Carillion bosses 'stuffing mouths with gold' before company collapse

Two select committees attacked the Government for lacking decisiveness and bravery to tackle failures in corporate regulation

Two select committees attacked the Government for lacking decisiveness and bravery to tackle failures in corporate regulation

Wednesday, May 16, 2018

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.

The MPs said that 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.

Frank Field, chairman of the Work and Pensions Committee, 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."

Rachel Reeves, who chairs the Business Committee, said: "Carillion's collapse was a disaster for all those who lost their 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 added had pocketed millions of pounds for their lucrative audit work.

"It is a parasitical relationship which sees the auditors prosper, regardless of what happens to the companies, employees and investors who rely on their scrutiny."

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