Firm being investigated over energy-from-waste announcements
Interserve chief executive Debbie White has said it is not expecting to find out until the end of the year the results of a probe from the Financial Conduct Authority into the handling of its exit from the energy-from-waste business.
The financial watchdog told the firm last month that it had begun the investigation because of the way Interserve disclosed information over a seven month period.
The period under scrutiny runs up to the February 2017 date when former chief executive Adrian Ringrose announced that the cost of getting out of the sector had gone up from an expected provision of £70m, announced in May 2106, to £160m.
White told a committee of MPs last week: “I have been informed by our advisers that it can take quite a considerable period of time. They have told us not to expect anything until the end of the year.”
Ringrose is among those being questioned and White (pictured) added: “We are co-operating with them fully, as are the previous executive and the board.”
Interserve said in its 2017 results, which it published at the end of April, that it has racked up losses of nearly £217m on the energy-from-waste initiative which began in July 2012 with the firm winning a £146m contract to build a plant in Glasgow which kicked off a slew of jobs across the country.
But Interserve said it was pulling out of the market 18 months ago after running up crippling losses on the Glasgow job. Last month, Pennon, the parent company of the firm behind the Glasgow energy-from-waste scheme, told Interserve it owes it £69m in additional costs. Interserve was kicked off the job at the end of 2016 and replaced by Doosan Babcock with the job now not expected to be fully finished three years late.
White said she “did not know of the financial situation of Interserve before [she] joined” and just seven weeks after starting at the beginning of September last year was forced to revise the amount it was losing on energy-from-waste up by £35m.
She told the Public Accounts Committee looking into those businesses which carry out more than £100m worth of work a year with government that she had been speaking to the Cabinet Office and the government’s Crown Representative – which act as a single point of contact for affected government departments – since October and had been having weekly meetings from January.
White said the firm provides government details of its 14 week cash flow along with weekly cashflow statements and “an update on all our conversations with shareholders and lenders. We also provide them with the business plan.”
She revealed the Cabinet Office had wanted to move the firm from a red rating to a high risk but successfully argued remaining at red.
White said she had recently discussed with the Crown Representative about “what the progress steps should be to get us from red to amber to green and what evaluation criteria the company suggests that the Cabinet Office holds us accountable to as it evaluates our position”.