Overview: Jon Moulton on the attack

Jon Moulton is the accountant turned private equity figurehead who has become
one of the chief media commentators on the credit crunch and its causes. Last
week he turned his attention to auditors insisting that a ceiling on their
liabilities was the only way forward.

What’s happened?

Moulton is a take-no-prisoners kind of guy. He has a well earned reputation
for being outspoken not just about the causes of the crisis but also about his
own profession.

But he came to prominence during the debacle over the sale of Rover Cars by
BMW. Moulton, as founder and managing partner of Alchemy Partners, was
negotiating to buy Rover. At the time he was not so feted as he is now, largely
because his tell-it-like it is approach meant his attitude to Rover was
unsentimental and brutally honest. The days of mass production were over, as far
Moulton was concerned, as he aimed at turning Rover into a niche player on a
reduced workforce.

In the end a public backlash, furious union lobbying and a confused
government propelled BMW into selling Rover to a management consortium for £10.
Moulton, a previous chairman of the Brands Hatch motor racing circuit, was
scathing in his public criticism of the deal.

Then came the debacle over private equity and whether it was good for UK plc.
He criticised his own profession for exploiting its tax advantages and trying to
pull the wool over everyone’s eyes with dodgy job creation statistics. He freely
admitted that the highly leveraged nature of some private equity deals was not
exactly healthy.

Then came the crisis and Moulton was equally scathing of UK bankers and their
‘greed’. In special TV documentaries he laid out his painful diagnosis of the
ills besetting the UK’s financial system. He was already one of the country’s
best known businessmen but it was now clear to everyone that he was the man who
liked to break ranks and get the bad out in the open.

Last week in Accountancy Age he said companies might have to accept
agreements to place a cap on their auditors’ liabilities because the country
could not take the loss of another big auditor like Andersen.

He went on to say there was a real problem in auditors demanding that clients
renegotiate lines of credit at the merest hint of banking covenants being
broken. As ever, forthright, outspoken and completely unwilling to soften the

What happens next?

Moulton has a high public profile and, though his main topic has been the
crisis, his statement on auditors will have the players concerned about just how
much attention he attracts. Auditors have received their fair share of stick
during the banking crisis, much of it unjustified, and if it gets about that
they’re not helping in the recession it will not be good for their public image.

And that’s important because the Big Four want that liability cap keenly.
What they don’t want is someone confusing the message and making it unclear
whether they are the good guys or the bad guys.

Some regulators have already said auditors have had a good crisis. The
auditors wouldn’t want anyone to think otherwise.

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