黑洞社区

Carillion鈥檚 major shareholders have issued scathing responses to the company鈥檚 collapse, raising significant questions about the management of the failed contractor in the lead up to the company鈥檚 liquidation.

Responding to requests from the parliamentary committee joint inquiry into the company鈥檚 collapse, a number told a parliamentary inquiry into the firm鈥檚 collapse that there were plenty of early warning signs the company was in trouble.

Kiltearn Partners, who held 10% of Carillion鈥檚 shares in February and May 2017, said 鈥渢here are clear grounds for an investigation into whether Carillion鈥檚 management knew, or should have known, about the need for a 拢845m provision due to receivables on its construction business earlier than July 2017鈥�.

It also said if Carillion had not gone into liquidation, it would have 鈥渃onsidered participation in civil legal action against Carillion with a view to recovering a proportion of its clients鈥� crystalised losses鈥�.

At the AGM in May 2017, Kiltearn voted all its shares against the Remuneration Report because of 鈥渃oncerns about [chief executive Richard] Howson鈥檚 level of remuneration relative to the company鈥檚 level of net income鈥�.

Kiltearn also said the company had become 鈥渋mpossible to value as it was not clear what future cash flows would be as there was no concrete information on critical factors鈥� and that Carillion鈥檚 published information could 鈥渘o longer be considered reliable and consequently no effective assessment of its finances could be made鈥�.

At a meeting with Carillion on 13 October, Kiltearn said interim chief executive Keith Cochrane could only provide 鈥渓imited and vague鈥� responses to 鈥渇undamental鈥� questions, leading to Kiltearn selling all its shares 11 days before the firm went under on 15 January.

Standard Life Aberdeen said it began selling its stake in December 2015 due to concerns about financial management, strategy and corporate governance.

It said it was 鈥渇elt that management was not giving sufficient weight to the probability that trading may deteriorate further or to the downside risk from this scenario given the high level of debt. The board showed no inclination to drive the management to change.鈥�

Labour MP Frank Field, chair of the work and pensions committee, said there was a disconnect within the information they were hearing from executives such as Howson (pictured).

He said: 鈥淥n one hand, the Carillion directors told us all was sunny until a bolt of Qatari lightning hit them out of the blue. Their stewardship had, they proudly told us, been adjudged 鈥檅est in class鈥� by their friends at [Carillion鈥檚 auditor] KPMG.

鈥淥n the other hand, investors were fleeing for the hills, and it appears those who looked closest ran fastest. We will be taking evidence from the auditors and the investors - as well as demanding more company papers - to get to the bottom of who knew what and, most importantly, when.鈥�

Field鈥檚 counterpart at the business committee Rachel Reeves said: 鈥淚nvestors spotted that Carillion was heading for disaster and fled. The company had unsustainably high levels of debt, weak cash-generation and was saddled with a widening pensions deficit.

鈥淚t鈥檚 a tragedy for those who have lost their jobs and the suppliers left struggling for survival that Carillion directors ignored these issues.鈥�

Representatives from KPMG, which audited the failed contractor鈥檚 accounts every year since its inception in 1999, receiving 拢29.4m in fees,will be grilled by the joint committee this Thursday.