Quitter Prime Minister David Cameron’s gamble could cost generations of Britons dearly. But Brexit seems to be profitable after all for the Big Four accountancy firms, already tipped to be hired by the government to assist in future trade negotiations.
Yesterday Financial Times reported that the Big Four firms are ready to step up to the plate and support the underskilled (for such an unprecedented task) UK civil service.
So, a win-win situation for the Big Four accountants who will not only help business in the private sector navigate the Brexit storm but also the government who will pay their fees out of the deep pockets of the British taxpayer (by the way a lot of them are EU citizens).
Amid the sterling free fall and the current constitutional crisis threatening the unity of the Kingdom itself (with Scotland’s vote to Remain triggering calls for a second independence referendum and concerns about the border between Northern Ireland and the Republic) Winston Churchill is surely turning in his grave, contemplating the spectacle of his own party.
This entire macabre circus has been performed to serve the personal ambitions of selfish politicians, who will no doubt go down in history as clowns who played with destiny an unnecessary game of Russian roulette.
Yet it’s the taxpayers and future generations of Britons will have to take the bullet.
Media reports have described how the Referendum seemed to be more of a Machiavellian plot to serve the political careers of the Goves, the Johnsons, the Camerons and the like, than an exercise of democracy.
No wonder House of Cards is a British invention, however this new episode resembles more the irresponsibility and lack of vision of student union politics, as Sir Edward Garnier MP puts it.
The Remain campaign failed to counteract the lies and dishonesty of the Leave camp. Brexiters have even dared to rewrite Churchill's views on his goal of a United States of Europe. (The “If Britain must choose between Europe and the open sea” quote was a broadside Churchill launched against De Gaulle on the eve of D-Day in 1944. Then they settled their row).
The Big Four will benefit from fishing in troubled waters but would they go for an even bigger catch? Now that the UK seems to be exiting the EU, would they also try to bring down the audit reform, which they very much despised?
An EU official told me last year that the Big Four deployed an army of lobbyists in Brussels to water down the reform, whose campaign was nastier and fiercer than the one to reform the banking system after the crisis.
If readers are in doubt of how dirty that lobby became, they can ask former MEP Antonio Masip Hidalgo, who received a personal threat from a lobbyist of a Big Four firm. Alternatively, an account of this episode can be read in his book Europeos pero incorrectos (Europeans yet not courteous).
So in a scenario where the Big Four are also consultants of the Brexit negotiations, destiny will put them in a privileged position to advocate in favour of ridding the UK of audit rotation and caps on the ancillary services they can provide to audit clients.
For the time being the UK Financial Reporting Council (FRC) says that “our regulatory framework is unchanged and we will continue to apply it.”
It should also be acknowledged that the accounting regulator was already acting on the findings of the then UK Competition Commission investigation of the statutory audit services markets.
In a September 2013 interview, FRC CEO Stephen Haddrill, told this magazine his views on tendering and rotation. “Our goal is that the company is able to get the best possible auditor for its business,” he said.
“If you keep the same auditor for 100 years, how do you know if you’ve got the best one? So retendering is important.”
Regarding the provision of non-audit services, Haddrill said then: “The sale of non-audit services to audit clients is damaging to the public perception of the independence of the auditor. I think it’s impossible to justify it to the public at large.”
Fast forward three years, and one of the questions to add to the pile of Brexit existential angst is whether or not the EU audit reform will survive in the UK.
As the Private Eye's cover illustrates this week (Leave Special: Country Leaves Senses) everything is possible. Pandora's Box has been opened.
Back in 2013, when the FRC opened an office in Brussels, we asked Haddrill if the FRC was an exception in a traditionally Eurosceptic country.
For historians’ interest, we reproduce his words: “Even the most Eurosceptic British governments have wanted to be influential at the heart of Europe.”