The Carillion former chief executive and chairman are among various top bosses at the collapsed construction giant who are set to be grilled by MPs to explain how the firm spiralled into bankruptcy.
A joint inquiry launched by the business and the work and pensions select committees will be taking evidence from trustees of the company’s pension scheme on 30 January, which is expected to land the Pension Protection Fund with £900m of liabilities.
Following this, top bosses including Carillion’s former chief executive Richard Howson, who resigned following the company’s profit warning last July, will be summoned before MPs on 6 February. Among others to be investigated will be the former chairman Phillip Green, finance directors Richard Adam and Zafar Khan and interim chief executive Keith Cochrane who took over following Howson’s departure.
Those being called to give evidence will be questioned on how the construction giant could crash into liquidation with a reported £5bn of liabilities and just £29m left in cash less than a year later. In 2016, Carillion is thought to have paid dividends to its shareholders of £78.9m from 2015’s profits – exceeding the £73m it generated in cash from operations. It paid a further dividend of £54m in June 2017- just one month before its first profit warning.
The business committee chair, Rachel Reeves MP, said: “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?”
The Insolvency Service, who will be investigating the company’s descent into bankruptcy, and the Financial Reporting Council, who regulate the auditors that signed off the company’s accounts, will also be appearing before the inquiry to provide evidence.
Frank Field, chair of the work and pensions select committee, 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.”