Thomas Cook collapse: MPs slam government inaction and lack of audit reform
Business secretary Andrea Leadsom has come under fire from MPs for “the extraordinary lack of interest” she showed in Thomas Cook in the run-up to its collapse, amid growing calls for wide-ranging regulatory reform.
In a scathing conclusion to the business select committee’s (BEIS) review into the travel giant’s liquidation, MPs expressed their frustration that Leadsom, did not speak to Thomas Cook executives during talks between the company and the government designed to halt its dramatic collapse.
Read more: Thomas Cook bosses point finger at government as MPs slam high pay
They also called on the government to bring forward long-awaited reforms to the audit profession, after last month decrying Thomas Cook’s auditor EY’s “inconceivable” judgement in signing it off as a sustainable business over the last year.
The Competition and Markets Authority and the BEIS committee published proposals in April on how to reform the audit industry, how to tackle conflicts of interest and how to improve audit quality, but the government has not acted on them.
The proposals followed heavy criticism of Carillion’s auditors for their role in the run-up to the outsourcer’s collapse.
Committee chair Rachel Reeves said: “The failure at Thomas Cook has been also been notable for the extraordinary lack of interest shown by the business department and its Secretary of State in the days and weeks leading up to the collapse.
“It is also a matter of fact that many of the necessary measures on audit, on executive pay, and on corporate governance have been sitting in the Government’s in-tray for months.
“A new Government needs to put this right and ensure the Queen’s Speech in a new Parliament includes the laws needed to make this a reality.”
Writing to Leadsom, Reeves said it was “frustrating” that the government “appears not to have learned the lessons from previous high profile corporate failures”.
Read more: MPs slam ‘inconceivable’ judgement of Thomas Cook auditor EY
Reeves also put forward proposals on how to tighten up corporate governance, after the committee last month said Thomas Cook bosses had been “rewarded for failure” having received £20m in bonuses in Thomas Cook’s final five years of trading.
A spokesperson for the Department for Business, Energy and Industrial Strategy said: “When a large company faces difficulties, it is standard procedure for one department to act as a single government contact, and Government officials from a variety of departments had over 100 meetings with Thomas Cook in the run up to its insolvency.
“We will be responding to the BEIS committee’s report in due course, but have announced plans for reform of the audit market including creating a new regulator with stronger powers”