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MPs set to grill Carillion bosses over collapse

Houses of Parliament

Two committees of MPs will grill former Carillon bosses about its debts, £587M pension deficit and unfinished public sector contracts left in the wake of its collapse.

Chief executive Richard Howson, chairman Phillip Green, finance directors Richard Adam, Zafar Khan and Emma Mercer, and interim chief executive Keith Cochrane will be quizzed by the work and pensions select committee and the business, energy and industrial strategy select committee. 

MPs have accused directors of being “asleep at the wheel” and will expect regulators to explain how the company, which was signed off as a going concern by auditors KPMG in spring 2017, could crash into liquidation less than a year later.

Work and pensions select committee chairman Frank Field said: “Another day, another company goes bust hot on the heels of a clean bill of health from a Big Four financial services firm.

“The particularly nasty twist in this now grimly familiar tale is the mountain of debt and giant pension deficit this public services contractor leaves in the wreckage of its collapse– with an accompanying massive hit to the public purse.

“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.”

MPs are expected to question a change to the company’s pay policy in 2016 which relaxed its clawback conditions for executive bonuses. The new policy prevented the firm from reclaiming bonuses if it went bust.

Business, energy and industrial strategy committee chairwoman Rachel Reeves said the insolvency had the “hallmarks of a corporate governance failure” and asked why so many warning signs were missed.

She said: “Why are the regulatory bodies stepping in only after Carillion’s collapse? 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.”

The inquiry will build on previous investigations into defined benefit pension schemes and corporate governance.

Representatives from the Financial Reporting Council and the Insolvency Service, plus Independent Trustee Services managing director Chris Martin, and Carillion DB Pension Scheme chair of trustees Robin Ellison will be questioned on Tuesday, 30 January. The former directors will appear in front of the committee on Tuesday, 6 February.

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