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Carillion executives, KPMG face parliamentary inquiry over collapse
Senior executives from collapsed government contractor Carillion will be grilled by MPs on February 6 as part of a joint parliamentary inquiry into the firm's demise.
The influential Business and Work and Pensions committees said they would also be placing auditors KPMG under the spotlight at an earlier session on January 30, with MP Frank Field, who will co-chair the inquiry, warning they will have to "account for themselves".
"Another day, another company goes bust hot on the heels of a clean bill of health from a 'Big Four' financial services firm," said field, who leads the Work and Pensions committee.
"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."
Former directors, including Richard Howson, who quit as chief executive after a profit warning in July but was still drawing his salary, and chairman, Philip Green will be asked to explain their conduct in the period up to the company going into liquidation this month leaving thousands of jobs at risk, potential pension liabilities of almost £1bn and taxpayers left to fund existing government contracts.
The committees said they would be be investigating "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 left in cash less than a year later".
"Despite a rising pension scheme deficit, Carillion paid in only £51m in 2016, £3m million lower than the previous year, and £27.9m less than it allocated for dividends over the same period," the said in a statement.
Carillion's headline 2017 first half pension deficit figure for its 29,000 member scheme was £587m, up from £318m in 2015.
"During the same period, net borrowing within the company ballooned from £170m million to £571m. Recent reports put the full liability buyout figure for the pension fund at £2.6bn, with the Pension Protection Fund estimating it will cost them £800m - £900m to finance the shortfall in the scheme," the committee said.
Labour MP Rachel Reeves MP, who chairs the Business, Energy and Industrial Strategy committee said Carillion had the hallmarks of "another corporate governance failure with directors asleep at the wheel while the business went off a cliff, in this case leaving jobs, pensions and public services under threat and a host of suppliers out of pocket. How is it that so many warning signs were ignored by the company and the government?"