Taxpayers will stump up for Northern Rock add-ons

Taxpayers will have to foot the bill for any ‘top-up fees’ that BDO Stoy
Hayward submits to the government if disgruntled shareholders take legal action
against its valuation of
Northern Rock.

The firm recently won a £4.5m deal to put a price tag on the Rock with the
government’s £25bn bail-out package stripped out, but any legal fallout is not
included in the figure.

A Treasury spokesman said the £4.5m was a fixed fee but there was
‘flexibility. Anything extra for the handling of appeals would be paid for
later,’ he said.

The Treasury has said that value for money was one of the key appointment
criteria in choosing BDO, but the taxpayer will still have to advance money for
any additional activity, before Northern Rock eventually picks up the tab.

‘Any costs would be met by
,’ the spokesman added, indicating that ultimately the costs of the BDO
investigation would transfer to the company.

Shareholders have already voiced their displeasure at the valuation set-up,
with the UK Shareholders’ Association saying it believes the terms of reference
have been constructed so as to reach a zero value.

BDO confirmed last week that its valuations partner Andrew Caldwell would
handle the valuation.
The firm’s involvement with the Rock could stretch on for some time.

‘At this very early stage in the process, it is impossible to determine the
likely timescale for this work or the amount of compensation which will be made
available to shareholders,’ he said.

‘It is the firm’s intention to conduct a fair, open and transparent valuation
of the compensation scheme for the benefit of all the shareholders.’

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