Written evidence from Brian Finney (BPW0010)

1.0 Summary

• to improve TPR’s powers or resources will have little if any effect. The current legislation is not being used.
• a criminal offence will concentrate the mind, but it currently exists in the Halcrow case and has not been used. 

2.0 Personal Statement 

2.1 I am a pensioner in payment of the Halcrow Pension Scheme (HPS) now in the PPF Assessment period, choosing not to transfer to the HPS(2) scheme thereby retaining my rights to my original pension benefits. HPS(2) benefits are similar to PPF benefits with the exception of a onetime 2.5% uplift for those agreeing to transfer to HPS2.

3.0 Background

3.1 The Halcrow Group was purchased by the US company CH2M Hill in 2011 in full knowledge that HPS had a significant deficit. CH2M Hill was an employee owned company and I understand that due to the impending retirement of large shareholders CH2M Hill needed to raise cash to purchase the employee held shares. Hence, CH2M Hill was purchased by Jacobs a similar US Engineering company, in December 2017. 

3.2 To enhance CH2M Hill’s attractiveness to potential investors/purchasers prior to the sale significant internal savings were achieved and the HPS deficit was effectively removed, at the second attempt, from the balance sheet by a novel and abusive use of an RAA (Regulated Apportionment Agreement). 

3.3 CH2M Hill shareholders benefited at the expense of Halcrow pensioners.  

3.4 Project Magnolia Ltd (PML) https://beta.companieshouse.gov.uk/company/10164541 was established for the sole purpose of accepting the transfer of HPS from Halcrow Group Ltd, which continues to trade. PML then enters into a Company Voluntary Agreement and HPS enters a PPF Assessment Period, with its reduced pension benefits in particular that pre 1997 service does not benefit from inflation increases.

3.5 PML’s formation and use in this RAA allegedly breaches the Companies Act 2006 Section 993Offence of Fraudulent Trading. https://www.legislation.gov.uk/ukpga/2006/46/section/993

4.0 Response to questions 1 & 3 only

Question  1    To what extent is improving TPR's effectiveness a matter of greater powers, better use of resources or cultural change in the organisation?

4.1 From a Scheme Member perspective TPR cannot be considered to be an effective Regulator, nor even helpful to the Scheme Member. Their objectives require a balance to be achieved between conflicting demands. The weakest party, always the Scheme Members because they do not have the resources to resist the challenge against the overwhelming force, will always take the hit as we have seen in recent times.

4.2 Quite whether the Trustees should have been more assertive is open to question, it is noted that in the case of the Halcrow Pension Scheme all Trustees including Independent Trustees Services Ltd where effectively appointed and paid by the Sponsoring Employer, a wholly owned subsidiary of CH2M Hill.   

4.3 Consequently, to improve TPR’s powers or resources will have little if any effect. The current legislation is not being used eg a criminal prosecution for an alleged breach of the Companies Act 2006 Section 993 Offence of Fraudulent Trading. Indeed there is evidence that TPR did not consider the Companies Act requirement. 

Question  3      Will a criminal offence provide a meaningful deterrent?

4.4 Undoubtedly, a criminal offence will concentrate the mind, but as stated above it currently exists in the Halcrow case and has not been used.  Therefore, rather than passing new legislation which will inevitably cause a delay it would be more productive to use the existing in all its forms including Financial Contribution Orders on parent companies. 

May 2018