MPs savage rotten state of Carillion

  • MPs savage rotten state of Carillion

MPs savage rotten state of Carillion

Rachel Reeves, chairwoman of the BEIS Committee, said: "The auditors should also be in the dock for this catastrophic crash".

The lawmakers called for government reforms to address failures that allowed Carillion to become a "giant and unsustainable corporate time bomb".

The committees said this paved the way for PwC - the least conflicted of the Big Four despite having advised Carillion, its pension schemes and the government on Carillion contracts - to "name its price" to come on board as special managers following the company's collapse.

He claimed there would be "no real ability to manage the widespread loss of employment, operational continuity, the impact on our customers and suppliers, or (in the extreme) the physical safety of Carillion employees and the members of the public they serve".

It also held numerous public contracts, including the maintenance of schools and prisons, "all of which had to be brought under government control, at a cost to the taxpayer", adds the broadcaster. Former executives of the collapsed government contractor Carillion faced questions on Tuesday from MPs on the work and pensions select committee and their counterparts on the business, energy and industrial strategy committee.

"They are guilty of failing to tackle the crisis at Carillion, failing to insist the company paint a true picture of its crippling financial problems", she said.

During oral evidence, Lesley Titcombe, the chief executive of TPR (pictured), was accused of failing to make use of these powers even though it had concerns about Carillion's schemes for many years and Carillion's pension trustees repeatedly asked it to intervene. Despite clear accountability, the directors presented themselves in Parliament as "self-pitying victims of a maelstrom of coincidental and unforeseeable mishaps".

Adam's sale of £776,000 shares shortly before Carillion's collapse "were the actions of a man who knew exactly where the company was heading once it was no longer propped up by his accounting tricks", the report says.

What are the auditors accused of?

Big Four giants Deloitte, PwC, EY and KPMG face extinction if they fail to learn the lessons from the failure of contracting giant Carillion, the head of Britain's leading accountancy institution warned this morning.

Reeves said this showed that the Official Receiver was seeking to resource a liquidation of exceptional size and complexity as quickly and effectively as possible from an extremely limited pool and called on the Competition and Markets Authority to look at the break-up of these big firms to increase competition and deal with conflicts of interest.

KPMG were Carillion's external auditors, Deloitte were internal auditors and Ernst and Young were tasked with turning the company around. "However, I reject the unwarranted conclusions the committees have reached concerning my role at the company".

Across the country thousands of people lost their jobs when the company went bust.

ICAEW chief Izza told BBC's Today programme the parliamentary report provided an opportunity to "think again about what we do to fix this".

Very few of those involved in the scandal escape censure, from the highly paid and "delusional" directors to the even more highly paid "cosy club" of auditors, the timid and ineffective regulators - and the government.

The extensive report published by the Work and Pensions and Business, Energy and Industrial Strategy (BEIS) committees lists conclusions on how Carillion managed to rack up liabilities of almost £7bn and just £29m in cash when it eventually liquidated in early January.

"When swathes of public services are affected, close monitoring of exposure to risks would seem essential", the report said. Crown Representatives provide an interface and single point of focus between the government and key suppliers but the report slammed them as "semi-professional and part-time", and failing to provide sufficient warning of risks in a key strategic supplier.