LPUK’s accounts investigation update

Back in October people were looking to me to work with Nic Coome to establish some transparency in the LPUK accounts, the idea was to try to heal the rift by establishing what had happened, if anything, to all the money. Recall that various accusations had destroyed trust in the leadership and caused a bust up. I am now going to report on how that investigation went, though I am sorry I did not get far.

At our meeting in October, there was anger and concern at what had occurred when the NCC and then the membership were both refused access to the accounts back in April 2011. This time Nic promised that “the bulk of it” (that’s the expenditure) could be accounted for and we left with the impression we would now see some detail from the ledgers. We had agreed a reasonable and mature standard that it was okay if some of it could not be fully explained.

After that, I corresponded with Nic and received copies of the NI and GB statements, which were already available online at the Electoral Commission. Rather than complaining that I had received nothing new, I set about doing what I do to my own accounts every year – checking the bank balance was correctly reflected.

Theory and Maths

Care should be taken never to mislead by giving incorrect data in financial statements because they are used to judge the overall financial state of an enterprise. Diligent firms will check the statements before extending significant credit to a company and they expect them to be a true guide. The cash flow statement, which the LPUK accounts strongly resemble, is there specifically as a guide to whether short term cash might be found to pay a bill.

Knowing the bank balance is an important check on the accounts. Statements of account for a commercial company would contain a cash at bank value that should match exactly to the bank statement. You might have judged that the cash flow out of the enterprise is manageable but what if the real rate of spending was higher? The bank balance check tells you if it could have been higher. Also, a large current account balance tells you how much money was physically there in the bank account at year end, making it easy to judge whether your bill might be paid.

LPUK’s statements don’t include a balance but luckily there is a direct relationship between cash flow and the final balance and you can calculate the latter:

If we that assume an enterprise:

a) starts with £0,

b) has annual income of £2, and

c) expenses of £1

then over three years (2-1)+(2-1)+(2-1)=3 is what you expect to see in the bank at the end.

It’s also worth knowing that (2-1) on it’s own is called your “net annual income”, £1 in this example.

1+1+1 also equals 3 proving the sum of net income is a handy shortcut to the balance.

LPUK’s figures

In 2007 Patrick Vessey filed a nil return for the annual accounts. Zero in and zero out. The rest of the information you need is all given for comparison purposes in the 2010 accounts for GB and NI parties, which are accounted for separately.

I added up all the net annual income values and got £4307.03, here are the same figures excerpted from the public documents.

Click through for the full PDF version downloaded from the Electoral Commission:

GB Accounts, 2010

NI accounts, 2010

It is now neccesary to speculate what the bank balance was supposed to be on 31st December 2010. That’s the value for comparison and unfortunately Nic Coome’s co-operation ended when I asked for it by email in October 2011. I did chase for this again in December 2011, on 12th March 2012 (Monday last), and again via Facebook. No acknowledgement of any kind was received.

The balance figures I have seen relate to a single bank account and average around £100 in November 2010 and about £60 in April 2011. I had to get those from NCC members on this side of the rift, but they demonstrate that LPUK’s balance was small and varied only by tens of pounds.

There was also a rumour of a £0.26 balance no later than May 2011, and at the October 2011 meeting Nic Coome mentioned that he put in £500 of his own. The Party also owes my company £30 from June 2011.

What might this mean?

The accounts investigation has yielded no new data so I can only give my opinion. First, let’s visualise that the facts and rumoured values listed above, and add a line to fill in the blanks by assuming a gradual change in the financial posiotn of the LPUK:

LPUKNumbersViz

Visualisation of confirmed value, the calculated December value, confirmed and rumoured values, total debt; and assumed changes (dotted) for LPUK’s primary bank account balance.

The party was not used to getting large amounts in donations, so we would not expect the balance to change by more than a few hundred pounds at a time. As such the balance implied in the statement of accounts is, at best, surprising. To be accurate it must have risen then fallen again by £4200. What explains that yo-yoing? What good reason is there for the bank balance to be such a secret that the reconciliation must be called off without a further word?

We know that the Party used a second account to process incoming donations, and also used Paypal. If at least £4200 of donations were received in November or remained unprocessed from earlier then the matter can be left here, but that would have represented a dramatic peak in donations. I believe it is unlikely that £4200 suddenly appeared only to disappear again by April. Also the receipt of that much money would still leave a question over why the party had to maintain £530 of debt the following year.

Andrew might have taken a loan from the Party account, which might be legit but certainly should have been disclosed when the original scandal over his unpaid personal loans hit the blogs.

Given the above, it is reasonable, I believe, to conclude that there is an accounting discrepancy of approximately £4200 to be resolved.

The most important thing to observe is the behaviour of the leadership team. There has been no private reply to me on these questions, no refusal, not even an acknowledgement. There has not been a single public statement acknowledging my query regarding the bank balance, despite a week and five months being given for the Party’s team to prepare one. This is not how I believe a libertarian party should respond to queries from concerned libertarians.

I hope that this article will finally prompt the disclosure of the bank balance value and supporting evidence. It is hard to imagine good reasons which might have delayed it’s publication. This figure should always have been discernable from the public statements and there are no privacy concerns about it for individuals since it is a single number. If it were somehow private, the time to disclose it confidentially was five months ago. Had it been disclosed my investigation could have moved on and been much more useful to the Party and to the libertarian movement as a whole.

By the summer of 2011 most activists I know had decided it was “him or me” with regards to the scandalised leader and other NCC members. Yet the leader ultimately insisted on staying on and fighting against measures others were taking to preserve the Party. That caused the rift we were attempting to cure in October. Presumably the chairman has been acting in consultation with the leader and his nominated NCC, and for them to play hot and cold to an investigation that was a declared prerequisite to a reconciliation was not in the true best interests of the Party. Ultimately, the South East region continued to hold meetups dissassociated from the Party and the success of those meetups shows what the Party is missing out on by electing to act as it has. For example, had the rift been cured it would have been the Libertarian Party of the UK visiting Occupy LSX at St Pauls cathedral and distributing leaflets to a third of the gathered crowd, not “an internet forum” called Libertarian Home. This closed and secretive behaviour should stop.

Finally, it is important that this discrepency is dealt with. At a minimum the 2011 accounts, due shortly, should leave no false impression that it’s net worth is over £4300 when the Party is in debt to it’s activists and officers.

 

 

UPDATE: Unfortunately, the 2012 AGM minutes do not include a statement on this issue. Nic Coome did address the issue of multiple bank accounts citing a lack of awareness of HSBC’s standard procedures on the part of unnamed critics. He may be referring to other critics, but in fact I also bank with HSBC and am aware that the Money Manager account he refers to cannot be used directly for spending purposes, therefore the bank accounts I saw must be the main account as spending was incurred against it. Nic’s comment amounts to a claim that the Money Manager account (+PayPal) contained £4200 which was fully spent within 5 months. This should be trivial to verify, yet has still not been verified. There has been no further comment or communication as of 11/04/12.

UPDATE 28-04-2012: in a party statement “NCC NOTE – 25-04-12” (also labelled NCC NOTE GAVIN WEBB) is a breif mention that the investigation was ignored because none of the people at a key meeting were members. This was not in fact the case. As noted above the rift is not in the interests of the movement so I have once again contacted Nic and Andrew to clarify.

UPDATE June 2013: Wither’s has not contacted the author or provided any further information.

  7 comments for “LPUK’s accounts investigation update

  1. Mar 19, 2012 at 11:23 pm

    Thanks for that analysis.

    Simon has quite rightly been careful to stick strictly to known facts, but there is much more money that has not been accounted for.

    Membership was £15 a year, there claims of up to 1,000 members and there were more than 3 years without proper financial information. Some of us also paid more than basic subscription and there was at least one loan to the Party.

    These maths are simple. £15 x 1,000 x 3 years = £45,000 plus donations. We can assume that the claims of 1,000 members was boastful or delusional and no doubt the donations were not enormous, but we are left with the problem that we have no detailed account of spending, no bank statements, no confirmation of how many accounts there were and no NCC authorisations of loans, expenses or anything else. The people who signed off the accounts for the electoral commission have either admitted that they did not thoroughly check them (Chris Mounsey) or have failed to provide information. John Watson, who had legal responsibility for the money for the five months he was treasurer, was according to his own account never given the financial information or access to the bank accounts.

    What is even more disturbing is that LPUK websites are still asking for money and Andrew Withers still appears to have a controlling influence over that organisation.

    I have made a complaint to the Police alleging that my money may have been misappropriated and I have had discussions with an officer from Avon & Somerset. So far this has not resulted in action as far as I know, but others who have joined LPUK should consider whether they are receiving proper information about where their money has gone. Apparently it was not spent on website development.

    • Mar 20, 2012 at 7:34 am

      I don’t blame anyone for not checking them thoroughly. I only learnt the trick above when I got into a pickle and my accountant sat me down and educated me.

      On the subject of maximum discrepancies, the number you give is very theoretical. Not all 1000 members would have been members for all three years an we know substantial sums were spent perfectly appropriately on leaflets etc.

      • Mar 20, 2012 at 9:01 am

        I agree Simon. I am not critical of the failure to make a thorough check before signing off the accounts. I make the point only because it shows that there could have been discrepancies throughout the whole life of LPUK. My criticism is with those who have denied financial information to the membership.

        My figure is clearly not the true one because that cannot be known without the records. I am just highlighting a possible range which did not include donations. There was undoubtedly some legitimate spending, but leaflets and the occasional room hire don’t cost much.

        For a very small organisation there is a substantial amount of money which must be accounted for. Andrew Withers has most responsibility for that, but it is a serious on the part of Nic Coome that he has not cooperated with you.

        • Citizen Stuart
          Mar 20, 2012 at 11:02 pm

          On the subject of leaflets, how much was spent on those is subject to speculation. With the exception of some leaflets supplied to Andrew Hunt during our first campaign in Wisbech, no Party funds were used to supply leaflets for local candidates – we had to raise the necessary money from local members and supporters, what with Withers pleading poverty. Although come to think of it, Withers did ask me for a copy of any receipts I had for electoral expenses – I didn’t understand why at the time, just assuming it was some obscure point of electoral law, althought I have a suspicion about that now (nothing I can prove unless and until someone reliable gets a look at the books). So the only expenditure on leaflets other than the Wisbech ones was for the Parliamentary candidates – was that three campaigns in total?

  2. Apr 11, 2012 at 7:39 am

    I’ve added a brief update and re-opened commnts to allow for responses.

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