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Big Four firms 'feasted' on Carillion 'carcass', MPs say

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The Big Four accountancy firms have been accused of “feasting” on the “carcass” of Carillion as the construction giant headed towards collapse.

PwC, KPMG, EY and Deloitte billed the company, its pension schemes and the government £71M for work related to Carillion since 2008, documents published by the work and pensions committee and the business, energy and industrial strategy (BEIS) committee show.

Work and pensions committee chairman Frank Field said the image is not a good one.

“The image of these companies feasting on what was soon to become a carcass will not be lost on decent citizens,” said Field.

“We saw at the end of our evidence session that the former directors of Carillion are, unlike their pensioners, suppliers and employees, alright.

“These figures show that, as ever, the Big Four are alright too. All of them did extensive – and expensive – work for Carillion.”

PwC was appointed as special managers to oversee the liquidation of the company by the Official Receiver. The other three firms were all judged to have conflicting interests.

Field continued: “PwC managed to play all three sides – the company, pension schemes and the government – to the tune of £21M and are now being paid to preside over the carcass of the company as special managers.

“It was perhaps telling that, with their three fellow oligarchs conflicted, PwC were appointed to this lucrative position without any competition.”

In response a PwC spokesperson said most of its work for Carillion was carried out before June 2015, rather than in the months before the collapse.

The spokesperson said: “Our technical skills and ability to deal with complex business problems led to our appointments to work for the government and the pension trustees.

“While there are only four large professional services firms, the market has been subject to extensive review by the Competition Commission (succeeded by the Competition and Market’s Authority) and European Commission.

“We comply with all rules that have resulted from these extensive reviews.”

KPMG has audited Carillion’s accounts every year since the company was formed in 1999, and BEIS committee chairwoman Rachel Reeves said the firm had “serious questions” to answer about the collapse.

“Either KPMG failed to spot the warning signs, or its judgement was clouded by its cosy relationship with the company and the multi-million-pound fees it received,” she said.

A KPMG spokesperson said the firm was “committed to building public trust in audit”, adding that it took the questions that have been asked of its profession in recent weeks “very seriously”.

The spokesperson added that KPMG welcomed the opportunity to assist the inquiry with investigations.

EY and Deloitte declined to comment. 

 

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Readers' comments (1)

  • What a completely misleading headline and article!
    The figure for accountancy work is over 10 years since 2008 and is nothing to do with the 'carcass' of Carillon.

    To suggest that it is inappropriate for a multi-billion pound company to be spending £7m / year on auditing and other professional services is daft - it is a requirement of any company to procure these services. Further, note that the £71m was also billed to the Government in relation to Carillon, so it wasn't just £71m of internal costs.





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