PFI company? Don’t bother with pensions for workers – put directors first

“Carillion “wriggled out” of payments into its company pension schemes as its troubles grew, while it carried on paying shareholder dividends and bosses’ bonuses, say MPs.

The Work and Pensions Committee is questioning the way pension investments were managed at the collapsed outsourcing giant.

The schemes overall are in deficit.

But last year contributions to the pension funds were deferred until 2019, to help shore up the firm’s finances.

The committee has published a letter from Robin Ellison, chairman of trustees of Carillion’s pension scheme, giving an account of the last few years and suggesting they have been left with a funding shortfall of around £990m.

The letter shows that pension trustees were “kept in the dark” about the state of Carillion’s finances until late last year, the committee argues, and that dividends and bonuses were paid out at the expense of pension fund contributions.

On Monday, the Financial Reporting Council, the UK’s accountancy watchdog, said it would launch an investigation into KPMG’s audit of Carillion’s financial results between 2014 and 2016 as well as the work it carried out during 2017.

The FRC said the probe would “consider whether the auditor has breached any relevant requirements, in particular the ethical and technical standards for auditors”.

It will examine KPMG’s audit work on areas including estimates and recognition of revenue on significant contracts and accounting for pensions.

KPMG said it believed that “we conducted our role as Carillion’s auditor appropriately and responsibly”, adding that it would co-operate fully with the FRC’s investigation.” …

http://www.bbc.co.uk/news/business-42853895