Carillion Directors ���stuffed Their Mouths With Gold��� As Company Collapsed, MPs Say

Directors at collapsed engineering giant Carillion were too busy ‘stuffing their mouths with gold’ to worry about the workers, according to a scathing report by MPs.

In the final report of an inquiry into the failure of the company, two select committees said directors should face the possibility of disqualification.

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They also attacked the Government for ‘lacking’ decisiveness and bravery to tackle failures in corporate regulation.

Carillion became a ‘giant and unsustainable corporate time bomb’, said the Work and Pensions and Business Select Committees.

The MPs said that following a series of hearings into the company’s liquidation, it was clear that the board presided over ‘rotten corporate culture’.

>>> Embargoed to 0001 Monday April 23 File photo dated 08/12/14 of chairman of the Work and Pensions Committee Frank Field who has said recording PIP assessments as standard was "a tremendous step forward". PRESS ASSOCIATION Photo. Issue date: Monday April 23, 2018. MPs and campaigners have urged the Government to go further in reforming benefits for disabled people after ministers published their response to a major review. See PA story POLITICS Benefits. Photo credit should read: Anthony Devlin/PA Wire
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.’ (Picture: PA)

They said the Insolvency Service should carefully consider whether former directors breached their duties under the Companies Act and should be recommended for disqualification.

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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.

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‘They rightly face investigation of their fitness to run a company again.

‘This is a disgraceful example of how much of our capitalism is allowed to operate, waved through by a cosy club of auditors, conflicted at every turn.’

Rachel Reeves, who chairs the Business Committee, said: ‘Carillion’s collapse was a disaster for all those who lost their jobs and the small businesses, contractors and suppliers left fighting for survival.

‘The company’s delusional directors drove Carillion off a cliff and then tried to blame everyone but themselves.

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‘Their colossal failure as managers meant they effectively pressed the self-destruct button on the company.’

Ms Reeves said the Competition and Markets Authority should look to break up the so-called Big Four accountancy firms – KPMG, PwC, Deloitte and EY -which she added had pocketed millions of pounds for their lucrative audit work.

‘It is a parasitical relationship which sees the auditors prosper, regardless of what happens to the companies, employees and investors who rely on their scrutiny’, she added.

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Rachel Reeves, who chairs the Business Committee, said: ‘Carillion’s collapse was a disaster for all those who lost their jobs and the small businesses, contractors and suppliers left fighting for survival.’ (Picture: PA)

The committee said Ernst & Young was paid £10.8 million for ‘six months of failed turnaround advice’, while Deloitte received £10 million to be Carillion’s internal auditor, but were either ‘unable or unwilling’ to identify failings in financial controls, or ‘too readily ignored them’.

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Thousands of jobs have been lost as a result of Carillion’s collapse in January.

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Former finance director Richard Adam was named in the MPs’ report as the ‘architect of Carillion’s aggressive accounting policies’ and was previously accused of ‘dumping’ shares worth hundreds of thousands of pounds at the first possible moment.

In a statement he said: ‘Despite retiring over a year before Carillion went into insolvency, I am deeply saddened by the events that have since overtaken the company.

‘The reasons for the collapse are clearly complex; however, I reject the unwarranted conclusions the committees have reached concerning my role at the company.

‘I have objected to the committees about quotes that they have misattributed to me. I look forward to contributing to the due process and conclusion of the various investigations that are still ongoing.’

Roger Barker, of the Institute of Directors, said: ‘The report confirms that, far from being a natural market failure, the demise of Carillion came about as a result of individual failings by the company’s board and other actors in the governance chain.

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‘What makes this all the more painful is that many of those who bore the brunt of its collapse – its employees, suppliers and other stakeholders – were among those who helped keep company on its feet for as long as it did.’

A Government spokesman said: ‘Our priority has been the continued, safe running of public services and to minimise the impact of Carillion’s insolvency. The plans we put in place have ensured this.

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‘The Government wants to see a strong and varied supplier base where companies of all sizes benefit from long term and stable Government contracts.

>>> A worker takes down a sign showing the name of liquidated British construction and outsourcing group Carillion from a construction crane on a building site in the City of London on January 23, 2018. British construction and outsourcing firm Carillion, which has a variety of private and public service contracts in Britain and employs 43,000 staff worldwide, announced its immediate liquidation on January 15 after the heavily-indebted company failed to secure a last-minute financial rescue by the government and banks. / AFP PHOTO / Daniel SORABJI (Photo credit should read DANIEL SORABJI/AFP/Getty Images)
A Government spokesman said: ‘Our priority has been the continued, safe running of public services and to minimise the impact of Carillion’s insolvency. The plans we put in place have ensured this.’ (Picture: AFP)

‘That’s why we have recently announced a number of measures to support Government suppliers – strengthening our commitment to prompt payment; protecting staff, businesses and small suppliers from irresponsible directors.

‘We welcome the report from the joint select committee and will respond fully in due course.’

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Rail, Maritime and Transport union general secretary Mick Cash said: ‘Today’s bombshell report rams another nail in the coffin of the racket of outsourcing and franchising.

‘The Carillion business model didn’t disappear with the collapse of the company and is still prevalent from train cleaning to rail franchising. It’s time for that whole rotten culture of corporate greed to be swept away for good.’

Source : https://metro.co.uk/2018/05/16/carillion-directors-stuffed-mouths-gold-company-collapsed-mps-say-7549916/

Carillion directors ‘stuffed their mouths with gold’ as company collapsed, MPs say
Carillion directors 'stuffed their mouths with gold'
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Carillion’s board presided over ‘rotten corporate culture’, say MPs
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Carillion directors ‘stuffed mouths with gold’, say MPs
MPs' attack on Carillion executives is an extraordinary and savage takedown