MPs savage rotten state of Carillion

MPs savage rotten state of Carillion

MPs savage rotten state of Carillion

Carillion had a "rotten corporate culture" as its directors drove the firm over a cliff, a joint review by two influential parliamentary committees concluded.

The extensive report published by the Work and Pensions and Business, Energy and Industrial Strategy (BEIS) committees lists conclusions on how Carillion managed to rack up liabilities of almost £7bn and just £29m in cash when it eventually liquidated in early January.

Frank Field, chairman of the Work and Pensions Committee, said: 'A board of directors too busy stuffing their mouths with gold to show any concern for the welfare of their workforce or their pensioners.

The report said: "These were empty threats - the Carillion directors knew it and got their way".

The 100-page report also took aim at the big four audit firms, after they "waved through" the indebted construction firm's accounts.

"The committees said that in its failure to question Carillion's financial judgements and information, KMPG was complicit in the company's questionable accounting practices, complacently signing off its directors' increasingly fantastical figures" over its 19 year tenure as Carillon's auditor.

The Insolvency Service should carefully consider whether Carillion's former directors breached their duties under the Companies Act and should be recommended to the Secretary of State for disqualification. They are guilty of failing to tackle the crisis at Carillion, failing to insist the company paint a true picture of its crippling financial problems.

The 12 January payments were: Slaughter and May (£1.196m), Akin Gump (£305,549), Willkie Farr & Gallagher UK (£164,016), Clifford Chance (£149,104), Freshfields Bruckhaus Deringer (£91,165), Sacker & Partners (£37,211) and Mills & Reeve (£20,621). "British industry is too important to be left in the hands of the likes of the shysters at the top of Carillion".

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"The sorry saga of Carillion is further evidence that the Big Four accountancy firms are prioritising their own profits ahead of good governance at the companies they are supposed to be putting under the microscope", she said.

MPs added that PwC was "continuing to gain" as its official receiver "without adequate scrutiny" and that Ernst & Young was paid £10.8mln for "six months of failed turnaround advice".

Richard Howson was the figurehead for a business that "careered progressively out of control under his misguidedly self-assured leadership". Finally, Philip Green, who joined the board in 2011 and became Chairman in 2014, is labelled as an "unquestioning optimist".

It said in the company's final years, "directors rewarded themselves and other shareholders by choosing to pay out more in dividends than the company generated in cash, despite increased borrowing, low levels of investment and a growing pension deficit".

Even as the company very publicly began to unravel, the board was concerned with increasing and protecting generous executive bonuses.

The committees said honouring pension obligations in decades to come "was of little interest" to Carillion and claimed the contracting giant treated its suppliers with "contempt".

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