On the money
Armstrong Group went into receivership earlier this month, allegedly because it could not reach a settlement with its pension trustee about payments to mitigate its £36m pension deficit. As a result 450 people may lose their jobs
Armstrong is, or was, part of the Caparo group. It was Caparo, almost a
generation ago, that provided the defining bit of case law about the auditor’s
duty to third parties.
But it is rather more than that. Caparo was one of the first companies run by
an Asian businessman, Swarj Paul, to get a UK listing and he personally has long
been close to the Labour leadership, providing the finance for Gordon Brown’s
private office when they were still in opposition. In his autobiography Paul
devoted a chapter to his friendship with Tony Blair, the late Robin Cook and, of
course, Gordon Brown.
Though it was Tory prime minister John Major who ennobled him as Baron Paul
of Marylebone, it was done on Blair’s recommendation. That year, Paul had given
£109,000 to the Labour party and another £200,000 followed a year later , which
if nothing else shows that there is little new in rows about alleged links
between payments and honours.
Angad Paul, his son, now runs the business and was quoted in the press
release as saying: ‘This is a bizarre world when a pension fund can only access
government subsidy by closing down a successful firm.’ Well up to a point.
Armstrong lost £20m a couple of years ago and between £2m and £4m every year
since, which is an odd definition of success.
It was his father’s good friend Brown who has rightly insisted that
struggling companies must not be encouraged to go into receivership in order to
dump their pension liabilities on the rescue scheme and then emerge and trade
unencumbered into the future.
Anthony Hilton is finance editor of the Evening Standard
