Yesterday in the Parliament the Business, Energy and Industrial Strategy (BEIS) Committee Committee led by Frank Field and Rachel Reeves quizzed disgraced Carillion management on the series of events leading up to Carillion’s collapse into liquidation in January 2018.
To say the management team including former CEO Phillip Green, Richard Howson, Chairman of the Board Keith Cochrane and former Finance Director Zafar Khan appeared out of their depth would be an understatement of grand proportions.
As John Grace writing for the Guardian put it, “listening to the bosses, you’re surprised Carillion survived for so long.” You can watch the 4hr long marathon grilling on Parliament TV below:
Having watched and live tweeted the the BEIS questioning of Carillion, we approached University of Essex Emeritus Professor of Accounting Prem Sikka for comment, who told the People vs PFI:
“In common with other parliamentary inquiries, witnesses for the Carillion inquiry had probably been coached by lawyers and PR people on what to say. The Carillion session often descended into cat-and-mouse games with MPs seeking to embarrass the key players whilst they did their best to avoid giving damning replies.
No witness was examined under oath and key documents were not subpoenaed. In search for the truth, all we got was an occasional glimpse of the inner workings of Carillion and capitalism. The Carillion episode of everyday capitalism repeated the usual story: Directors got shedloads of money, shareholders got massive dividends and pensions scheme, HMRC and suppliers are left high and dry.
The real culprit in all this is law which empowered Carillion directors to commit excesses. But that was totally ignored by the MPs. The eventual parliamentary report may lead to slow reforms, but governments are not obliged to carry out any of the recommendations. How long before the same story emerges from another collapse…?”
Prem Sikka is of course, bang on the money. Unless we change the rules of the accountancy and Corporate Governance game, there is nothing to prevent the occurrence of another debt-loaded Carillion collapsing, with Directors riding off into the sunset having asset stripped the company and shafted pensioners, HMRC and small SME suppliers.
Carillion Inquiries: Directors being chastised for crocodile tears and empty words of remorse. What about parliament passing poor laws and govts creating toothless regulators that facilitated this and many other scandals.
— Prem Sikka (@premnsikka) February 6, 2018
There are numerous potential candidates amidst the growing list of PFI & outsourcing companies currently in financial trouble, which is known to include:
For further coverage of the BEIS questioning of Carillion, read:
Left Foot Forward – ‘To avoid more collapses like Carillion, put workers on company boards’
The Financial Times – “Board Should Have Asked More Questions”
Huffington Post – ‘Councils Face 20% Fee Hike To Bail Out Carillion Deals’