Company directors should not be able to act wrongfully without fear of repercussion

Steven Law, President of R3

This is the gist of a media statement issued by Steven Law, president of the leading professional association for insolvency, business recovery and turnaround specialists in the United Kingdom, known as R3. This follows from the “carefully considered plan to meet the 11% cuts agenda” submitted by the Insolvency Service to the Department of Business Innovation and Skills. Steven Law notes that although the 11% cuts in running costs is an “unavoidable necessity” in this climate this may likely result in the reduction of the number of insolvency and live company investigations carried out by the Insolvency Service. In his opinion, this has the same effect as taking the police off the beat in the midst of a violent crime wave. Most of R3’s members have noted a sharp rise in the number of cases of suspected misconduct by company directors in 2009/2010, as well as the number of problematic decisions not to disqualify directors who ostensibly did not carry out their duties with responsibility. Thus, given that the Insolvency Service has two years to follow-up a referral many cases of alleged fraud during the recession may not be investigated. He concludes that the cuts should be imposed elsewhere within the Insolvency Service because it is a matter of public interest that the Service has the requisite resources to deal with all the cases they receive else some company directors will continue to act with impunity.

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Helen Peach said…
The system was far from great prior to the cuts - going forward, if we want our economy to thrive, there needs to be a far tougher regime to deal with incompetent and miscreant directors - the cuts just leave the system open to further and deeper abuse.