黑洞社区

One of the Labour MPs heading the investigation into Carillion鈥檚 collapse has condemned its directors for their attitude to the company鈥檚 gaping pension shortfall.

Frank Field (pictured), chair of the work and pensions committee, said new information from the trustees revealed they had written to the pensions regulator twice seeking  鈥渇ormal intervention鈥� after the failed contractor refused to increase its contributions.

He said: 鈥淭hese letters suggest the Carillion directors were contemptuous of their pensions obligations. Over two successive 15 month negotiations they refused to give an inch to the pension schemes.

鈥淭heir private pleading that the company could not afford more was in stark contrast to the rosy picture 鈥� and bumper dividends 鈥� being presented to the outside world. Richard Adam, the longstanding finance director, has particular questions to answer.

鈥淲ith characteristic alacrity, the pensions regulator started its arduous process of chasing money down from Carillion a few days after it was formally announced there was no money left. I can only assume 鈥� and hope 鈥� they are going after some of those very generous bonuses.鈥�

The first letter, which was sent back in 2010, revealed the gap between pension contributions and the shareholder dividends that were being paid.

In the letter, FR Herzberg, chair of the Carillion staff pension scheme, said: 鈥淭here is a difference of opinion over what the Carillion group can afford to pay. In view of the recent bullish results announcement by the Company, the strong cash flow and the 12% increase in shareholder dividends there appears to be a reluctance to recognise the position of the six Group schemes.

鈥淐arillion stated that no more that 拢25m each year was available towards funding the six Group Schemes. In the opinion of the Trustee Forum this is not acceptable and is far less than what the Trustee Forum thinks would be a reasonable overall annual contribution.

鈥淲e will continue to do our utmost to bring discussions with the Company to a conclusion and in the meantime would welcome any assistance you can give.鈥�

The second letter, which was issued by Robin Ellinson, chairman of Carillion Pension Trustee and scheme actuary Edwin Topper in 2013, said that negotiations between the trustees and the company were at an 鈥渋mpasse鈥�.

It was revealed that the trustees had proposed contributions of 拢65m a year over 14 years to meet a deficit they estimated at 拢770m, while the company made a final 鈥渢ake it or leave it鈥� offer of just 拢33.4m a year over 15 years. 

The letter also revealed that the trustees had said the company had weakened in recent years, which was rejected by the company.

The trustees said that the pension schemes were 鈥渇alling behind relative to other Carillion stakeholders鈥� and 鈥渢aking a disproportionate amount of risk鈥�.