Carillion’s board presided over ‘rotten corporate culture’

A lack of corporate responsibility and the role of accounting firms under fire
A lack of corporate responsibility and the role of accounting firms under fire

Directors at collapsed engineering giant Carillion were too busy “stuffing their mouths with gold” to worry about the workers and should face the possibility of disqualification, according to a scathing report by MPs.

In the final report of an inquiry into the spectacular failure of the company, two select committees also attacked the Government for “lacking” decisiveness and bravery to tackle failures in corporate regulation.

Carillion became a “giant and unsustainable corporate time bomb”, said the Work and Pensions and Business Select Committees.

Following a series of hearings into Carillion’s liquidation, it was clear that the board presided over “rotten corporate culture”.

They said the Insolvency Service should carefully consider whether former directors breached their duties under the Companies Act and should be recommended for disqualification.

Work and Pensions Committee chair Frank Field said: “A board of directors too busy stuffing their mouths with gold to show any concern for the welfare of their workforce or their pensioners.

“They rightly face investigation of their fitness to run a company again. This is a disgraceful example of how much of our capitalism is allowed to operate, waved through by a cosy club of auditors, conflicted at every turn.

“Government urgently needs to come to Parliament with radical reforms to our creaking system of corporate accountability.

“British industry is too important to be left in the hands of the likes of the shysters at the top of Carillion.”

Business Committee chair Rachel Reeves said the crash was a disaster for those who lost jobs and the small businesses, contractors and suppliers left fighting for survival.

“The company’s delusional directors drove Carillion off a cliff and then tried to blame everyone but themselves.

“Their colossal failure as managers meant they effectively pressed the self-destruct button on the company.

“However, the auditors should also be in the dock for this catastrophic crash.

“They are guilty of failing to tackle the crisis at Carillion, failing to insist the company paint a true picture of its crippling financial problems.

“The sorry saga of Carillion is further evidence that the Big Four accountancy firms are prioritising their own profits ahead of good governance at the companies they are supposed to be putting under the microscope.”

Ms Reeves said the Competition and Markets Authority should look to break up the so-called Big Four accountancy firms - KMPG, PwC, Deloitte and EY -which she said had pocketed millions of pounds for their lucrative audit work.