Carillion board blasted in MPs report

Remigio Civitarese
Mag 16, 2018

"The Government has recognised the weaknesses in the regulatory regimes exposed by Carillion and other corporate failures, but its responses have been cautious, largely technical, and characterised by seemingly endless consultation", the report stated.

The Rt Hon Frank Field MP, Chair of the Work and Pensions Committee, said: "Same old story".

Special criticism was reserved for the company's finance director, Richard Adam, who the MPs say "was the architect of Carillion's aggressive accounting policies" and who resolutely refused to make adequate contributions to the company's pension schemes, which he considered a "waste of money".

'They rightly face investigation of their fitness to run a company again. "British industry is too important to be left in the hands of the likes of the shysters at the top of Carillion".

Rachel Reeves, who chairs the Business Committee, said: 'Carillion's collapse was a disaster for all those who lost their jobs and the small businesses, contractors and suppliers left fighting for survival. "Their colossal failure as managers meant they effectively pressed the self-destruct button on the company".

They also called for a potential break-up of the big four audit firms, after they "waved though" the indebted construction firm's accounts. They also criticised Carillion directors of "recklessness, hubris and greed" and of putting their own financial reward first.

"It is a parasitical relationship which sees the auditors prosper, regardless of what happens to the companies, employees and investors who rely on their scrutiny".

Turnaround experts from EY were paid £10.8m and Deloitte, Carillion's internal auditor - whose role was to work with management to establish accounting checks and balances - received £10m. The construction company "employed 43,000 people, about 20,000 of them in the United Kingdom, thousands of whom have lost their jobs", says the BBC.

'I have objected to the committees about quotes that they have misattributed to me.

The report calls on Government to carry out an "ambitious and wide-ranging set of reforms" to "reset systems of corporate accountability". "National and local government have the power to transform outsourcing disasters by bringing services in house where profit is no longer the ideological master and for service contracts that are let to apply standards on quality and workforce concerns".

'By the end, a whole suite of advisers, including an array of law firms, were squeezing fee income out of what remained of the company.

The company - which specialised in government contracts from building hospitals to managing schools - collapsed in January with huge debts. "The majority of United Kingdom businesses and business leaders bear little relation to the companies we have seen fail due to poor corporate governance in recent years, yet unfortunately they are tarnished by the same brush".

"Our priority has been to keep public services running safely across the country while saving thousands of jobs", said PwC chairman and senior partner Kevin Ellis. The plans we put in place have ensured this.

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

The report said the collapse revealed the UK's audit market as a "cosy club" that was unable to provide the degree of independent challenge needed.

Ms Reeves told the BBC that the four providing auditing services for virtually every listed company.

Rail, Maritime and Transport union general secretary Mick Cash said: "Today's bombshell report rams another nail in the coffin of the racket of outsourcing and franchising".

Unite, which represents more than 1,000 workers affected by Carillion's collapse, is demanding that the recommendations are adopted in full.

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