to comment.
HOMEOWNERS seized on ultra-low interest rates
to remortgage in June, while buyers held back
amid political turmoil.
A total of 16,880 remortgages were agreed, up
8.3pc from the same time last year, says trade
body UK Finance. But loans to first-time buyers
slipped 1.5pc to 32,760, and home mover mort-
gages fell 3.6pc to 31,000.
Rates are close to record lows – with the aver-
age five-year deals charging interest of 2.8pc,
according to data firm Moneyfacts – and cus-
tomers are scrambling to lock in these deals.
Andrew Montlake, of mortgage broker Coreco,
said: ‘We’ve been flat out, driven by people tak-
ing advantage of stupendously low remortgage
rates. Paradoxically, the growing likelihood of a
No Deal Brexit and the uncertainty that could
bring has created a lot more activity.’
The average age of first-time buyers was 32,
and the average loan size was £172,158.
Rush for mortgage
deals before Brexit
SAVERS’ reports of investment fraud have almost
doubled in the first six months of the year to more
than 8,000, official figures reveal.
If the surge continues at the same pace, the tally
will reach an all-time high by the end of this year.
Scammers try to persuade families to part with
their nest eggs by guaranteeing high returns on
their savings. But in reality the investment does
not exist or cannot deliver promised returns.
Fraudsters also convince families to plough their
money into risky investments and last year 9,398
scams were reported, according to National Fraud
Intelligence Bureau figures released to invest-
ment broker AJ Bell.
So far this year, there have been 8,153 reports.
The number of pension scams reported has dras-
tically fallen following a ban on pension cold calls,
after new tax rules were enforced in 2015.
Tom Selby, of AJ Bell, said: ‘As pension scam
reports have fallen, the number of people falling
prey to scams focused on investments has contin-
ued to rise and look set to hit record highs.’
Fraud reports set
to hit record high
Page 72
Trade fears hit the
markets in Europe
MARKETS across Europe
suffered another day of falls
as the trade row between
the US and China took
another turn for the worse.
The FTSE 100 hit its lowest
level in six months, falling 1.1pc
to end at 7067 points, trimming
around £20bn off the value of
Britain’s biggest companies.
It came as China threatened to
retaliate against the latest Ameri-
can tariffs, and attacked the US for
‘seriously violating’ trade rules.
Other major European indexes
also ended in the red, with France’s
CAC 40 closing down 0.3pc and
Germany’s DAX shedding 0.7pc.
In a roller coaster week for stock
markets, a seeming relaxation in
tensions between America and
China on Tuesday provided a wel-
come boost for bourses.
The US had agreed to delay slap-
ping tariffs on a range of Chinese
products, such as mobiles and lap-
tops, for several months to allow
American retailers to build up
stockpiles in the run-up to Christ-
mas. But on Wednesday, pessimis-
tic economic data from China and
Germany seemed to indicate that
the world could be on the brink of
recession. The Dow Jones fell 3pc,
or 800 points, as a result and other
markets followed it.
Yesterday, US indexes were
buoyed by positive results from
retail giant Walmart and better-
than-expected figures for the
retail sector. The Dow rose 0.4pc,
or 100 points, the S&P 500 was up
0.3pc, or 7 points, but the Nasdaq
was off slightly, dropping 0.1pc,
or 5 points.
Traders are worried that the spat
between the US and China could
tip an already-fragile world even
closer towards recession.
Craig Erlam, senior market ana-
by Francesca Washtell
ENERGY firm Cuadrilla has
restarted controversial fracking
work at its Lancashire site.
It will finish drilling a second
well at the Preston New Road
facility by November 30 and will
test how much gas flows out.
Hydraulic fracturing, known as
fracking, is a process where
water, sand and chemicals are
blasted into a well at high speed
to fracture the rock around it to
release trapped gas or oil.
But it is known to generate
tremors, including two minor
earthquakes that Cuadrilla set
off near Blackpool in 2012 which
brought the process to a halt.
Cuadrilla has been in a tussle
with the Government over a
strict system that means com-
panies must pause operations
for a short time if the fracking
generates tremors above 0.5 on
the Richter scale.
Companies claim this is too
strict as disturbances at that
level are not felt above ground.
The rules meant that when
Cuadrilla began to frack a well
last year, it only completed work
on two out of 41 sections.
Industry regulator the Oil &
Gas Authority is mulling chang-
ing the rules and is reviewing
data from Cuadrilla.
Environmental groups oppose
fracking but companies in the
sector argue that natural gas is a
necessary, low-carbon energy
that is needed before renewable
energy, such as wind and solar
power, is more widely available.
lyst at Oanda, said: ‘The speed
in which this trade war has
ramped up in the past few
weeks is considerable even by
its own standards.’
Another indicator which is
flashing red and indicating that
a recession could be coming was
the yield on 30-year US govern-
ment bonds, which yesterday
fell below 2pc for the first time
ever recorded.
This happened because a rush
to buy the debt, which is seen as
a safe haven during strife, drove
up its price. When the price of
bonds rises, their yield drops.
This is leading to something
that is called an inverted yield
curve, which, put simply, is
when the yields on long-term
debt are lower than on short-
term debt.
When this happens, it suggests
investors are worried about a
downturn in the near future.
In the past, this type of change
has come ahead of almost every
American recession.
It also shows that investors
are fleeing into safer invest-
ments, which include long-term
government debts, and are try-
ing to avoid further volatility on
the markets.
Michael Hewson, at CMC
Markets UK, said: ‘There cer-
tainly appears to be a signifi-
cant dislocation in what US
bond markets are telling us
and what the US economy is
telling us, when it comes to
the economic data.
‘Throw in concerns about US-
China trade, slowing growth,
the risk of recession in Europe –
particularly Germany – Brexit,
the possibility of Italian elec-
tions, unrest in Hong Kong, as
well as a crisis in Argentina, and
tensions in the Arabian Gulf
and it’s perhaps not surprising
that investors are moving into
areas which generate a positive
rate of return.’
÷ The price of oil fell another
2.5pc, to $57.99 a barrel, after
Gibraltar agreed to release an
Iranian oil tanker seized on sus-
picion of busting sanctions.
by Francesca Washtell
7100
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May Jun Jul Aug
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FTSE 7700
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Cuadrilla
restarts
fracking in
Lancashire
marcin
(Marcin)
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