MPs haul Carillion directors in for grilling over firm’s collapse

Two of the Commons’ most powerful committees have ordered former Carillion directors – including ex-chairman Philip Green – to give evidence as part of a joint inquiry into the construction giant’s collapse.

The Work and Pensions Committee, headed by Labour’s Frank Field, and the BEIS Committee, headed by his colleague Rachel Reeves, have launched a joint probe into why the firm was put into liquidiation last week leaving “a mountain of debt”.

“The committees will be investigating how a company that was signed off by KPMG as a going concern in Spring 2017 could crash into liquidation with a reported £5bn of liabilities and just £29m left in cash less than a year later,” the two groups of MPs said today. One area of interest will be the 2016 change in pay policy to relax its clawback conditions for bonuses, something which has been slammed by the Institute of Directors.

The first evidence session will be next week, with representatives of The Financial Reporting Council and The Insolvency Service appearing alongside Chris Martin, managing director of the Independent Trustee Services and Robin Ellison, chair of Carillion’s pension trustees.

That will be followed on Tuesday 6 February with evidence from Green, former chief executive Richard Howson and two former finance directors – Richard Adam, who stepped down in December 2016, and Zafar Khan, who took the role on until Carillion’s collapse.

Keith Cochrane, interim chief executive, and Emma Mercer, finance director, will also attend.

Field said “Another day, another company goes bust hot on the heels of a clean bill of health from a Big Four financial services firm. The particularly nasty twist in this now grimly familiar tale is the mountain of debt and giant pension deficit this public services contractor leaves in the wreckage of its collapse– with an accompanying massive hit to the public purse.

“It must also be time now for the auditors who cosily signed off this disaster-in-the-making as a ‘going concern’ less than a year ago to begin to account for themselves.”

Reeves added: “In the wake of the BHS scandal, Carillion has the hallmarks of another corporate governance failure with directors asleep at the wheel while the business went off a cliff, in this case leaving jobs, pensions and public services under threat and a host of suppliers out of pocket.

“How is it that so many warning signs were ignored by the company and the Government? What were the Carillion board and senior management doing to address the spiralling problems at the company? Why are the regulatory bodies stepping in only after Carillion’s collapse? As a Committee we will also want to explore the executive pay arrangements at Carillion, the potential cost to the taxpayer of the insolvency, and the role of both directors and non-executive directors in the company’s collapse.”