Patisserie Valerie workers latest victims of Bandit Capitalism and government inaction
- Wednesday 23 January 2019
Unite, Britain and Ireland’s largest union, has blamed government inaction in tackling ‘bandit capitalism’ for the collapse of Patisserie Valerie and has warned that the failure to learn the lessons from Carillion’s collapse will lead to other workers in the future losing their jobs through no fault of their own.
Urgent reform of regulators
Unite is calling for urgent reform of the entire regulatory system for the financial sector. The number of regulators needs to be reduced and they need to be given real legal teeth and enforcement powers allowing them to act before companies collapse.
Problems at Patisserie Valerie, where Unite has some members, were revealed in October last year when an apparently healthy company, was overnight transformed into a financial basket case when a multimillion pound black hole was discovered in its accounts.
Investigation into auditors
The Financial Reporting Council has launched an investigation into Patisserie Valerie’s auditors Grant Thornton and its former finance director.
Workers are innocent victims
Unite assistant general secretary Gail Cartmail said: “Workers at Patisserie Valerie are the innocent victims of bandit capitalism, they have been failed by the government which has failed to take action to end these practices.
“This latest corporate collapse demonstrates why the financial regulators are not fit for purpose, they need to be able to take action before a company collapses, rather than after jobs are lost.
“Since Carillion’s collapse the government has continued as though it is business as normal and has ignored all suggestions to initiate vitally needed reforms.
“If the government does not take swift action then inevitably there will be further innocent victims of bandit capitalism in the future.”
Thousands of false entries
The company entered administration yesterday (January 22) after its bankers refused to lend it any further money. Last week the company discovered thousands of ‘false entries in its accounts’. Administrators KPMG have already announced the closure of 70 its 200 stores, resulting in large scale job losses.
The reform of financial regulators is one of the recommendations included in Unite’s report aimed at preventing future corporate collapses, Ending Bandit Capitalism: Learning the lessons following Carillion’s collapse. Other recommendations include:
The need for the break-up of major accountants so that the role of auditing is not linked to other lucrative remuneration, for example management consultant work.
The creation of additional rules requiring auditors have a duty of care to employees and not just the company.
Notes to editors:
For more information please contact Unite communications officer Barckley Sumner on 020 3371 2067 or 07802 329235.
Unite is Britain and Ireland’s largest trade union working across all sectors of the economy. The general secretary is Len McCluskey.