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Former Carillion bosses apologise for company's collapse
The former chief executive and chairman of Carillion have apologised to MPs for the construction and support services company's collapse and the effect on workers, pensioners and others.
Former chairman Philip Green and ex-CEO Richard Howson both told MPs they thought the company could have been saved with more time to put its finances in order.
Green said: "I'm truly sorry for the impact the collapse of the company had on employees, pensioners, customers, suppliers and all stakeholders ... Words cannot describe the depth of my despair."
Green attributed Carillion's implosion to high debt levels from 2013 to 2016, problems with a small number of big contracts its failure to raise short-term financing to support the business in early January. Taking full responsibility for the company's collapse he said even the day before Carillion went into administration in January the board thought a restructuring was possible.
Howson, who stood down after a profit warning in July 2017, said: "I too would like to say how truly saddened and how sorry I am for what has happened to the business. It was a great business that delivered hundreds and hundreds of contracts successfully around the world."
He said if not for problems with a few contracts in Qatar, which owed £200m, and Oman the company could have survived and that Carillion was on the verge of working its way through these contracts. He said the company, where debt averaged between £875m and £925m last year, ran short of money because Middle East customers refused to pay until a project was delivered.
Carillion collapsed on 15 January when its banks refused to provide further funding. The government's insolvency service said it did not have enough money to cover its own insolvency. The biggest corporate failure in the UK for a decade left almost 20,000 workers' jobs at risk and future pensioners facing cuts of up to 20% in their retirement incomes.
Howson and Green followed other former Carillion executives in being questioned by MPs on the business and work and pensions committees. They also blamed the company's woes on non-payment by Middle East customers as MPs questioned whether the company had put workers and pensioners in peril with risky behaviour.
Zafar Khan, who was finance director for eight months until September 2017, denied being asleep on the job and said his report into the Middle East business "spooked" the board.
"No I don't believe we were asleep at the wheel," Khan said. "I believe I did everything that I could have done, essentially." But Keith Cochrane, who took over from Howson as CEO said Khan left because the board was not convinced he had a grasp of the numbers.
Carillion's accounts for the last four years, and their audit by accountancy firm KPMG, are being investigated by the Financial Reporting Council.
Frank Field, co-leader of the influential parliamentary committee, said last month that the inquiry was set up to investigate "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 of £587m at its interim results last year, 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. Carillion, which had 13 retirement schemes covering 27,500 members in total, increased its dividend for each of past 16 years.