Carillion collapse prompts rules on UK corporate recklessness

LONDON: UK Prime Minister Theresa May set out a plan to defend capitalism from capitalists, after the collapse last week of construction company Carillion Plc put at risk public-sector projects from roads to hospitals.

In an article for the Observer newspaper, published Sunday, May pledged new rules to deal with executives "who try to line their own pockets by putting their workers' pensions at risk." She attacked a corporate culture that saw "big bonuses for recklessly putting short-term profit ahead of longterm success." The newspaper said the new rules could include punitive fines for directors, or giving regulators the power to block takeovers that risk pension pots.

Carillion's failure has prompted a debate in Britain about both how companies are run and the extent to which the government relies on businesses to provide services. The U.K. spends 10.3 billion pounds ($14.3 billion) a year servicing public-private contracts of the type awarded to Carillion, the National Audit Office said last week.

The opposition Labour Party leader Jeremy Corbyn argues the collapse vindicates his longstanding critique of the free-market system. May defended both the use of companies like Carillion to deliver services and her government's rejection of a bailout before its collapse on Jan. 15, saying shareholders, not taxpayers, should bear the costs of bad management. But she said business had to behave responsibly. "Every successful business is built on a thriving, supportive society," May wrote. "But that support is conditional it can only exist as long as we all playing by the same rules."