Para.9.0.   “Findings of Fact”  -  Illustrative examples

By way of illustration of the matters set out at paragraph 8 above, I would refer to the following examples of PricewaterhouseCoopers (PwC) conduct /behaviour in their C$3m+ Report:

Para 8.Point  A.     Numeracy/Finance skills – “they can count, logical  etc”

Para.9.1.   -  A340-500/600  PRICING -  

In explaining the increase in Q4.2006 Revenues from the Q2.2006 EAC PwC state (para 8.62b) : “The increased revenue for the remainder of the programme was due to management’s assertion that a higher percentage of future sales will be generated in later years, when MAC can expect to benefit from the impact of compound price escalation.” This was invalid and simple to intuitively see /calculate for any numerate person.  Furthermore PwC had the spreadsheets in which it would have been visible that this was both an erroneous statement and assertion. Q9.1: Why did PwC consciously state that??

Mr Dekker confirmed this in his oral evidence on 10 June 2009.    See also website Part D Exhibits 8.1 and 8.3.

Mr Dekker

There’s evidence in the bundle, we have two different schedules that show the breakout for the Q2.2006 and Q4.2006 numbers that the selling price for each quarter was different; the Q2 price was lower than Q4.


It doesn’t look as if they’ve brought that into the equation in terms of the report?

Mr Dekker

They certainly haven’t documented it in that fashion.

<BL observation    The schedule referred to in the oral evidence that June 2009 morning (Q2.2006.doc 1830A, after I had completed my own evidence in March 2009) allowed me to confirm what we instinctively and numerically knew (now factually precisely), which was that PwC had the basic information readily available to enable them to fully recognise that management were being “untruthful” in their reported assertion at para 8.62 above.  Aside from the obvious fact that PRICING was overwhelmingly the primary reason for the “move to a positive gross profit” in the Q4.2006 EAC the reader should bear in mind that these are reputedly “forensic” accountants and naturally would themselves know (for a logical and numerically trained specialist person), that the “management assertion” (Mr Dekker?) which they reported at Para 8.62 was untrue

 It is insightful to also know that to those with forensic knowledge and experience when a remark “management asserts” is written in that way in such a Report it is “consulting-speak-code” for the writers understanding (PwC) that the assertion is wrong and they already have access to multiple pieces of information to conclude  that.  That is our view and I also worked with E&Y from 1997-2001.  In the A340 Section 8 PwC report PwC refer on two occasions to this “consulting-speak-code” Management asserts” – in PwC para 8.62b pricing comparisons between Q2.2006 and Q4.2006 (i.e as set out above) and then again from Mr Neill, in PwC para 8.72 – “Furthermore, management asserts that the requirement for spare units will support and exceed the total number of units projected in the EAC. “  That, you will recognise, is the quantities/ volumes subject matter which follows at paragraph 9.2.

In fact on PRICING when we had these Q2.2006 (doc1831A) and Q4.2006 (doc1830A) schedules in mid- 2009 disclosed to the UK court it took just a few minutes afterwards to produce the Excel spreadsheet WB1A.Q2.Q4 revenues comparing the changes in revenues and their reasons to demonstrate the precise pricing numbers and Revenues impact from Q2 to Q4.2006. As the reader can see in this spreadsheet $761K   (ONLY 9%) of the $8470K increase in the A340 EAC revenues from Q2. to Q4. 2006 were attributable to the “management assertion”  of a deferral in the schedule to later delivery years.   

Furthermore it was possible for a logical and numerate person to see that the pricing table at para 8.79 computed by Aeronca, as recorded by PwC, was incorrect as the application of the MAC/Aircelle escalation formula with consistent labour, other materials and BETA21S cost % assumptions would have worked through to providing a consistent year-on year escalation from FY2006 to FY2012 – in fact a very fractional reduction of circa 3.9% per year.  Any basic checking by PwC would have revealed obvious multiple numeracy errors as above the stated 10% BETA21 cost increase assumption by some $4.4m in unsubstantiated revenues as per the tables at this link.

PwC also ignore Mr Butyniec’s 11/14 August letter to Aircelle re A340 pricing – Q2.2006 impact/see para9.10>

You can read this all in the management assertion:PwC table 8.62 pricing summary document.>