Monday, November 16, 2009

Spat Over Woolworths

One year on from the demise and collapse of Woolworths the former Chairman, Richard North and former chief executive Steve Johnson, publicly criticised Deloitte's handling of the collapse.

They noted that Deloitte's acted as both adviser and administrator to Woolworths, and cited that this was a potential conflict of interest.

North and Jones feel that Deloitte's didn't back an emergency rescue plan by Woolworths' management team, because of its interest in the higher fees it would earn as administrator.

Deloitte's have been quick to fire back, they are quoted on City AM:

"Woolworths failed because it was losing money and had no cash.

It was the directors themselves, not the banks, who appointed Deloitte as administrators, based on the realisation that the company had run out of money and could not continue trading on a solvent basis.

We are never driven by the fees available but simply by the pure economics of the options for the creditors

They have a point, re who appointed them.

I would ask why the directors, if they were concerned about a conflict of interest, appointed them in the first place and are only raising this issue now?

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