“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.”
For a longer and even more critical report published after this article, see:
“The directors of Carillion should be formally investigated after overseeing a “rotten corporate culture” and may warrant disqualification from holding boardoom roles in the future, a House of Commons inquiry has concluded.
A damning 101-page report into the collapse of the public services contractor, undertaken by the joint business and work and pensions select committees, has identified failings by regulators, the accountancy firms KMPG and Deloitte and the government, as well as the company’s directors.
The government called the Official Receiver into Carillion four months ago after banks and investors refused to support the group, which had annual turnover of £5 billion and 43,000 employees. It collapsed with £2.6 billion of pension liabilities and about £2 billion of debts with suppliers and lenders. Its demise left serious issues over the delivery of maintenance, catering and cleaning contracts in schools, hospitals and military bases.
The company blamed its financial crisis on failing construction contracts, including those to build hospitals in the West Midlands and on Merseyside, a new motorway in Scotland and developments in Doha ahead of the 2022 World Cup finals in Qatar.
The MPs’ report recommends that:
•The Insolvency Service investigate “potential breaches of duties under the Companies Act” and claims of “wrongful trading” that could lead to “action for disqualification as a director”;
•The intervention powers of the Financial Reporting Council should be beefed up and its remit be extended to company directors that are not accountants;
•The Competition and Markets Authority should investigate the Big Four accountancy firms and consider that they be broken up;
•The Prompt Payment Code for suppliers should be reviewed after Carillion’s flagrant abuse of it;
•The “Crown representative” system used to oversee large public services contractors should be reviewed after it appeared to pick up no warning signals about Carillion’s financial crisis;
•The leadership of The Pensions Regulator should be is shaken up to make sure that it takes “harsher sanctions” against companies such as Carillion that fail to properly fund their retirement schemes.
The damning report will cast a shadow on the careers of the grandees on the Carillion board: Philip Green, the former United Utilities and P&O boss who was chairman; and Keith Cochrane, the former chief executive of Weir Group who was Carillion’s senior independent director.
There were criticisms, too, of Alison Horner, Tesco’s head of personnel, over her role as chairwoman of Carillion’s executive pay committee. Senior executives Richard Howson, Richard Adam and Zafar Khan were all sharply criticised.
Mr Green, who is called “delusional” in the report, criticised the MPs’ inquiry. “The report fails to understand and accurately reflect the true, more complex picture of events,” he said.”
Source: The Times (pay wall)