Beyond commercial in confidence: accounting for power privatisation in Victoria
Purpose - The purpose of this paper is to examine whether the use of commercial-in-confidence arrangements within the public sector allows the deliberate manipulation of accounting figures to generate support for the privatisation agenda. Design/methodology/approach - A case study is presented of an Australian power entity, United Energy, where the privatisation was subject to commercial-in-confidence restrictions and differing opinions as to the accuracy of the entity's financial accounts during the privatisation process. It examines many of the key “commercial-in-confidence” documents, which are now available through parliamentary and official document sources, together with pre- and post-privatisation financial statements. Findings - The accounting figures were shaped to support a privatisation agenda and this was obscured by the commercial-in-confidence provision. Some attempts were made to use accounting arrangements to reduce federal taxes but this failed. A substantial element of the reported sale price represented internal transfers between the state-owned entity and the government with the actual price paid by the purchaser being substantially lower than the reported price. The price paid was based on the financial statements which were openly challenged by the Auditor-General. The paper strongly supports the contention that manipulation of accounting figures occurs under commercial-in-confidence privatisations. Research limitations/implications - This was limited to one example at one time. Further work is needed on other settings. Practical implications - The paper challenges the success claimed for the privatisation process and for the social benefits of privatisation by tender. Originality/value - There was little evidence of a substantial improvement in financial performance following privatisation or that the pre-privatisation performance was substantially boosted to support the privatisation agenda. It did show that the accounting served political ends.
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Volume (Year): 22 (2009)
Issue (Month): 8 (October)
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- Ogden, S. G., 1995. "Transforming frameworks of accountability: The case of water privatization," Accounting, Organizations and Society, Elsevier, vol. 20(2-3), pages 193-218.
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