BEIS0001166
BEISO001166
From: Chisholm, Alex (BEIS)[/O=EXCHANGELABS/OU=EXCHANGE
ADMINISTRATIVE GROUP
(FYDIBOHF23SPDLT)/CN=RECIPIENTS/CN=E06D33F 69FDF459B87B0A3CB7
5D2E37C-ALEX.CHISHO]
Sent: Wed 05/06/2019 7:56:33 PM (UTC)
To: Cooper, Tom - UKG
Ce: Watson, Richard - UKGI: Creswell, Carl (Better
Regulation Executive): In, Craig (Advanced
Manufacti Permanent
Subject: Re: Confidential - POL litigation
Isn’t it the same reporting standard?
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From: Cooper, Tom - UKGI!
Sent: Wednesday, June 5, 2019 7:
To: Chisholm, Alex (BEIS)
Cc: Watson, Richard - UKGI; Creswell, Carl (Better Regulation Executive); Watson, Craig (Advanced
Manufacturing and Services); Permanent Secretary
Subject: Re: Confidential - POL litigation
Alex
This isn’t about making a provision yet. The issue at the moment is disclosure of the contingent
liability in the notes to the account.
Tom
Sent from my iPhone
On 5 Jun 2019, at 19:32, Chisholm, Alex (BEIS)
> wrote:
Tom,
The Minister quite reasonably expects the company to have made some estimates
of exposures under various scenarios. Not having seen them she may feel they
don’t exist. I don’t know whether she knows about - or has been briefed on - the
relevant FRS but quite possibly not. From memory this requires provisions to be
made when sufficiently specific in time, quantum and probability; I can see why
this threshold might not yet be met; also why one would not want to advertise
worst or expected losses to potential beneficiaries.
So I would organise a brief note to explain the situation and the constraints and
risks that apply. And offer a more detailed breakdown perhaps lawyer-to-lawyer
to provide reassurance that proper estimation occurring, while preserving legal
privilege.
Copying Carl and Craig in case they have any better ideas.
A
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BEIS0001166
BEIS0001166
From: Cooper, Tom - UKGI:
Sent: Wednesday, June 5, 2019 9:51 am
To: Chisholm, Alex (BEIS)
Cc: Watson, Richard - UKGI
Subject: Confidential - POL litigation
Alex
As we heard yesterday Kelly is very interested to get an estimate from POL about the
potential cost of the litigation.
We need to be mindful that the new auditors, PwC, are putting pressure on POL to
disclose an estimate in the notes to the accounts this year— it has been raised by them
at the audit committee as a significant audit issue. The Board’s position is that, while
the wording in the notes needs to change, it is still not possible to put a figure on the
possible cost. The logic is that the claimants have not put forward a serious statement
or indication of what they want, nor does POL have information on the 561 cases that
would enable them to make an estimate themselves. My understanding is that POL
does have information about 140 or so of the 561 cases because they were part of the
mediation process a few years ago.
So the concern here is that it’s possible that any estimates that POL gives BEIS could
gain a degree of spurious validity with the auditors which could lead to two
consequences:
* Disclosure of a range in the accounts which would effectively set a floor for any
settlement
* A going concern issue and request from BEIS for a comfort letter about funding
POL are making a serious attempt to answer the questions in the Minister's letter to Tim
Parker so they will do their best to let us know what they think the cost could be—
suitably caveated I expect — so unless we modify our request we will get some numbers
out of them.
Please advise as to how to proceed — should we raise this issue with Ministers?
Tom
Tom Cooper
Director
UK Government Investments
1 Victoria Street I London I SW1H OET
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