黑洞社区

A parliamentary report into Carillion鈥檚 collapse has laid the blame at the door of its board singling out its former chief executive and finance director for presiding over a 鈥渞otten corporate culture鈥� with MPs telling a separate Insolvency Service investigation into the failure that it needs to 鈥渃arefully鈥� look at whether the contractor鈥檚 directors breached company law.

In a , the business and work and pensions committees, which launched a joint inquiry days after the 拢5bn firm went bust in January, said Carillion鈥檚 fall was 鈥渁 story of recklessness, hubris and greed [based on] a relentless dash for cash, driven by acquisitions, rising debt, expansion into new markets and exploitation of suppliers鈥�.

But it saved particular ire for the collapsed firm鈥檚 board with the committees, headed by Labour MPs Rachel Reeves and Frank Field, rounding on directors鈥� 鈥渟elf-pitying鈥� evidence they heard in the weeks after its collapse.

It said: 鈥淭hey presented to us as self-pitying victims of a maelstrom of coincidental and unforeseeable mishaps.鈥� 

MPs singled out former chief executive Richard Howson, his finance director Richard Adam, who left at the end of 2016, and Carillion鈥檚 chairman at the time of its implosion, Philip Green, for particular criticism.

鈥淭hey presented to us as self-pitying victims of a maelstrom of unforeseeable mishaps鈥�

Parliamentary report

Howson, the MPs said, was a 鈥渇igurehead for a business that careered out of control鈥�, while Adam was labelled as the 鈥渁rchitect of Carillion鈥檚 aggressive accounting policies [who] resolutely refused to make adequate contributions to the company鈥檚 pensions schemes鈥�. And Green was derided as 鈥渁n unquestioning optimist when his role was to challenge鈥�.

The report added: 鈥淲e recommend that the Insolvency Service, in its investigation into the conduct of former directors of Carillion, includes careful consideration of potential breaches of duties under the Companies Act.鈥�

Others taken to task in the coruscating report included non-executive directors who 鈥渇ailed to [鈥�] challenge reckless executives鈥� while Carillion鈥檚 120 payment terms for suppliers was described as a 鈥渨heeze鈥�.

MPs said Carillion鈥檚 auditor of 19 years, KPMG, was guilty of 鈥渃omplacently signing off the directors鈥� increasingly fantastical figures鈥� adding: 鈥淚n failing to exercise professional scepticism towards Carillion鈥檚 accounting judgments over the course of its tenure [鈥�] KPMG was complicit in them.鈥�

Another Big Four accountant Deloitte was accused of being a 鈥渂adge of credibility鈥� after picking up 拢10m to act as Carillion鈥檚 internal auditor while EY, brought in after last July鈥檚 拢845m writedown, 鈥渨as paid 拢10.8m for six months of failed turnaround advice鈥�.

The MPs said the statutory audit market should be referred for review to the Competition and Markets Authority and that any review should look into breaking up the Big Four into more audit firms.

Carillion鈥檚 final chief executive Keith Cochrane was described as having 鈥渜uickly succumbed to the dysfunctionality prevalent on the board鈥�. But his finance director at the time of the collapse was left unscathed with MPs describing Emma Mercer as demonstrating 鈥渁 willingness to challenge the status quo鈥�.

At the time it collapsed, Carillion employed 43,000 people globally including 20,000 in the UK. More than 2,300 jobs have since been lost.

It went bust owing 拢2bn to suppliers and racked up a 拢2.6bn pension liability.