Three top privatisation bosses ripped off millions of pounds of money in scams involving the London Fire Brigade (LFB), a report has revealed.
Directors of AssetCo, which leased fire engines to London and Lincoln brigades, hid millions of pounds from auditors.
And some of the cash went straight into their own pockets.
Chief executive John Shannon was in charge of AssetCo when it nearly went bust and sold off all of London’s fire engines in 2011.
Now a report by the Financial Reporting Council (FRC) has described how Shannon and two other directors lied about AssetCo’s problems.
It also reveals how he twice cooked the books to pay off more than £2 million in debts owed by him and his son.
With other directors Frank Flynn and Matt Boyle, Shannon told auditors that AssetCo was getting more money from London Fire Brigade than it actually was.AssetCo charged LFB £2.6 million for new foam pumps and more than £300,000 a year for thermal imaging cameras.
Yet financial reports for the year between March 2009 and March 2010 claim it was receiving tens of thousands of pounds more.
The three directors claimed to be charging LFB an extra £46,975 a month for the pumps and just under £30,000 extra a month for the cameras.
On top of this they also fiddled the costs and payments of an emergency training programme for 700 firefighters.
They claimed they were receiving £71,000 a month for ladders and hoses and guards that were already being paid for under a different contract.
And they claimed the cost of the training was £2 million when in fact it was more than £6 million.
On top of this directors discounted £900,000 in costs, which they claimed was a management fee to a firm named in the report as XYZ.
In fact there were no management fees from that firm. The money was actually used to pay off interest.
The FRC report, published earlier this month, also revealed two acts of fraud against AssetCo by Shannon together costing more than £2 million.
In 2008 Shannon transferred £1.5 million from AssetCo to Jaras Property Development—a company which he was also director of.
A day later the same amount was transferred from Jaras to Shannon’s personal account so that he could pay a debt.
And in 2010 Shannon took more than £600,000 to clear a debt for his son Joel. AssetCo had recently taken over another company, Graphic.
Shannon claimed Graphic owed him £685,000. He took that from AssetCo and used it against a debt of the exact same sum owed by his son to a company he ran.
When his lies fell apart, the question of who would own and pay for the fire engines was up in the air.
Yet they still haven’t been brought back in house. Instead they are owned by another private firm—Babcock.