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Alliance Trust auditor faces criticism over payments error

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The new chairman of the Alliance Trust was forced to admit to an error in calculating the pay package of former CEO Katherine Garrett-Cox.

Lord Smith of Kelvin told shareholders at the Trust’s annual meeting in Dundee that an investor had flagged up an issue with the level of payment to be made to Miss Garrett-Cox and former chief finance officer Alan Trotter.

The executive duo both left the business after shareholder pressure led the Trust to a major restructure and the establishment of a new non-executive board structure.

The issue related to payments due under the long-term incentives plan.

The Trust had erroneously calculated that it was due to pay a six-figure sum more than it was due.

The error was not picked up by the Trust’s auditors Deloitte and was only spotted by an eagle-eyed investor.

Fortunately, payment had not been made to either of the former managers and no sum is outstanding.

Lord Smith said the total remuneration figures given for the duo in the annual report were “slightly overstated” and he said revised figures would be included in the 2016 report.

He also promised a review to determine what had gone wrong.

The issue was later raised again by shareholder Douglas Wood.

He said he understood the sum involved was more than £100,000 and said such errors could lead to reputational damage.

A representative of the auditor was in the audience and said the issue had been missed during the sample testing process when reviewing the Trust’s accounts.

One audience member called for Deloitte to reduce its fees as a results of its failure to pick up the problem.

The wider meeting heard that despite a “great deal” having happened in the past year in the structure of the Trust, investment performance had improved following Peter Michaelis’ appointment as head of investments within subsidary company ATI 18 months ago.

In his presentation, Mr Michaelis said the Trust had outperformed its new benchmark index during 2015.

Investors were also told that a concerted share buyback programme instituted in October had seen 35 million shares purchased at a cost of £175m.

Lord Smith earlier told The Courier that Dundee remained central to the Trust’s plans and said it had grown its workforce in the city in the past 12 months despite its investment arm focus switching to Edinburgh and London.

He also said he expected the investment and savings businesses to be in sustained profit within months.