“A specialist project manager brought in to oversee the construction of Carillion’s delayed and overbudget £350 million PFI hospital in Liverpool has confirmed that work was halted for safety and legal reasons nine months before the problems became known publicly.
The Royal Liverpool Hospital is one of four key construction projects that felled Carillion. The hospital was part of the £845 billion writedown in its accounts last July, which set in train the events that led to Carillion’s compulsory liquidation last month owing more than £1 billion.
The financial blowouts at the Royal Liverpool, the Midland Metropolitian Hospital, on a £700 million road project in Aberdeen and on work in Qatar for the 2022 football World Cup are at the centre of investigations by the House of Commons, the Financial Conduct Authority and the Financial Reporting Council over whether Carillion’s board deliberately concealed its financial crisis.
In a submission to the Commons’ joint select committee inquiry, Charles McLeod, a director of the company charged with delivering the Royal Liverpool, said that cracks in crucial supporting beams were found in November 2016 and “exclusion zones” preventing work being done were in place until March 2017.
These issues and escalating costs were not disclosed by the company until the July 2017 profit warning, despite trading updates and annual accounts before then. Mr McLeod is principal of McLeod Partnerships, a specialist “interim management” business that deals in projects in danger of “distress or default”. He was brought into Royal Liverpool in 2015.
At a previous hearing of the committee, Richard Howson, Carillion’s former chief executive, blamed the failures at Royal Liverpool on subcontractors. Mr McLeod, however, said that TPS Consult, a wholly owned Carillion company, had “overall responsibility” for the beams.
The committee’s hearings continue today. The witnesses include Michelle Hinchliffe, head of audit at KPMG, Carillion’s auditor, and Peter Meehan, the partner in charge of the audit; and Lesley Titcomb, of the Pensions Regulator.”
The Times (pay wall)