Area 9 Concerns Time-Line

Recently provided some ‘defined costs’ for Area 9, we can make meaningful comment about the charges presented by Kier Highways Ltd (KHL). We have concentrated upon AIW (Asset Incident Watchmen) operatives, the first-response staff common to most claims.  

Based upon the information obtained, Third Parties (drivers, fleets and insurers) should be paying about £30 / hour for an AIW but are charged from £65 / hour to £170 / hour. For the same staff, doing the same job, Highways England Company Ltd (HE) are paying about £25 plus a small (<10%) uplift.

There are other areas of overstatement, for example:

  • vehicles (plant)
  • planning
  • administration
  • debris removal

We have tried to compress 3+ years of information acquisition, collation, examination and presentation into the following.  It is import to be aware of the billing process as who receives a KHL invoice is generally governed by the claim value:

  • if the repair cost is above £10,000, the Public Authority such as Highways England, is billed by their repairing contractor, pays the invoices then seeks recovery from you.
  • if the bill is below £10,000 the contractor is not paid by the Authority but pursues you, your insurer or your company (if a fleet vehicle) for the money.

Why does this make a difference?  Because above £10k ‘mates rates’ are used, below threshold a difference process to bill is engaged and the bills are substantially higher.


Note – some pages will be restricted to registered users until such time as investigations are completed.


A brief history:

2012 – ‘Crisis-hit services group Mouchel has gone into administration, enabling it to sell the business to its lenders and management in a deal which will leave shareholders with nothing.’ – source – Telegraph.  KPMG appointed as administrators.

2013 – ENTERPRISEMOUCHEL LIMITED Company number 05606089change their name to EM HIGHWAY SERVICES LIMITED (and in 2015 after acquisition by Kier, become KIER HIGHWAYS LIMITED

2013 – An example of an invoice for attending an emergency incident displays a charge of about £125. (our ref:R06B037)

2014 – incident attendance example – now over £1500 (our ref: S03A533).

01/07/2014 – KHL commenced the Area 9 contract.  Incident attendance is £2700 plus £2000 admin’.

The contract can be found on-line, as can its Annexes.  But the document that protects Third Parties, an Appendix that sets out the process by which the MAXIMUM a Third Party should be charged, their ‘shield’, is unavailable.  What use is a shield if you do not know of its existence or it cannot be found? The document ‘Appendix A’, was not discovered until early 2017 – see below.

From the outset, Kier did not comply with the Appendix and Highways England appears not to have noticed, or turned a blind eye.  Kier used their own ‘1153’ process which is described here, the figures appear here. ‘1153’ saw gross exaggeration with Third Parties owed £millions. Some obvious observations:

  • the process saw total incident attendance costs divided by the number of incidents per year – 1153. But:
    • the resources used to attend incidents also cut grass, filled pot holes and picked up litter / debris – paid for by way of lump sum form Third Parties (tax payers) – they were paying twice
    • the number of incidents per annum was about 5400 (click here for the evidence and implications).

10/2015 – After challenging the costs for over a year, KHL abandoned 1153 using their ‘defined cost’ process – which still did not comply with the contract.  The rules contained within Appendix A remained secret.

KHL issue their brochure  Insurers Guide to Incident Management v1 that conveys uplifts for operatives out of ‘core hours’ (8am to 5pm) – see page 10 of the pdf – but we understand operatives work shifts and are not paid the uplift. There is no mention of ‘Appendix A’.

11/2015 – we asked HECL for information about sub-threshold (under £10k) claims but are repeatedly told they do not possess the records – we are misled – more here.

01/2016 – HECL audit KHL.  Tim Reardon, HECL’s General Counsel provides the audit 160107 HE audit.  No significant issues found.  No mention of ‘Appendix A’.

Kier states the TP Claims Overhead (see 01/2017 below) is 20.58% but makes no mention of Appendix A to Annex 23.

03/2016 – according to HECL’s general counsel Tim Reardon, Highways England are charged £70.32 / hour for an AIW.  No suggestion the rate is ‘commercially sensitive’.  We have evidence HECL are NOT charged £70.32.

Breakdown of AIW hourly rate of £70.32 provided by Ms Granville of Kier.

09/09/2016 – Ms Sophie Granville, Kier Highways head of claims makes a statement for the Court – text here

01/2017 – Tagged on to the end of a Court exhibit is Appendix A to Annex 23 – a brief document setting out how to calculate the MAXIMUM a Third Party is to be charged, ‘no more than’:

‘x’ defined cost (£) + ‘y’ Third Party Claims Overhead (%) = maximum charge

In possession of the above calculation, to ascertain the MAXIMUM charge to a Third Party, you require:

confirmation of which has repeatedly been kept from us.

It is evident Appendix A of the contract has not been complied with since commencement 01/07/2014.

2017 – We made an FoIA request for AIW defined costs.  HECL refused to release the information citing ‘commercial sensitivity’.

Concerns about non-compliance with Appendix A and evdience of gross overstatement raised with Colin Mathews, Chairman of HECL.

21/06/2017 – We met with Sarah Green of HECL and explained our concerns; we presented evidence that HECL was paying a base rate of £23.71 / hour in Area 9 for an AIW yet Third Parties were paying £70.32 / hour.  Appendix A was not being complied with, if it was:

defined cost (£23.71) + TP Claims Overhead (20.58%*) = maximum charge £28.59

*as yet, not evidenced and suspected of being exaggerated.

Subsequent Kier statements made in support of Court action taken in the name of Kier, do not display Appendix A to Annex 23.

Sarah Green emails Jim & Tim (HE) extract as follows:

I met with Mr Swift today and he does have valid points and raised a few points that are actually of some concern. (Kier quoting VRM’s for vehicles attending repairs which turn out to be VRM’s for a motorbike, a Mercedes convertible, a privately owner Ford Focus etc)

I have asked that he now only writes to me as I am the one trying to resolve the issues and that rather than have email war 

22/06/2017 – Sarah Green phones and asks CMA if their Fraud unit should be appointed.

27/07/2017 – Sarah Green of HECL states there were ‘gaps’ in the original audit (01/2016)

Grant Thornton were to be appointed to audit… but replaced by …

KPMG are appointed to audit Area 9.  As at 08/2018 this has yet to be completed.

15/11/2017 – KPMG  Overview of Concerns provided to Damian Byrne of KPMG. We spend almost an hour conveying facts.

CMA compile on-line repository of evidence to support allegations of systematic overstatement of claims by Kier, supported by Highways England.

12/2017 – Audit summary to have been completed.

Mrs Green of HECL emails ‘The below threshold claims are the sole responsibility of Kier and they do no collect any information on behalf of Highways England hence this information cannot be obtain via an FOI request‘. But KHL do submit information to HECL – it is a contractual requirement.

2018 – The ICO rejects the ‘commercial sensitivity’ exemption and directs HECL to provide AIW rate data – this supports the £23.71 / hour ‘defined cost’ sum – see 03/05/2018 below.

04/01/2018 – Sharon McCarthy @ HECL states she is responsible for getting to the bottom of the allegations that have been raised. Sharon accuses me of sending ‘at least 30 to 50 emails a day’ (preposterous, denied and asked to evidence – has thus far failed to do so).

18/01/2018 – Sarah Green advises HECL should be getting the initial draft of KPMG’s report next week.

04/01/2018 – Sharon McCarthy accuses CMA of sending 30 to 50 emails / day to KPMG and mentions harassment.  The statement is false; such volume of emails has not been sent.

01/2018 – Government Legal Department, acting for HECL

‘I am instructed that Sarah Green is satisfied that there is no substance to your complaint about Kier. Accordingly I am further instructed to press this claim, bringing proceedings if necessary.’

Sarah Green of HECL denies making the above statement.

12/02/2018 – Sarah Green states HECL had a draft audit report (KPMG) sent to their audit committee last Wednesday.  The committee had asked for further work to be undertake.

I was asked to give Sarah 3 weeks and was assured Mrs Green would come and see me if only to ‘buy me a cup of tea and a cake’.  We agreed I would diarise to 01/03/2018 to touch base by email about a meeting. I explained that I would be sending stuff on each file in the meantime to which Mrs Green replied ‘I know you’ve got to, and that’s fine’.

28/02/2018 – I spoke with Mrs Green and agreed to call late Friday.  I expressed concern for Mrs Green explaining part of the reason that I send so much is that I feared, in the background, there was a lot more going on than meets the eye; there is an awful lot of money involved.

02/03/2018 – Subject Access Request to Sharon McCarthy, Jim O’Sullivan and Colin Matthews.

08/03/2018 – we seek an update about the audit – email.  To date, no response.

03/2018.  It appears Mrs Green is removed form the audit of KPMG and Tim Readon (General Counsel) has taken over.

04/2018 – We post information about systematic overcharging, misrepresentation about the charging process and that Appendix A is not being complied with – click here.

03/05/2018 – HECL releases AIW rates – the response can be found here.By applying the information to claims, the calculation can be completed – click here

These figures are for ‘x’ (see 01/2017 above), specifically for AIW’s in Area 9.

  • Note: in 03/2016, more than  2years ago, HE’s General Counsel wrote that HE was charged £70.32 for an AIW.  This is untrue.

14/05/2018SAR made to KPMG.

 


Currently … KPMG audit not completed or a foregone conclusion?