Commenting on today’s NAO report, Investigation into the
government’s handling of the collapse of Carillion, Rt Hon
MP, Chair of the Work and
Pensions Committee, said:
“This invaluable report adds new weight to what
we found: Carillion hoodwinked the Government as they did many
others who were so naïve as to trust their published accounts.
Philip Green, Richard Howson and Richard Adam were desperate to
attribute their company’s explosion to some of its more exotic
forays overseas. But the NAO’s explanations of why common or
garden UK public sector construction contracts failed betray
extraordinarily negligent planning. Surely they could not have
been so incompetent? It is difficult to shake the impression that
this was conscious cash-chasing, bugger the long term
consequences and bugger the interests of suppliers, workers and
pensioners.
“As Special Managers, with a contract to print money awarded
without any competition, PwC will draw £50 million for six
months’ work. More money for PwC is less money for
sub-contractors and the PPF. We have further questions about
those payments—and how PwC’s conflicts of interest arising from
their long history of work on Carillion are being managed—and
have written to PwC and the Official Receiver requesting further
information. I am particularly concerned that PwC’s conflicts
could jeopardise action against individual directors.”
- The Committees previously reported on the last ditch
“begging letter” sent by Carillion CEO Philip Green to the
Cabinet Secretary on 13 January - less than 48
hours before it was forced to file for insolvency when Government
refused a bailout. Para 4.11 of the NAO report indicates
that on that same day, Carillion directors were presented with
independent analysis that showed their restructuring plan was
overly optimistic.
- Figure 17 on page 36 shows that Carillion also tried to
convince Government to “persuade” the PPF to agree to a
restructuring of their massive pension liabilities in a bid to
look better to other investors - and asked for immunity
from fines for avoiding those pension responsibilities. The
Committees previously reported on
former finance director Richard Adam’s apparent attitude to
funding its pension obligations, and the pension
“contribution holiday” Carillion directors negotiated as they
took on yet more borrowing. They never resumed contributions.
- Paragraph 3.6 of the report shows that, despite the huge
amounts of public money at stake, Carillion directors refused to
do any contingency planning for the provision of vital public
services, saying it was focusing instead on the ultimately
unsuccessful restructuring it engaged EY for – who, as
the Committees reported last
week, had also been engaged by HS2 to carry out public contract
risk assessments.
Notes
1. The letters to the Official Receiver and PWC are attached,
also published under the same embargo, at midnight tonight.
