At BM&T we have long been concerned about the conflicts of interest that exist in the UK with Insolvency Practitioners (IP’s) acting as advisers pre-insolvency and then being appointed as Administrator when the business goes into Administration (see earlier blog re Comet). Cynics will always suggest formal insolvency is the result the IP wants. Similarly, IP’s and turnaround practitioners who are on bank panels are effectively put in by the lender but are engaged and remunerated by the company. Who do they work for? Where do their loyalties lie? Is it the company or do they favour the lenders who are a key source of future business?
It is therefore interesting to see the current heated debate in the UK on two potential conflict of interest issues, albeit unrelated to turnaround and restructuring. Firstly the selection of a top-flight person to chair the public enquiry into historic child abuse and possible cover ups at high level. The first appointee, Baroness Butler-Sloss was forced to step aside over concerns that her brother had been Attorney General during some of the time that cover ups are alleged to have taken place. Her replacement, Fiona Woolf now faces concerns that she had a social relationship with Leon Brittan, the then Home Secretary, and is facing a judicial review application challenging her independence.
In a separate matter, there have been a number of concerns raised over members of the National Institute for Health and Care Excellence (NICE) watchdog being too closely related to pharmaceutical companies that produce the drugs NICE has to make recommendations on. A group of leading doctors and researchers has complained to the Health Select Committee.
Whatever the fine detail of the relationships, surely anything that gives the slightest appearance of a potential conflict of interest should be avoided. The general public will never have confidence in matters where there is any hint of a conflict, whether it is public enquiries, health watchdogs or business failures. The fine detail doesn’t matter because to the public at large, perception is reality.
There seems to be a growing tendency for politicians and business professionals to think that the basic principles of conflict of interest can somehow be stretched. They can’t. Minor conflicts are no more tolerable than major ones and Chinese Walls are highly unreliable; a myth intended to suggest that an inherent conflict can somehow be worked around.
The public are already showing signs of strong discontent and distrust of politics and big business and this will only be added to by such behaviour. Our political and business leaders need to wake up and take the lead on this. At BM&T we remain committed to being free of all conflicts of interest and acting independently and objectively in the best interests of our clients and their stakeholders.
David Bryan – Principal, BM&T
22nd October 2014