Wednesday 16th May, 2018
The Work and Pensions and BEIS Committees publish report on the collapse of Carillion that calls on the Government to carry out a wide-ranging set of reforms to reset systems of corporate accountability.
It does not mince its words and says, it is Carillion’s board who are both “responsible and culpable for the company’s failure” presiding over a “rotten corporate culture” that led to the company’s devastating and hugely costly failure.
Carillion, the UK's 2nd largest construction company collapsed in January 2018 leaving its 20,000 UK employees with an uncertain future and pension concerns.
Rachel Reeves MP, Chair of the BEIS 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. Their colossal failure as managers meant they effectively pressed the self-destruct button on the company.”
The report also demands that the big four accountancy firms be referred to competition authorities for potential break-up following the collapse of government contractor Carillion.
In December 2016, the company was recognising £294 million of traded not certified revenue (revenue that clients had not yet signed off), an increase of over £60 million since June 2014, and accounting for over 10% of total revenue from construction contracts.
Carillion’s Early Payment Facility treatment helped hide its failure to generate enough cash to support the revenues it was recognising. Carillion had a target of 100% cash conversion: for cash inflows from operating activities to at least equal underlying profit from operations. It consistently reported that it was meeting this target.