Despite warning signs, the construction giant Carillion, with a debt of up to £1.5bn, went into liquidation at beginning of the year. Carillion held numerous government contracts and employed 20,000 people in the UK. Fears over disruptions that the company’s bankruptcy may cause led the UK Government to form a taskforce to support and monitor the impact on small businesses and workers.
The average pay for a UK chief executive has been decreasing in past years. It has been reported that FTSE 100 chiefs earned on average one million less in 2016 compared to 2015 (2016: £4.5 million; 2015: £3.4 million). Despite the decrease, an independent study found UK chief executives on average still earn 120 times more than a full-time worker. The Investment Association Public Register also revealed that four out of ten resolutions were for shareholders voting against companies’ remuneration reports. The Forum regularly engages with FTSE 100 companies on executive pay.
Speculations over Saudi Aramco’s IPO continue after it was converted into a joint stock company – this will allow it to have more shareholders than its current sole shareholder, the Saudi government. LAPFF has previously raised concerns regarding listing rules.
The Serious Fraud Office (SFO) has launched a criminal investigation into grenade and ammunition manufacturer Chemring. The SFO is looking into money laundering, bribery and corruptions allegations.
Carphone Warehouse is facing a £400,000 fine after a cyberattack exposed personal details of more than 3 million customers and staff in 2015.
After thousands of people were left without power for days, the US department of Public Utilities launched an investigation into National Grid to evaluate its response. The Company can face a fee of up to $20 million.
Qualcomm has been handed a €997 million fine for abusing its dominance over the market after it paid Apple to exclusively use its chips. The Competition and Markets Authority also evaluated that Sky takeover by Fox is not in public interest, without safeguarding the independence of Sky News. This comes as Comcast launched a bid for Sky.
Protecting corporations from foreign hacking and cybercrime is an increasingly serious matter for companies, illustrated by Facebook hiring its first head of cybersecurity policy in January. The head of UK’s National Cyber Security Centre also spoke on this matter and warned that a major cyber-attack on the UK is a matter of “when, not if”. As a growing investor concern, the Forum regularly engages with Companies to discuss cyber security measures.
Ryanair has agreed that the Balpa union will be representing all its directly employed British pilots, despite historic claims that the Company will never recognise a union. Despite this development there remain concerns. For example, the Chairs of the HOC Work and Pensions and Business select committees have written to HMRC and the director of labour market enforcement to investigate Ryanair in light of the Company’s “refusal to cooperate” with inquiries over conditions and crew pay. LAPFF has written to Ryanair requesting a meeting to discuss employment conditions.
British retailers, including M&S, John Lewis, Debenhams, Next and Sainsbury’s are yet to renew their commitments to a factory fire and building safety deal in Bangladesh. The retailers were holding back amid concerns over costs and possible lack of support from factory owners.
Germany and Iceland are following UK’s initiative to tackle the gender pay gap. German employers will now also have to report on the pay gap, while Iceland has gone a step further, becoming the first country to make the gender pay gap illegal.
The Financial Reporting Council also opened an inquiry into KPMG’s role in the collapse of Carillion. Several areas of KPMG’s work are reportedly under examination, including estimates and recognition of revenue on significant contracts and accounting for pensions.
The FCA has also been under scrutiny after Vince Cable condemned the regulator for failing to expose alleged role of Royal Bank of Scotland’s management in treatment of small businesses.
Baroness Bowles, during January and February has tabled 45 Parliamentary Questions relating to the Financial Reporting Council. The questions have extracted the fact that: the Financial Reporting Council has been classified a public body since 2004, but has not followed the standards required of public bodies; and the position that the FRC cited on the law as being the governments’ position was incorrect, and that the government’s position, is not as far, if at all, from the position of George Bompas QC for LAPFF. LAPFF awaits the answers on the so far unanswered questions with interest.