The evaporation of prospective revenues

Corporate collapses: when Arthur Andersen went down 15 years ago over Enron the problem was that the liabilities of one branch of that firm spread right across the world. This is different to the collapse of Bell-Pottinger where no liabilities (at least as matters stand) are due. Here the firm which specialised in managing reputations lost its own. It was not the liabilities that closed in. It was the evaporation of prospective revenues.

And now KPMG, auditors and accountants to the squalid Gupta brothers, are facing management changes in South Africa. It is clear that there is no suggestion of fraudulent or unlawful behaviour on the part of KPMG. Although it is true that KPMG associated with the Guptas such association is not itself unlawful. So the instant, because unforeseen, fatal problem arises through the capacity of instant communication on the part of those who object to what KPMG may have done to persuade customers of KPMG to question whether they can afford to be seen using KPMG. It would surely be wise for people to take a deep breath and consider where this all leads to. KPMG has a long and deep reputation for propriety and this should not casually be ignored.

*****

Separately, the Guptas have presumably shipped all their spare cash out of South Africa. But a thorough investigation of their affairs preceded by a freezing order on their South African assets could yield a spectacular harvest for South Africa. The trouble is that the only instigator of such a process can be Jacob Zuma and it is his conduct that is central to the Guptas’ theft.

*****


Pantheon (LON:PANR) seems to be clear of weather problems. Perhaps now is the time to clamber aboard. It is 48p offer.

*****

Finally, Clear Leisure (LON:CLP) yesterday reported its results for the six months to 30th June 2017. This company is essentially an asset play where I believe in the sincerity and ability of the management. Tangible Net Asset Value (TNAV) was there disclosed as 1.25p per share.

Surprisingly, events have moved on overnight in that it seems that, subject to completion of formalities, TNAV improves by a further 1.25p on settling its liabilities in a subsidiary at a discount of c. 87%. This takes TNAV up to 2.5p. I have therefore paid 1.25p this morning. I am not sure what the proper valuation is now but it is certainly over 1.5p, possibly 1.75p. At this level there is the possibility that somebody for some reason might fancy taking a pop.