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Feb
2015
Monday 23rd
posted by Richard Bagley in Britain

Union blasts ‘rotten’ business practices lining the pockets of administrators while leaving workers with tuppence


TRADE unionists and politicians condemned Britain’s “rotten” business practices yesterday after it was revealed that administrators for collapsed parcel firm City Link are making millions in fees while hundreds of workers remain penniless.

An army of City analysts and advisers from accounting giant Ernst & Young have descended on the firm since its Christmas Eve demise — with their employer charging up to £642 an hour for their services.

Union RMT condemned the amounts being made while “over a thousand drivers have still not received a penny piece.”

E&Y advised City Link’s 2,272 permanent workers — most of whom were ditched on New Year’s Eve — to seek taxpayer-funded redundancy worth £4 million.

But the accountancy firm itself has raided City Link accounts to the tune of £1,709,513 in just six weeks.

RMT general secretary Mick Cash said: “It is a shocking indictment of business practices in this country that between Christmas Eve and the end of January, when over 3,000 staff and contractors were being dumped on the stones due to the City Link collapse, that the administrators were raking in well over £1.7m in fees.”

Senior Labour MP Ian Davidson said the government must now “look again” at the rules for payouts when a firm goes bust.

“There’s something unjust about a situation where the owners of capital can walk away with millions, the administrators can get paid hundreds of pounds an hour, and the small contractor ends up out of pocket,” he said.

“The government needs to look again at how the available funds are distributed where a company goes down.”

By the end of last month E&Y had billed £781,692 for staff in partner, executive director or assistant director roles at between £471 and £652 an hour.

The lowest paid “support” staff were billed for at an average hourly rate of £250 — equivalent to an annual £455,000 salary.

But the report confirms that nearly 1,000 self-employed City Link van drivers owed millions will get a paltry 2p in the pound at most, once everyone else has been paid out.

First place among creditors will go to ex-owner Target and parent vulture capital firm Better Capital, which pulled the plug on the firm at Christmas.

It has ensured that it will claw back about half of its original £40m investment in City Link.

Mr Cash said: “There is something rotten at the core about the way business operates in this country and around who gets priority for payment when a company is folded in the cavalier fashion that City Link was destroyed on Christmas Eve with thousands of livelihoods wrecked in its wake.

“RMT continues to fight for justice for the City Link workers.”




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