Posts Tagged ‘KPMG’

“Offshore wind power is not affordable” – KPMG

November 15, 2011
Any Old Wind That Blows

There are some simple and rather obvious matters that the “green” lobbies prefer to ignore.

  1. In spite of twenty years of subsidies wind power is still not commercially viable without subsidy. Solar thermal power plants enjoy feed in tariffs some 3 times higher than the cost of conventional fossil power generation. Wherever renewables have been used to any extent, electricity prices for the consumer have increased.
  2. Intermittent sources of power (which cease when the wind does not blow, or blows too hard or when the sun does not shine at night or when clouds appear) are – by definition – unreliable. They do not add to the reliable, base-load, generating capacity that any electricity grid requires and must be backed up.  In Scotland for example – as Professor Colin McInnes points out – wind power capacity now exceeds nuclear capacity but only produces about one-third of the energy.
  3. Electricity is energy in motion and cannot be stored as electricity. For any electrical grid, at any instant, generation must, perforce, equal demand – and pumped storage schemes are merely devices to try and ensure such balance. Since the outages of wind and solar power are unpredictable (though it is generally predictable that solar power will not be available at night), and cannot be relied on to meet load demand fluctuations, “balancing power” (usually from gas turbines) must be arranged for whenever wind or solar capacity is added.
  4. In addition to the direct subsidies, whenever wind or solar power is available at times when there is low load, the subsidised regime forces the turning-down of other capacity – to the detriment of that capacity – and adds to the total cost of the grid.
Now – finally – some of the real numbers are beginning to be acknowledged but not, of course, by the green lobbies. KPMG has produced a new report “Thinking about the Affordable” and Power Engineering International reports that:

“KPMG are stupid” – How valuations are made

November 11, 2010

Sydney Morning Herald.

KPMG and regulators are too stupid to notice if an asset is overvalued and investment bankers are leeches, say the characters in an online video lampooning the working culture inside international investment banks.

I have seen how the Big 4 accounting firms behave over the last 30 years and this video thought to be made by employees of an investment bank is not so far away from reality.

SMH continues:

BusinessDay is not implying these events took place, but our source claims the videos were made as an in joke by current staff of a large multinational investment bank for former employees. Another video pokes fun at job descriptions in the corporate world after one of the characters meets a “business accelerator”, who was “somewhat vague in his description of his services, but he was very compelling”.

“Investment bankers are generally perceived to be sharks,” the man then says.

“We are also leeches, but we are leeches with a lot of smaller leeches clinging to our backs,” the lady responds.

The videos end with investment bankers heading out for a typical after-work activity – drinking beer and playing ping pong.

Ethics and Business

April 19, 2010

In the wake of the latest Goldman Sachs scandal, Gordon Brown has accused them of “moral bankruptcy”.

But polticians would be well advised to see to it that they also actually operate under an ethics code of their own.

Milton Friedman, Peter Drucker and others must bear their share of the responsibility for having propagated the view that corporations should only be concerned with the profit they deliver to shareholders. They have – maybe inadvertently – supported the view that humans in a corporate setting can and should abdicate their own ethical codes. The Wall Street Journal has even declared from on high that ethics cannot be learned and ethics courses are irrelevant to business. Utter rubbish of course, but even the “newspapers of record” such as the New York Times or The Times or Der Spiegel or the Wall Street Journal have lost their famed objectivity and have become political advocacy channels. It is such high-profile and basically amoral views which have been greatly responsible for providing a cloak of respectability for the attitude that:

  1. Corporations have no business to concern themselves with ethics, and
  2. Even if ethics is important then compliance with law is a sufficient substitute for having a code of ethics, and
  3. If an action is seen to be compliant with laws then this is sufficient.

Large corporations, ably assisted by the Big Four auditing firms, have fine-tuned the processes and documentation needed to show compliance. After Siemens experienced their scandals in 2007, anti-corruption training courses were held compulsorily throughout the company – mainly to assist in the negotiations with the SEC and minimise the extent of the inevitable fine. The training courses were conducted by staff from KPMG and I was disappointed but not surprised that the trainers either did not have the intellectual capacity to see – or perhaps did not want to see – the distinction between corruption and non-compliance.

There is no excuse for corporations to abdicate from ethical responsibility and satisfy themselves with the appearance of compliance. By taking the position that unacceptable behaviour is only that which is non-compliant they have, of course, also defined everything else that can be done as being acceptable. But it does not stop with just the officers of the corporation. It extends to ownership. Normally an owner is expected to take some responsibility for his property. But yet, no shareholder is really willing or able or required to take his share of the responsibility for the ethical conduct of a corporation he partially owns. And this is so even though the shareholder, as an individual, may well have an admirable code of ethics of his own.

The financial world has been particularly aggressive in promoting the notion that ethics has no place in business, and only the limits set by law have been acknowledged  and accepted as constraints on behaviour. Since law is retrospective this has allowed the creation of strange and wonderful financial and trading products in areas where the law has been silent and lawmakers have not yet written any laws. In such areas, where there is also an absence of any guidance from any ethical code, financial bubbles and dubious practices have grown unfettered by any constraints.

In my view, an organisation cannot isolate itself from the social environment it is surrounded by. It must have an explicit view of its own integrity and therefore of its own ethical code. Merely being compliant with law is insufficient. The owners must be party to this. It is time to bring these into the main-stream of management and into the fundamental vocabulary of a manager. Not for the sake of public relations or for avoiding criticism but because it is the right thing to do.

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