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Ex-Carillion boss accuses government of poor payment

howson

An ex-Carillion boss has accused the government of poor payment practices as he hit back at criticism by a parliamentary committee. 

Former chief executive Richard Howson said the failed construction giant was “constantly chasing” government and public sector customers

In a response to a report by the work and pensions, and business select committees Howson slammed government for “using its supply chain as a bank.”

Howson said ‘substantial amounts’ were owed by government bodies such as Highways England, Transport for Scotland and Network Rail in the months leading up to the company entering compulsory liquidation in January this year. 

Transport Scotland said Carillion, part of the Aberdeen Roads Limited consortium, had been paid for all completed sections of the Aberdeen Western Peripheral Route. 

Howson wrote: ”The Government quite rightly mandates contractors to pay suppliers on 30 day terms; however, in order to achieve this, Government should be prepared (in all senses of the word) to administer monthly payment applications holistically to enable all parties in the supply chain to be paid fairly for all of the work undertaken within a given period.

“Hiding behind spurious disputes around scope, changed or varied works, eligibility for legitimate additional costs or punitive levying of performance penalties, and therefore effectively using its supply chain as a bank, is not acceptable.”

The company had been slammed by MPs for using its supply chain to prop up the business and the final report, which was published in May, called for directors to be disqualifed. 

“Carillion in my time was constantly chasing up its Government and public sector customers to agree such additional amounts, despite the fact that such amounts had arisen because those customers had failed to adequately understand the size of their estate and had failed to administer the contract between the customer and Carillion in a fair and timely manner,” Howson added.

Former directors Richard Adam, Keith Cochrane, Zafar Khan and Emma Mercer, and chairman Philip Green claimed they disagreed with the report but declined to comment further while other investigations are ongoing. 

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