LONDON FIRE SERVICE:

ASSETCO MEETING TO DISCUSS CRISIS

The crisis engulfing AssetCo - the company which owns London's fire engines and provides strikebreaking fire crews - worsened today after its shares were suspended following a bitter internal rift over a proposed recovery strategy.

Chief executive and largest shareholder John Shannon was said to be fighting it out with other senior figures after he refused to approve a funding package which would see �16million raised through a discounted share sale, though the company admitted that even this would leave it short of working capital by �3million - �4million. The company released a statement criticising Shannon and warning that, without the funding, it could not continue in its current form. In another twist, chairman Tim Wightman has been forced out after losing the confidence of colleagues.

The latest turmoil followed hot on the heels of another internal row which saw Shannon at odds with senior colleagues over whether to accept a takeover bid by Bahrain-based Islamic investment bank, Arcapita (see here: http://www.fbu.org.uk/?p=2039)

AssetCo faces a winding-up petition in the High Court in April. A meeting of shareholders and board members took place on Tuesday 22nd March at which delegation of FBU officials gathered outside the meeting to protest.

Meanwhile, London Fire Brigade bosses have been accused of employing a "smoke and mirrors" strategy over the likely implications of an AssetCo collapse. In a letter sent on 18 February to London fire commissioner Ron Dobson, the Fire Brigades Union general secretary Matt Wrack raised concerns over the apparent lack of contingency arrangements for the ongoing maintenance of fire appliances in the event of AssetCo going to the wall and also sought assurances that the appliances would not be used as surety to pay the company's debts. The commissioner replied that contingency plans were written into the contract, though he declined to elaborate.

On a number of occasions since, the union has asked for sight of the contract between the brigade and AssetCo. A copy was eventually received on Friday, though whole chunks of it - including the crucial section relating to supposed contingency arrangements - had been blacked out on the grounds of "commercial sensitivity".

Speaking today, Matt Wrack said "The London Fire Brigade had claimed that its contract with the company provided assurance that, in the event of AssetCo defaulting on its debts, London fire engines were safe. But this claim collapsed when the LFB finally provided a copy of the contract to the Fire Brigades Union.

"In the place where this assurance ought to be, all the words have been blacked out, or redacted. We were told the words were redacted because they were commercially sensitive.

"We have been warning that this was coming for weeks now, and our warnings were brushed aside contemptuously by the London Fire Brigade and the Fire Minister.

"To leave this contract in AssetCo's hands was playing Russian roulette with the lives of Londoners. The London Fire Brigade seems willing to do this.

"I will write this week to Business Secretary Vince Cable asking him to ensure that these decisions are taken in future on rational grounds and not on grounds of political dogma.

"It seems as though AssetCo may try to salvage something by selling itself to the Bahraini bank Arcapita, which is the preferred solution of the CEO, Mr John Shannon. Arcapita has made it clear that it still wants the company, albeit at a knockdown price. Indeed, if Arcapita's offer had been more generous to shareholders, London's fire engines would now be owned by a bank in Bahrain - which, given what is happening in Bahrain right now, is not reassuring.

"This is not any old company suffering from the economic climate. Because of the contracts AssetCo has obtained from the London and Lincolnshire fire authorities, every person in London and in Lincolnshire depends for their safety on the health of this company. If AssetCo goes down, the banks own all our fire engines. Even if the fire authorities manage to buy the fire engines back, there will be no one to maintain them.

"All this unnecessary danger stems from a bit of political dogma which says that there is nothing the public sector can do which the private sector cannot do better. We had no concerns about the maintenance of the fire engines while the fire authorities did the job themselves."

Yours in unity

LONDON FBU