Parliamentary select committees launch joint inquiry into contractor’s implosion
Former Carillion chief executive Richard Howson and ex-finance director Richard Adam are among several Carillion directors being hauled in by MPs next month to explain the company’s collapse.
Also joining Howson (pictured), who left as chief executive last July following an £845m writedown, and Adam, who retired after nearly 10 years in the role at the end of 2016, in the spotlight will be Keith Cochrane, the firm’s interim chief executive at the time Carillion went under, along with its chairman Philip Green – who took up the post in May 2014 – whose job it was to tell the Stock Exchange last Monday the contractor had gone bust.
Adam’s successors Zafar Khan, who quit the business last September after just nine months in the role, and his replacement, Emma Mercer, are being asked to appear before MPs as well.
Parliament’s pensions and business committees said today they have launched a joint inquiry into the group’s demise.
Business committee chair, Labour MP Rachel Reeves, said: “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.”
Both select committees have said they want to know 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 in the bank just nine months later.
Pensions committee chair, veteran Labour MP Frank Field, added: “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.”
In 2016, Carillion paid £78.9m of shareholder dividends from the previous year’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.
Despite a rising pension scheme deficit, Carillion contributed only £51m in 2016, £3m lower than the previous year, and £27.9m less than it allocated for dividends over the same period.
Howson and Adam, who both resigned from non-exec director roles at other companies last week, will be called to the inquiry on 6 February along with Cochrane, Green, Khan and Mercer.
The Insolvency Service, which last week ceased payments to Carillion executives, and the Financial Reporting Council will also be called at an earlier hearing next week as questions remain over the strength of corporate governance at the company. Robin Ellison, the chair of Carillion’s pension scheme, will also appear at the hearing next Tuesday.