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Carillion finance chief raised alarm months before collapse

carillion 2

A Carillion finance chief blew the whistle about accounts that began the unravelling of the company months before the construction giant’s collapse, board meeting minutes show.

Emma Mercer raised concerns about “sloppy accounting” six weeks into her role as construction services finance director, the joint Parliamentary inquiry into Carillion has revealed. 

Mercer, who later took over from Zafar Khan as finance director in September 2017, raised the alarm about accounting on major projects including the Royal Liverpool Hospital and Battersea Power Station in April.

Mercer advised managing director Adam Green that she had identified issues in the accounts. Green alerted chief executive Richard Howson on 15 April and asked the then finance director Khan to discuss the position with her, the minutes show.

Carillion remuneration committee chairwoman Alison Horner “noted that Mrs Mercer appeared to be a whistle-blower who did not feel she was listened to.”

Mercer’s concerns threw up questions about whether the 2016 year-end trading position could be supported and triggered a review of contracts. The board’s initial decision to have an independent element to the review was reconsidered.

The three-stage review, comprised of an internal review, a KPMG review and the sub-committee of the board chaired by Carillion’s audit committee chairman Andrew Dougal, concluded that the 2016-year end position did not need to be reviewed. 

KPMG undertook an enhanced contract review in June 2017, which led to the £845M write down on 10 July. 

Work and pensions chairman Frank Field said: “Emma Mercer took just six weeks to spot and pull the thread that began the entire company unravelling.

“That the next chief financial officer had to go through whistleblowing procedures to get her concerns about accounting irregularities taken seriously by the Carillion board is extraordinary.

“So too is that the board’s response was to reject an independent review and get KPMG, their pet rubber-stampers, to mark their own homework.

“While our witnesses have been reticent in oral testimony, these minutes begin to reveal the true picture of a company falling apart at the seams in full view of the board and their auditors.”

Yesterday the joint Commons work and pensions committee and business comittee inquiry revealed that former Carillion finance director Richard Adam had “dumped” - sold shares in the company worth £776,000 in the months leading up to its collapse. 

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