Carillion ‘shysters’ stuffed their mouths with gold

Carillion 'shysters' stuffed their mouths with gold

A joint inquiry by two Commons select committees concluded no-one stopped directors stuffing their mouths with gold for years before it went into liquidation in January with debts of up to £7bn, including £2.6bn in pension liabilities.

The MPs called for the Government to launch an ambitious and wide-ranging overhaul of corporate accountability, finding that successive administrations allowed Carillion to become a giant and unsustainable corporate time bomb.

In their final report they said the primary responsibility must rest with the company’s board, finding its actions were driven by greed through higher financial rewards for themselves aided by improved dividends for shareholders.

The report accused Carillion of masking its true financial state through accounting practice tricks that hid higher levels of borrowing, contract losses and exploited suppliers.

As Sky News revealed at the weekend, the main recommendation by the Work and Pensions and Business Select Committees was that authorities consider directorship bans for former senior figures at the company.

Carillion collapse the key personnel at the firm

Another was that the Competition and Markets Authority should look again at potentially breaking up the so-called big four accountancy firms of KMPG, PwC, Deloitte and EY or splitting their audit functions from non-audit services.

The committees said the Carillion debacle had exposed the UK’s audit market as a cosy club incapable of providing the degree of independent challenge needed.

They have previously estimated earnings of £71.6m for professional services companies in Carillion-related work since 2008.

The MPs also accused the Financial Reporting Council (FRC) and The Pensions Regulator (TPR) of being too timid to exercise their powers, which could have saved jobs and pension cash.

Carillion employed 19,000 staff in the UK at the time of its demise. To date, 2,301 jobs have been lost amid efforts to keep Carillion’s work going in both the public and private sectors.

Frank Field, who chairs the Work and Pensions Committee, said the findings exposed a series of failings.

A board of directors too busy stuffing their mouths with gold to show any concern for the welfare of their workforce or their pensioners.

They rightly face investigation of their fitness to run a company again.

He added British industry is too important to be left in the hands of the likes of the shysters at the top of Carillion.

Carillion collapse Super hospital in limbo

Philip Green, who chaired Carillion from 2014 and had told MPs he took full responsibility for the company’s collapse, took issue with some of the report’s conclusions.

He said The Board always sought to make decisions on the best available information and with the best professional advice; furthermore we always strived to act in the interests of the company and all its stakeholders.

Whilst much of the commentary in today’s report fails to understand and accurately reflect the true, more complex picture of events, the committee has highlighted lessons which can be learnt by the board, the government and the wider industry.

As the former chairman, I’m grateful for the on-going hard work of Carillion staff who have been working hard to minimise disruption.

Richard Adam, who served as chief financial officer from 2007 to 2016 and was accused by MPs of being an architect of Carillion’s accounting policies, hit out at the findings.

He also dismissed a quote attributed to him in the report which suggested he considered pension scheme payments a ‘waste of money’.

He said The reasons for the collapse are clearly complex, however, I reject the unwarranted conclusions the committees have reached concerning my role at the company.

I have objected to the committees about quotes that they have misattributed to me. I look forward to contributing to the due process and conclusion of the various investigations that are still ongoing.

A Government spokesperson responded Our priority has been the continued, safe running of public services and to minimise the impact of Carillion’s insolvency. The plans we put in place have ensured this.

The government wants to see a strong and varied supplier base where companies of all sizes benefit from long term and stable Government contracts.

That’s why we have recently announced a number of measures to support government suppliers – strengthening our commitment to prompt payment; protecting staff, businesses and small suppliers from irresponsible directors.

We welcome the report from the joint select committee and will respond fully in due course.

The under-fire FRC is currently investigating KPMG’s handling of Carillion’s accounts.

A company spokesperson told Sky News We believe we conducted our audit appropriately.

However it’s only right that following a corporate collapse of such size and significance, the necessary investigations are performed.

The person added We welcome any future review of our profession… We believe there are clear benefits of being a multi-disciplinary firm, but we also recognise the growing challenges that this structure presents and the importance of managing these to ensure public trust.

News Source SkyNews

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