KPMG says Carillion bosses were wrong to pin blame for collapse on Qataris
The pensions watchdog today told MPs that it must be “tougher” as it considers action against individuals involved in the collapse of Carillion.
Giving evidence to the parliamentary inquiry into Carillion, Lesley Titcomb, chief executive of the Pensions Regulator said that with hindsight the regulator would have used its powers more quickly to ensure the company increased its payments into the pension scheme.
Nicola Parish, an executive director at the regulator, also said the regulator could now use its powers to recover money from individuals as contributions to Carillion’s pension deficit.
Meanwhile, KPMG told MPs that Carillion’s executives were wrong to claim that late-payments on a Qatari contract were the reason for the contractor’s demise.
Carillion bosses told MPs that the firm failed because it failed to recover payments for contracts with the Qatar Building Company.
Read more: MPs slam Carillion directors for “contemptuous” attitude to pensions
However, asked whether the statement of the directors was correct, Peter Meehan, partner at KPMG, said:
The simple answer is no, I can’t see how that was the cause in itself at all.
The complex nature of the contracts and the judgements and estimates that you heard from the director panel is such that there were a wide range of judgements and estimates involved, and there’s a wide range of acceptable answers, there’s no right answer in terms of those judgements and estimates and contracts.
Meehan said he went on 30 site visits in Qatar, and did presentations highlighting the risks from the contract. Chair of the Work and Pensions select committee Frank Field said that despite the site visits, KPMG “didn’t really spot anything”.
Read more: Exclusive: Carillion locked in £200m Qatar FIFA World Cup contract row
The Qataris disputed that they owed Carillion £220m for building work done for the 2020 Fifa World Cup. All of the auditors today said they were not aware the Qatari company was pushing back against Carillion’s claim.
KPMG is giving evidence to the parliamentary inquiry into the collapse of Carillion, which fell into liquidation in January. MPs are questioning the firm, which audited Carillion for 19 years, after it signed off Carillion as a going concern months before it collapsed.
“People knew it had challenges”
Meehan, partner of audit at KPMG, told MPs that is was clear the company was running a low margin business, had a high level of debt, and was dealing with a widening pension deficit.
“People knew it had challenges, but the company also had the reserves to deal with those challenges,” he said.
Asked whether there was any action KPMG could have taken to save Carillion, Meehan said he was not allowed to “make decisions on behalf of the company.”
“I’m not proud of where the company has ended up, no,” Meehan said.
“I’m very sorry for what’s happened to the families of the employees who lost their jobs and sub contractors and shareholders. But my role is to be the auditor – not in the choosing of management.
“Independence doesn’t allow me to make decisions on behalf of the company.”