Arch cru: The ‘decimation of the character' of Capita but no govt inquiry

MPs from six political parties have this morning battered Capita with a tirade of attacks over its management of Arch cru investors' money, only to have their calls for a public inquiry into the debacle dismissed by Treasury secretary Mark Hoban

In what one MP described as the public "decimation of the character" of the firm, about thirty-five MPs - five percent of all those who sit in the Commons -  condemned the authorised corporate director (ACD) for refusing to accept responsibility for investors' losses and for its "wholly inadequate" offer of partial compensation.

MPs warned Capita it has just two choices; pay investors 100% compensation or lose any friends it has in Parliament.

The firm currently has £1.12m worth of outsourcing contracts with the government across various departments.

"Capita needs to realise it will be looking over its shoulder after the debate today," said one MP, who accused the government of "arrogance" in "pouring money down the neck of Capita" while saying it can not investigate claims of wrong-doing at the firm.

MPs called for an immediate section 14 government inquiry into the roles of Capita, HSBC, BNY Mellon and the FSA in the failure of Arch cru.

But Treasury secretary Mark Hoban, who sat and listened to the hour and a half debate, said he had not been pursuade a section 14 inquiry was "appropriate", and would not be appropriate while FSA enforcement investigations were still underway.

As ACD of the Arch cru range, Capita was paid to oversee the management of the funds.

But it has always denied responsibility for the failings which led to their suspension in March 2009, and subsequent investor losses of around 40% of capital.

Shadow Energy minister Tom Greatrex, who secured the Parliamentary debate on the adequacy of the £54m deal on offer from Capita, told MPs he had spoken to former employees of Capita who revealed serious failings at the firm.

"They said there was relatively little oversight at the firm, and staff were young and inexperienced.

"Capita is not the best managed firm, one told me. They said it is not particularly well respected in the industry."

Greatrex said it was now time for Capita to "step up to its responsibility".

The MPs also criticised the FSA's role in the fund range's downfall.