15/11/2017 Explanation to KPMG

15/11/2017, we spoke with  KPMG (DB) below:

DB – Damian Byrne of KPMG
PS – Philip Swift

1. DB Okay. So um, thanks very much indeed for your, your time. Um, essentially the aim of the err, the call today um, as, as you know we’ve been appointed by Highways England to look at the, the matters in question. Um, we’ve received your file of information, and the aim of the call today um, is to just take any additional information you might have for us on that. Um, we’ve been through the file, err, we’re happy we understand it for our present purposes, um, there may be additional questions in due course, um, but I just thought it was sensible just to speak to you directly um, in case you can add anything else for us or um, give any explanation that might be helpful to us in our work. So that was err, that was really the aim of, aim of the call today, if that’s okay?
2. PS Yes, by all means, and certainly I think there is an awful lot to be added. Um, the meeting that I had with Highways England back in July, I believe it was, with (SG of HE), um, I really didn’t know where they were coming from, what their intentions were and how serious they were going to take this, and therefore they didn’t leave with a great deal of information, and I, I felt somewhat sympathetic for them because they didn’t leave with it in the best of formats, so I’ll do what I can to, to address that.
3. DB Okay. Um, so like I say, we, we don’t have a lot of err, a lot of questions really. Like I say, we’ve been through it, err, we’re, we’re happy we understand the information for, for present purposes, but perhaps um, if you just wanted to err, err, guide us to any, any particular areas to which you wanted to, to draw our attention.
4. PS Yeah. The, the problem I have is, having lived this sort of for three years I, I probably will go off at a tangent and therefore um, it might be easier if I came at it from, from a, um, which aspects are you looking at? Are, are you simply looking at the charging to third parties by Kier? Are you looking at the charges to Highways England? Are you looking at the anomalies between the two? Or is your remit to go further and look at the, the various misrepresentations?
5. DB Um, so really for the purposes of today’s call we’ll just talk through the subject matters in the file. So err, if we can perhaps start with um, the charges by um, err, Kier to err, third parties, so not the, not the charges pursued by Highways England.
6. PS Okay. Um, alright. Charges by third parties came to our attention in, I suppose, late, later 2014. We got a little bit concerned because at 2013 we were seeing about £125 for an attendance charge at an incident by what was then EM Highways. Um, that, that appeared reasonable. Within probably less than a year that had increased to £1,500, so we’re now talking sort of toward the end of 2013/early 2014, and it was, a more than tenfold increase is noticeable, plus we’re looking at other companies so we can compare rates.
7. We were still negotiating with EM Highways, as they were at the time, but, and it, my understanding is that this ties in with their taking over Area 9. On or about 1st July 2014 they took over Area 9 and became the contractor from Amey. And I can’t be certain that it occurred on that date, but I, I, I think I have some notes somewhere that, that was the date given to me, that they introduced, instead of their initial attendance staff being ISUs – incident support units – they had these asset inspection watchmen, or asset incident watchmen – AIWs. And what it was claimed was that these guys were effectively highly trained, well trained, um, and they would attend in two’s in a vehicle.
8. Now, we started to see the bills for incidents involving these guys towards late 2014, and I… They hadn’t come up on my radar at that time, my claims handlers were dealing with them, but the one um, brought up the paperwork to me and said, ‘Look, um, I don’t get it, it’s gone from £125 to £1,500, now we’re getting a call-out charge just for attendance of £2,700. On top of that we’re seeing £2,000 admin.’
9. So, we started to try to dig down into this and find out what was going on, why things were so different, why this these, these charge were nothing like we’ve seen before, and we didn’t get very…
10. DB So was that, was that that a one-off err, sort of step change or did these err…
11. PS No, that was it, blanket.
12. DB … did it sort of taper in over a period of time? Okay.
13. PS No, absolute blanket. It was just a, a, a sort of a switch was turned on overnight.
14. DB Okay, and what, so when, is there an, a date in particular that that err, changed?
15. PS Well, I think it was 1st July 2014 they started to apply it, when they took over Area 9.
16. DB Okay. Yeah.
17. PS And ultimately we, we actually got somewhere. We, we started on, on a couple of files in order to explain these charges they disclosed what I would consider, certainly by current standards, an awful lot of information. Um, they sent us err, a document which headed up description of individuals, the quantity that they had of these, of their operatives, um, how they fell, whether they were labour plant staff, the rate, what they cost them per year, and they provided a calculation which was the cost per annum divided by 1,153, and 1,153 has become, well became, um [laugh] a sort of, err, an, an everyday conversation here, because we couldn’t get our heads round this.
18. Um, what they were claiming was that they have staff, let’s take, and we, we, to an extent we, we’ve concentrated, to try and keep things simple in our own mind, on labour, which was the AIW, the asset inspection watchman, and the AIW’s vehicle. So, we were told, 38 AIWs, they work in pairs, um, they cost £2.7 million per annum, and the charge per claim is therefore £2,385 per incident on each of the 1,153’s. The vehicles, they’ve got 19 of these to cater for 38 individuals working in pairs, 19 vehicles, 4 point, err £440,000, £381 per incident, so for all the 1,153 incidents they attended each year, um, divide those figures and you get £381. Add the £2,385 to £381 and you get about £2,700, £2,700 something.
19. DB Yeah.
20. PS That was their initial charge. Now, we, we started to think, ‘This is, this is nuts.’ We were doing our background on AIWs, we were looking for adverts to see what they did, we were making applications for information about them, and it became quite obvious that these AIWs filled potholes, um, they trundle off and cut grass, they picked up litter, debris, they did all these other tasks, all tasks paid for by the lump sum, the amount that Highways England pays them every month, to Kier, for doing stuff that nobody else is going to pay for – cutting grass, picking up debris, filling holes. Yet they, Kier, had divided their entire cost of these attendance staff, who also did these other tasks, and were charging every insurance company for 100% of their time. Now, we tried to drill down even further and find out how many incidents, you know…
21. DB Yeah.
22. PS … what sort of percentage of the work was incidents, and to an extent you can do that. I mean, it doesn’t take a, you know, it’s not rocket science to take 1,153 and say, ‘Well, there is 52 weeks in a year,’ that works out to about 20 incidents per month, that’s one incident per AIW um, per day, sorry, and yet you’ve got all these staff out there.’ There was no way that these guys are doing much. They’re, they’re simply not attending incidents most of the time. And this became so obvious to us that, you know, it… I don’t deny it, it almost drove me mad looking at this. Because we looked at this, and you, you can come at it a different way, you can say, ‘Well, if you’ve got 38 staff, you know the total cost, you can work out that they’re out £30 per hour.’ And these incidents, these are the ones that are under £10,000, these are the smaller incidents. You can’t possibly be telling me that these guys at £30 an hour are racking up a bill, even with their vehicle, of £2,700. I think the maths, when I did the maths, if you add two AIWs together at £30 each, gives you about £60, plus £10 for the vehicle, £70, you divide that into 2,700, I think it worked out to almost a week’s worth of wages. It’s about 30, 37? 37 hours that were being charged.
23. DB Okay. Um, yeah, so, and what was your assumption on how long a, a single incident, how much time did you…
24. PS Generally under four hours. Under four hours.
25. DB Yeah, because it’s the smaller, err, smaller incidents…
26. PS It’s un- it’s under threshold, and we are only talking about the incident attendance.
27. DB Yeah, not the, the repair? Yeah.
28. PS Now, I stress… No. So, none of this, the mathematics of this, it simply cannot be correct, it, it just… It’s farcical. Now, they were very keen to disclose the information at this point. Moving on, we’ve had a, a terrible trouble getting any information from them. Here they want to disclose, they gush with information to try and convince us, now we get nothing. So…
29. DB And have you had any response on the, the, the direct question you, you put to them?
30. PS With regard to?
31. DB Just you, what you say is the discrepancy between the, well the [crosstalk 0:11:58]?
32. PS No. Um, so what I did was, what, what happened was, we carried on forwards, and late 2014, as I say, I mean the maths just speak for themselves, and they’re not complicated. By 2014, we’d clearly got their back up, because they contacted one of our clients and said, ‘If these guys don’t resolve this um, we’re going to issue proceedings on all of your cases.’ Client contacted us and I said, ‘Look, um, we’ve got a meeting lined up for them in February, we’ve been trying to get a meeting for ages, it hasn’t occurred, um, we’ll sort it out.’ The meeting never occurred, um, we asked for information, I asked for information upfront, I explained to them I didn’t want to be ambushed, and by that I meant I wanted to be prepared when I went, when I went along, they assumed that I err, thought I was going to be beaten up by them, peculiar individuals, and during summer of 2015 err, we were still exchanging.
33. Err, I was dealing with a guy called Neil Pendlebury Green, um, he’d sort of taken the reins from Dan Hay who was the manager, and Neil’s I think sort of a little higher. And then, in late August I was still emailing Neil when unbeknown to me, I think it was 21st August 2015, he sent an email round to, or a letter round to all my clients basically saying, ‘Err, we’re not happy with CMA, you know, we’re, we’re a big company, this is inconsequential, um, they don’t go about things the right way.’ They effectively tried to get all my clients to drop us. Um, fortunately it didn’t work.
34. So, come about October, when they realised this, October 2015, we had a young lady called Sophie Granville arrive on the scene. Um, I remember calling her and being surprised that she was willing to meet, and I thought, ‘Right, this is it, um, we’re going to resolve this, we’re going to get to the bottom of it and we’re going to move forward and get these charges right.’ Um, [laugh] I have a good memory of the date because it was sort of tying in with the fact that the following month I intended to retire.
35. DB Okay. [Laugh]
36. PS Um, so, you know, having said that, it will give you an idea of why I speak about this with quite a lot of confidence, is that having so more or less cleared my desk, I haven’t really dealt with anything since, anything other than this, um, and once it’s done I want to be out of here.
37. So, I dealt with Sophie, we had a meeting and I was uncomfortable, ’cause she turned up with Neil Pendlebury Green and he, he tried to put a new process in place and it, it was obviously flawed and he didn’t like being told that, but err, if, ultimately accepted it, and we understood that they would go away and they would address all the problems.
38. Um, they abandoned 1,153, so that was the first thing that went, and we saw claims, well, you know, taking the figures £2,700 for attendance, £2,700 admin, we saw claims for no more than about £4,700, in other words they’d just gone along and maybe brushed some debris aside, drop to, I think one was £1,250, one was £750. These claims plummeted, some of them. In theory, they all should have dropped by at least £4,000. We’d sort of worked out that the overstatement on that year was in excess of £10 million, um, in the… And that was just on initial attendance.
39. So, we lost 1,153 in October 2015, and we didn’t see the insurers guide straight off, um, Kier went away, Kier Highways Ltd went away, they created a guide and they came back and, and I can’t remember the exact phraseology but I, it, it was sort of along the terms of ‘defined cost process,’ and whilst they were using this explanation for the charges, the defined cost process, it’s, I would suggest, very important to understand at this point, we were still in the dark. Um, we hadn’t been involved in this defined cost process, we had no idea that in the background, lurking, was a little document under the contract, under Annex 23, called Appendix A, Appendix A to Annex 23, and excuse me, I’ve, I’ve got a head cold so I’m sniffing a bit.
40. DB Alright, yeah, it, there is a lot going around at the moment.
41. PS Oh, don’t I know. So, we, we were actually ignorant of this in late 2015, never, never come across this Annex 23. We’d been online, we’d been onto the gov um, archive, we’d looked at the contract. I mean, there are masses of documents up there, but none of the appendices. Annex 23 deals with um, red and green claims, and it’s, it’s aimed at, as you would expect, err, the, the contractor. Appendix A has built into it, and I’ll come onto that, what I’ve referred to as the protection for third parties.
42. So, we have no idea. We were now, back at the beginning of 2015, talking about a defined cost process, and all of a sudden we saw this new document err, the, the CBD, the cost breakdown document appeared, and we have no hand in this, and it simply accompanied third party claims. The CBD, on the face of it, looks, it’s quite nice, it, it’s quite easy to read, it breaks the incident down, it gives you a precis and then works down, and it starts off with initial attending the incident costs. One of the first things we noticed was that in all the areas, bar one, the cost was about £70 an hour for an AIW. In Area 9 it was £73. Now, when I spoke to Miss Granville about this, all she could say at the time was, ‘Oh, um, yeah, that’s Area 9, we took over a real shambles from Amey,’ and I’m sort of saying, ‘Well, that’s no grounds to charge insurers more, that’s down to you, that’s due diligence, girl.’ Um, I didn’t say girl, I hasten to add.
43. DB Okay. [Slight laugh]
44. PS That’s me just being very casual with you. Um, we didn’t like this, and the more we looked at it, the more we went back to 1,153, and the more that was used against us. You can imagine, we’re turning round and saying, ‘Look, we know your annual costs, um, you’ve provided 1,153,’ and they’re, they’re saying, ‘Well, if you want to use 1,153, go ahead.’ And we’re saying, ‘No, what we want to do is to compare the prices. It’s not that we want the best of both worlds, we want to demonstrate to you that your figures don’t make sense. £70.32, £70…’ Yes, £70….. Sorry, I’m just remembering. ‘£70.32 per hour is absolute nuts. You’ve told us how many asset inspection watchmen you have, you’ve told us the annual charge, we know that they cost you £30.94 or thereabouts per hour. Overnight, let’s say 1st October, you’re now charging us £70.32. Why?’ And we didn’t like it.
45. And eventually um, Miss Granville sends me an email and says, ‘Look, it’s the right figure. We have um…’ I don’t think she used the word ‘defined costs’ but effectively it’s a base rate. I mean, she uses so many words for the same thing, ‘defined cost,’ ‘base rates,’ um, ‘nominal values,’ ‘notional values,’ they’re, they’re all the same thing, they’re a base rate. And she sent me the breakdown and she said, ‘Look, it’s £58.32.’ So, okay. So that makes the add-up, and she’d put it on there, of 20.58%, which equals £12, £58.32 plus £12.00 equals £70.32. ‘Okay, I’ve got it, I get, I get where you’re coming from, but how is it overnight these guys are now costing you more than double what they were under 1,153?’ She said, ‘Well, this is the base rate, this is um, the mark-up, this is what we’re contractually allowed to, to use.’
46. And again, at this point, we’re still talking early 2016, we have not seen Appendix A to Annex 23. We have, we’re ignorant of it, but we’ve got to the point now where we’re saying, ‘No, you, you, you cannot do this, this is wrong, this is unreasonable, you can’t go to £70.32 overnight.’ And during the year we were seeing these claims come in, and then probably some of the documents that Sarah [Hansen 0:21:25] has given to you, all of a sudden we managed to put together an incident, err, we, we saw an incident that happened um, at the end of July.
47. So, July 2016, I think it was 29th, and this one was over threshold. So, it was in Area 9 and the incident happened at about 9 o’clock at night, 9pm, and we looked at the charges and we thought, ‘We’ve got our base rates, at last, we can actually now move forward and, and make informed comment,’ because the invoice that came out, that’s the invoice for breakdown, said that an AIW in Area 9, to Highways England, was £23.71, and this was for two guys, one a chap called Mr Ubsersachs, and another called Mr Simkiss, and they were both chang-charged the same, £23.71, plus a 7.38% uplift, and that brought the total, I think, if I remember correctly, 3.78 of that is £1.75, so it brought the figure to 20, about £25, £25.46. And I went back to Sophie, I mean I’d, I’d seen this figure earlier but I’d never had it so clearly laid out for me, and I said to her, ‘Look, you know, you’re, you’re charging Highways England about £25.’ And she was blunt, she said, ‘Don’t know where you get that figure from.’ I’m thinking, ‘Well, I’ve got it in front of me.’
48. Now, I must have had it before this July 2016 because it was on 31st March 2016 that I sent her one of my long letters, 77 pages, saying, ‘Look, these are all the issues, help.’ Um, she came back, she emailed back 10 minutes later basically saying, ‘Yeah, I’ve answered all these before, um, off to the lawyers we go.’ So, my 77 pages she’d managed to scan in 10 minutes. And from that point forward we’ve been dealing with their lawyers.
49. Now, having seen this July 2016 incident, it was a Friday at 9pm, there was another point that, that really started to niggle, and this was that at 9 o’clock at night the incident management form, the document that these guys, Mr Ubersachs and Mr Simkiss complete when they go out to an incident, showed that they were on the M6 when, when contacted. It only took them two minutes from when they were notified to attend the scene at 9 o’clock at night. Now, we’re being told that there are multipliers used to add further uplifts, but only to third party claims. We don’t see any multipliers on Highways England. So, coming back to 29th July, we looked at the paperwork, the £23.71 plus £1.75, it’s £25.46 an hour for these guys. It’s wrong.
50. Something is not right. We have a document from Miss Granville which says the cost of these AIWs, the wages, salary, bonus, specialist allowances, relocation, NI, pensions, safety, water, gas, whatever they use, is £58.32. That’s what they cost them per hour. They’ve worked this out, they’ve put it in writing to me. How on earth can you be charging Highways England £23.71 per hour, plus 7.38%, about £25.50? It’s not right. Either Highways England are in on this and they’ve done a deal whereby they get it really cheap because the public/third parties are subsidising, or Highways England are ignorant of this and they’ve just let these guys do what they want below threshold, and that’s exactly what they’re doing, unpoliced, or there’s something between the two there that’s going on that I just don’t understand. Either way, we’re not being charged the same, and I’ll come onto that when I reveal our, our knowledge of Appendix A.
51. The good news from our perspective was that a week after 29th July, on another Friday, this time at about 6 o’clock in the morning, there was another incident in Area 9, Mr Ubersachs, Mr Simkiss go out, they go out in the same van, and because it’s 6 o’clock in the morning they get charged at £73.05 to a third party at a 1.5 mark-up because it’s before core hours. This therefore makes them about £109 an hour for third party, people that Highways England are charged at £25.50 or thereabouts.
52. DB Is it normal, it’s presumably normal though to charge some premium for, for unusual hours, is it?
53. PS No, I don’t think so. And the funny thing was, I’d had this conversation with Miss Granville, because many moons ago in my first life I was, I was a police officer, and the, the analogy I used to her was, ‘Look, you toddle off to training school, you do your weeks, you turn up at a police station to be assigned to that, you go and stand before someone who says, “You officer, you’re going to shift B, they’re starting at 7 o’clock tomorrow morning, and you’re doing 7 to 3 until the weekend, weekend starts and you’re going to be coming on at 3, doing lates until 11 o’clock, you’re going to have a few days off, then you’re doing 11 to 7. For that you’re getting the princely sum of £20,000 per annum,” and it’s built in.’ Now, I can… I’m, I’m going to go out and say, ‘These guys work shifts.’ I’m going to say as well that these guys are not paid the uplift. I don’t think that there is a premium paid to these guys, but I’ll restrict that to weekdays. I’m… I don’t have enough experience of them to be able to say of a weekend or public holiday that they’re not paid an uplift. My understanding is of a weekend they’re on a roster, and that’s part of their salary, but I’m not confident. So what I tend to do is when…
54. DB Um…
55. PS Sorry?
56. DB No, no, I was just going to, I, I… We can err, we can look into that. It’s, you…
57. PS Yeah.
58. DB … you obviously don’t have full, full visibility of what the…
59. PS No we don’t, and, and… Again, you know, this, this isn’t really a massive bit of our business. I mean we’re, it’s a bolt-on that we started doing for an insurance company years ago who were having a few problems and it’s, it’s grown, but principally we deal with vehicle thefts and collisions um, and fraud-related matters in, in respect of vehicles. We are all things vehicles, um, therefore we don’t, we don’t get a lot of these coming in. Um, but we’ve, we’ve got enough that we could do this cross reference.
60. So, we looked at these charges and I said, I remember saying to Sophie, ‘Look, you know, surely it’s like that, they come on.’ She was telling me that they’re paying them about £42,000 a year, and that sounds about… That sounds generous, especially for… Alright, no, not especially, but even allowing for them doing shift work. I’ve seen an advertisement for a HETO, the um, Highways England Traffic Officer, and they start, I think they’re sort of about 21 starting, um, so £42,000 a year for these guys isn’t, isn’t horrendous, you know, to, to my way of thinking, it, it’s quite possible, and I think that that would cover shifts, but I, but I’ll come onto that.
61. So, we’re getting charged a multiplier. At some point Sophie turns round and says, ‘Look, we have core hours.’ In support of this Kier produced their insurers’ guide. Now, we’ve… That, that’s given me an awful lot of confidence because they’ve documented these hours. What they’re saying is, from 8am to 5pm weekdays our guys are on the road, these are the shifts, you know, that is the shift they work, 8am to 5pm. Now, that’s been documented, that’s in their insurers’ guide, they send it out with each claim to insurers and to third parties, after 5pm of a weekday you get a 1.5 multiplier, before 8am you get a 1.5 multiplier. That doesn’t apply to Highways England. Now, that’s another reason why I think these guys are not paid the uplifts, because if they were paid the uplifts you would expect them to be a higher price on, or a multiplier to be added on the Highways England documents. They’re not.
62. Now, 8am to 5pm is something that she has said to me, and is core hours. We got so twitchy about this, we see incident management forms that show where the guys are when they’re contacted, and on the 29th… Sorry, on the August date err, we know that they were on the M6 and arrived 10 minutes later, so it’s, that’s, that’s 9 o’clock at night. We know these guys are on the road. So, they’re working after 5pm. It got to such a point, we got so many contradictory statements, I’ve, I’ve had conversations with her where she’s said, ‘Well, we’ve got three shifts, there is one that works late, there is one…’ And now we’re tied down to this 8 to 5. We tracked down an AIW, I spoke to him, and he says to me, ‘We work shifts, we have three shifts, they’re 9 hours, and we work them.’ So, these guys are not working 8 to 5, and as far as I can recall from speaking with him, ’cause I asked him about, you know, ‘Do you get paid overtime?’ Um, in fact, again Sophie confuses me, and I think this is intentional, overtime and outside of core hours are two different things. If somebody works 8 to 5 and then does work beyond that, they get paid overtime, I agree with that. If somebody is contracted to work shifts and is working at 9 o’clock at night, because they’re working a 9-hour shift, just because it’s outside of Kier de-denoted err, set core hours that they’ve dictated, doesn’t mean to say they get paid more, and I don’t believe they do.
63. And this is where it seems to me there is some deception at play, this misrepresentation, and they, they, they mess with their phraseology. But these guys, they’re working and they’re working 24/7 during the week or almost that, I mean the shifts indicate that. There is no uplift to Highways England. Kier have said, Miss Granville has said, at court, because I have the transcripts, that these monies are paid to their operatives. I don’t believe that to be the case. If it was true, we would have been told this from the outset, I wouldn’t have nine different accounts of the shifts that they work. There is, there is gross misrepresentation. And when you look at the whole of what we’re dealing with, of what we’ve encountered, this is one… As, as much as I want, want to rabbit on about the costs, and you can do the maths, etc. you know, at the end of the day I get reasonableness, I don’t get misrepresentation, you know, we, we should not be the subject of such misrepresentation, such dishonesty.
64. But the one thing that’s grating on me is these multipliers, because ultimately, if these multipliers, if they are not paying their staff 1.5 times after 5pm, I fail to see how seeking recovery of those moneys is nothing other than fraud, gross misrepresentation, blatant dishonesty, and that’s, that really is one of my core um, arguments and my core concerns about what is, what is occurring.
65. DB Okay, okay, so that’s err… I mean the principle, yeah, I, I understand, I understand the concern and err…
66. PS Okay. Now, we, we’ve kept on, we’ve, we’ve plugged away and it abs- having written, in late 2015 I’d written to Highways England and it took them until early 2016 to sit up, and a chap called Tim Reardon, who’s their General Counsel um, started to communicate with me, and he appointed auditors. Now, my understanding is they went down to the west country whereas I think they should have gone to Area 9, but that’s by the by. They went down, Highways England went down, and my understanding is that Miss Granville was present throughout the audit. The audit that’s come back is, to my mind, farcical. Um, for example, it didn’t identify um, the, the damage that had been done, the overstatement from 1,153. Um, it appears that they were directed to certain claims, and it just didn’t touch upon um, the, the true aspects.
67. The other thing that now niggles me is that at no point do they make reference in the audit to a compliance with the contract, specifically Appendix A to Annex 23, hence when they did the audit back in January 2016, and it was supplied to me in about February or March, I was still none the wiser about this. There is no reference to it.
68. So, we’d seen the audit take place, I was in touch with Tim, at that point we were sort of speaking, corresponding, and I was just, I was, I was blatant with him, I was blunt, and I just wrote to him, I said, ‘Look, how much are you, Highways England, charged for an AIW?’ This was before I’d got the most recent documentation, the July and August. And he came back, and he’s written to me, ‘We are charged £70.32 for an AIW, and it’s about £35 for an AIW vehicle.” I almost fell off my chair. There was no way that this is what they were charged. I was in further correspondence with staff at HE and they were all basically saying, ‘Look, we support our contract.’ And I’m saying to them, ‘Look guys, you’re telling me you pay £70.32.’ I went back to, to Tim, and I said, ‘From when? Since when? Where did you get this information?’ And he wrote back, and he said, um, ‘I think it was correct as of December 2015,’ and he got it from Kier. And again, I just thought, ‘I’m being stitched up. If you, Tim, wanted to give me legitimate figures, if you were not looking for a get out here, you would have gone straight to your own people and said, “Hey guys, err, you guys in green claims, how much um, are we charged by err, Kier?” You wouldn’t have gone to Kier and say, “How much do you charge us, Highways England, for an AIW and your vehicle?”’ To me, it struck me that he was looking for a get out, so as he could come back and say later, ‘Well if this is wrong, it’s just what I was told.’ Whereas he could simply have gone to his own staff, to their own records and he would have identified that they’re paying £23.71, as I know, because I’ve got it on documentation in front of me.
69. The other thing that supported my concerns about what we were being provided, and I mean this, this, this is their General Counsel fobbing me off, giving as far as I’m concerned false information. So, please understand where I come from and why I, I… When I dealt with (SG of HE) I, I had some serious reservations. These guys, as far as I’m concerned, are in cahoots. You know, they… You’ve got Highways England supporting Kier who are putting forward these charges which just don’t add up. In fact, one of the documents that we started to see on Highways England claims, because they not only get different charges, they get a different presentation where they get more data, we were seeing daily time costing sheets. Now, these are a cracking little document. Um, the daily time costing sheet is effectively the um, the time sheet for an operative, so Mr Ubersachs and Mr Simkiss, when the bill is presented to Highways England they not only get the breakdown of the charges, they also are given the daily time costing sheets for the staff, and you can see on there he’s actually written what his shift is.
70. So, this core hours of 8am to 5pm is a misrepresentation and, as I’ve said, I, you know, there is the fraud aspect when it comes to third parties. I’m going to go further than that, I’ve purposely gone out and spent an awful lot of money on the transcripts on three court hearings, because Miss Granville of Kier, in the name of Highways England, is presenting this same information to a judge. Now, I don’t know if that’s pervert the course of justice, it’s perjury, I don’t think she’s under oath, but, you know, telling me porky pies is one thing, but actually being prepared to stand up before the judge and do this, it, it, it just tells me that I don’t stand a chance dealing with Kier and, you know, it, it accounts for why I’ve got such difficulties. We know there is a lot of money involved. Moving…
71. DB Okay, yeah.
72. PS Moving forward, toward the end of 2016 cases start to be presented to the courts. Nothing was happening, um, again my clients were being approached, there were attempts to undermine us, to pull us out from um, being instructed, you know, to adversely affect my business. Most of the clients have stuck with us. Some, you know, have, they haven’t taken kindly to it. There is only so much I can do. But we started to see cases go before the court, and what then happened was, we started to see statements coming, in particular from Miss Granville, and on, tagged onto the end of one of these statements, I’ve only seen it on one case, on one statement, and I do now wonder if somebody put it on there by mistake, but tagged onto the end was a, sorry, onto the end of Annex 23 somebody had included Appendix A, and this was the first time I’d seen the thing, and I don’t think I saw it until early, early 2017. And all of a sudden, things started to crystallise, because Appendix A is headed ‘Amounts claimed from third parties.’ Well that’s us, drivers, fleets and insurers.
73. DB Yeah.
74. PS Appendix A sets out the principles to be followed when calculating the maximum amount to be claimed for damage to Crown property when Kier is pursuing a claim against a third party such as an insurer. It’s in the contract for Area 9. Kier have signed up to a process, as of 1st July 2014, that says, ‘You will charge a maximum amount of…’ It goes further and actually says um, ‘The charge will be no more than…’ And they break it down into effectively what are two sections. There are defined costs which, you know, light bulb moment, now I get where she’s coming from, now I see why we’ve got defined costs to Highways England and we’re talking about this defined cost process. And on top of the defined cost is the third party claims overhead.
75. Now, they’re just words. The ASC does not set out values, it doesn’t give us the price, it doesn’t give us the figures, so we know a defined cost is a specific pounds and pence, we know that a third party claims overhead is a percentage, but we don’t know what they are. We don’t, we don’t have the schedule of defined costs, nobody will give them to us, and we only have Miss Granville’s word on the third party claims overhead. But we went back to what we’d been sent, which was the breakdown of the £70.32, the £58.32 was the make-up of items, and on the end was 20.58%. So, the £70.32, actually we could see now how they came to this. She was saying, £58 was the defined cost and £12 is the third party claims overhead. But, armed with this document, we then went back to the Highways England papers and said, ‘That doesn’t work, the defined cost, as Miss Granville will say at court,’ and as I say, I have the transcripts, ‘the defined cost to Highways England and to a third party is the defined cost, it does what it says on the tin, it’s a set cost and it’s the same to both parties.’ The difference to Highways England on an above-threshold claim is that Highways England are charged a 7.38% fee. Third parties are charged the third party claims overhead of 20.58%. Therefore, the difference of over and under-threshold is 13.2%. With me so far?
76. DB Yes.
77. PS Good. [Laughing] You guys are going to be a lot better with numbers than I am, I’m sure. Well, all of a sudden, we’ve, we’ve got it, we’ve, we’ve got to where we needed to be. We’ve got the document that says, ’You can’t charge any more than…’ We’re now looking at Highways England correspondence and seeing, ‘Ah, this big list here, the values, these are the um, these are the breakdowns, these are the hourly rates. In fact, we went, we got so [pause] I was going to say excited, that’s probably the wrong word, but it was a lightbulb moment, that we went right back, and in 2013 we pulled out an Amey document, and again it made sense. Here was Mr Simkiss and Mr Ubsersachs, before July 2014 where Kier took over, here was them in um, April 2013 being charged by Amey to Highways England with a rate of £18, obviously it had gone up since, with the working area overhead, which was their fee… Oh, sorry, in working area overhead plus the fee, and the fee was 9.93% under that.
78. So we could now go back through all these Highways England documents, all these above-threshold claim figures, and pick out the sums, because Appendix A to Annex 23 is the protection that Highways England have built into the contract to say, ‘Look guys, this is what you will charge, this is the maximum, no more than, and it’s the areas of defined cost plus the third party claims overhead, so you’ve got your defined costs for the items and then the overhead of 20.58%. And this is why, when we go to court, and I’ve got the transcripts, nothing is making sense. Kier cannot be complying with the contract.
79. Now, you know, I’m, I’m not naïve, Highways England may turn round and say, ‘Ah well, they signed up to that contract, um, yeah, we’ll give them a rap on the knuckles, they’ve been very naughty boys and they shouldn’t have done that, and actually their process is better, so up yours, Mr Swift.’ That, that could be the approach that they take. We’d obviously say, ‘Well the costs are unreasonable.’ Where they’ve shot themselves in the foot is firstly with regard to multipliers, as I said earlier, but secondly they have been telling us and the courts that they are complying with this process, this is the process that they’re working to, and they’re not, they cannot be, because if they were, for the incident under £10,000 with Mr Ubersachs and Simkiss they’d be charging us £23.71 plus 20.58% mark-up, bringing it to about £30 an hour. But they’re not, they’re charging £23.71 multiplied by about three to get to £70 an hour, and on top of that sticking a multiplier.
80. I come back to this audit of January 2016. Highways England must have known about this document, must have known about Appendix A, and, and to say I’m angry is, is not unreasonable, err, an unreasonable description. Highways England could have brought this to our attention, they could have looked at the contract and seen, ‘What are you paying, what, what was, what did the contract say about third parties?’ They could have identified that they weren’t complying with it. Tim Reardon could have done it. Whoever did the audit could have done it. These guys are issuing invoices every day, probably at about a rate of about 10 a day, which are grossly exaggerated and are non-compliant with the contract. And in fact, you don’t even no- need to get to the technicalities of the contract to realise that something’s very wrong. All you’ve got to tell yourself is, I’ve set up a contract, at HE, I’ve set up a contract with Kier, and that dictates a process. Why is it that Kier had one process at the outset and now they’ve got another one where they’re using defined costs? Why hasn’t there been consistency? They must have realised something was up.
81. Somebody has let this go, somebody is protecting Kier, has been protecting Kier for an awful long time. Even now, Kier will stand up in court and say, ‘Well, the process that we’ve got, these err, multipliers and err, shifts etc. this is all agreed with the insurance industry, we’ve been along to see Admiral, we’ve been along to see Aviva, um, we’ve agreed this with them.’ Yeah, okay, well where’s that in Appendix A? Where does it say that the process you use to charge insurers has to be agreed with them, and that what you’ve agreed with a couple of insurers can be dictated and forced upon ever other insurer? What’s more, I’ve spoken to Admiral, I’ve sent them an extract from the transcript and I’ve said, ‘This is what’s being said about you. You guys have apparently agreed this.’ Admiral emailed back to say, ‘We have no, no such agreement, and as far as we’re concerned um, AIWs are an exaggeration.’
82. I don’t think Kier care what they say at court. I don’t think they care what they say to anybody. I suspect that Highways England is going to have a hard time with them because they’re now in control of over a third of our roads. I think that they think they’re untouchable, and I think that we’re considered just to be a nuisance to be squashed. I don’t really know what more I can add.
83. DB Okay, ell um, just [inaudible 0:49:46] on the err, on the principles, so I’m, I’m happy I, I, I’m clear on what you’ve explained to us there, um, err, that’s very helpful in terms of where we need to, to go. Um, just conscious of, of time, um, so we have until 2 o’clock. Um, like I say, I’m comfortable with, with what we’ve covered. With the just under 10 minutes we have left, is there anything else that err, you feel we should discuss?
84. PS What I’m going to do, I don’t… I, I am going to document this for you. Um, I’m going to put some stuff down for you for, for reference, because I think you need more. I think, you know, I’m, I’m an old-fashioned copper, you know, I… I almost feel as if I shouldn’t be doing this because I’m actually helping out the insurance industry, and, and we’re one of the smallest firms of loss adjusters here. But I, I just have, I just feel we’re doing the right thing. I can’t, it’s, it’s probably a personal issue but I can’t step back from something that is so blatantly wrong. So, I will… And, and by the old-fashioned copper bit, I mean that I’m not telling you anything that I cannot evidence. This business has been, we’ve been trading since 1994, I am to the Nth degree careful about what I say not to crucify um, my business, the livelihoods of my staff. I am not saying anything that I cannot evidence, and that’s the difference between myself and Kier. I, I go over the top to evidence, so if I tell you something, you know, come back to me and ask me to support it. I will, I promise you.
85. DB Okay. Um, if I could just say a couple of things on err… I mean if um, we obviously have a lot of information from you already, so um, unless there’s something additional to that you feel we don’t have then um, just, if you could just exercise some judgment in what we already have and only supply anything that’s…
86. PS Yeah, well I don’t know what you have, but I, I think I can lay it out a little better, so um…
87. DB Um, the other thing I’d ask is err, obviously our position is err, it’s important we, we stay independent here. The, the, the file of information you submitted um, to Highways England, that’s what we have, so if that’s the route which, through which you submitted information previously, I’d ask you to keep to that route and then Hi- I’ll notify Highways England that err, you may wish to make additional um, submission of information, and then they can pass it direct to us, and then it err… I, I think the process is just more proper in that way.
88. PS Okay. Now, you say independent, err, do you have, have you had or do you have any dealings with, with Kier or Kier Highways Ltd, EM?
89. DB Err, well part of our work, and the intention for our work is that err, we will need access to Kier to um, properly look at these matters.
90. PS No, sorry, what I meant was, are you their auditors, or have you ever been, Kier Highways Ltd, or Kier Ltd?
91. DB Um, personally no. Um, as a firm, um, we do work for Highways England and for Kier, um, it’s a normal situation for us. Um, I am entirely independent.
92. PS Okay. Okay. Well, as I say, I mean I, I evidence everything I’m saying, it’s not as though I’ve got any concerns about that, I’m just mindful that this has dragged on and something needs to be done. What, have you got a sort of timeframe for this?
93. DB Um, I, I haven’t set a timeframe. Um, the, the work really err, needs to, to progress. Um, so that’s err, that’s to be err, to be decided as, as we go. Um, I will aim to completely my work um, as soon as I can.
94. PS And if you were to consider that there was dishonesty and criminal offences, are you in a position that you would then pursue that?
95. DB Um, part of my normal job in, in any situation, if I, I were to err, come across things like that, I would have to consider that.
96. PS Okay. Alright. Alrighty. Look, if you need any more from me, you’ve got my email address, just let me know, if there is any clarification required.
97. DB Err, that’s very helpful, thank you. Like I say, I’m happy I understand the, the information you submitted so far and what we’ve discussed on, on the call. Um, but yes, that’s very helpful, if there, if there was anything um, that offer to come back to you is, is helpful, so thank you.
98. PS Quite alright. Alrighty?
99. DB Okay. Um, well thanks very much for your time today, I appreciate that.
100. PS Pleasure.
101. DB Um, yes, and it’s good to speak to you.
102. PS [Laugh] Alright, you, you take care.
103. DB Okay?
104. PS All the best.
105. DB Thank you.
106. PS Cheers, bye.
107. DB Bye bye.