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.>Theresa May launches Plan B telling MPs 'no second referendum and no Article 50 extension'
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’.
They said the Insolvency Service should carefully consider whether former directors breached their duties under the Companies Act and should be recommended for disqualification.
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.>'Self-centred' swimwear model spared jail after importing £18,000 python-skin accessories
‘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.>Boy, 4, forced to raise £25,000 for his own bionic arm because he's 'not disabled enough'
‘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.
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’.
Thousands of jobs have been lost as a result of Carillion’s collapse in January.>'Beheaded' plastic swan and 'dead' cuddly toy among RSPCA's weirdest call-outs
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.
‘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.
‘The Government wants to see a strong and varied supplier base where companies of all sizes benefit from long term and stable Government contracts.
‘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/