Carillion asked UK government to step in over Qatar debt black hole
Hard-pressed contractor sought help to recover $200m owed on Doha project
In evidence to Members of Parliament (MPs), Richard Howson, the former chief executive, revealed that he wrote to Liam Fox, the minister for international trade, last May, warning him of the problem.
A copy of that letter, seen by Arab News, said that unpaid debts on a flagship project in Doha with Msheireb Properties, a Qatar government-owned entity, had become a serious issue for the British company.
“The position on that project has deteriorated significantly, and despite continued efforts to engage with Msheireb and its advisers at the highest levels, we find ourselves in a position of having to request the assistance of HM government to help the current impasse, which is having a significant financial burden on our business both regionally and for the Carillion Group as a whole,” the letter said.
Carillion has cited the £200 million owed by Msheireb as one of the main factors in its collapse.
“We remain committed to completion of the project, but the lack of payment since October 2016 and the employer's (Msheireb) recent proposal to introduce a third party contractor to assist in completing the works at significant cost is significantly hampering our ability to do so,” the letter continued, asking what support Carillion might expect from the British government in getting the debts repaid.
The letter also referred to an April meeting between Carillion executives and Fox in the British ambassador's residence in Muscat, where unpaid debts from Oman were discussed.
It has not been made public how much Oman owed Carillion, but the company has said that £314 million of the £845 million “black hole” revealed last July came from the Middle East.
Howson told the MPs that he had briefed Fox on the “increasingly difficult situation” in Oman and Qatar in order to get his help “on turning receivables into cash on those countries.”
Philip Green, former chairman of Carillion, said the collapse happened because the “balance sheet was not able to withstand the shock from four contacts that went badly wrong in 2017. The balance sheet did not have the robustness to withstand it.”
Carillion was also owed significant sums on three infrastructure projects in the UK.
Keith Cochrane, another former chief executive, said that the Qatar project was “a very specific contractual situation. We thought that the government and the former ambassador would help us get a hearing on that matter.”
Howson has previously told MPs he “felt like a bailiff” on his monthly trips to Qatar to try to recover money.
The contract at the center of the dispute is Downtown Doha, a $5.5 billion (SR20.62 billion) project to develop a central area of the city. The developer is Msheireb Properties, a subsidiary of Qatar Foundation, which describes itself as a “private, nonprofit organization,” with Sheikha Moza Bint Nasser as its chair.
The project has been reported to be part of Qatar's preparations for the 2022 Fifa World Cup bid, but it was launched before the country was awarded the rights to run the biggest football competition in the world, in December 2010.
Carillion was brought on board in late 2011 for one of the early phases of the project.
Msheireb has denied that it refused to pay Carillion for work on the project, which is now almost complete, and claimed that money paid to the UK group was used to pay other bills.
The Carillion executives were being questioned by members of Parliament on a joint committee overseeing public accounts and administration.
Howson previously told a different committee: “But for a few very challenging contracts, predominantly in Oman and one in Qatar, I believe Carillion would have survived.”
Msheireb in Doha did not answer a phone call seeking comment.
LONDON: Carillion Group, the British contractor that went bust in January with debts of around £1.5 billion ($2.09 billion), asked for British government assistance to get overdue payments from Qatar in spring 2017, before its financial problems became public.
Bosses of the liquidated outsourcing and construction company Carillion (L-R) chief executive Keith Cochrane, chair Philip Green, finance director Emma Mercer and chief executive officer Richard Howson give evidence to a UK parliamentary committee. (AFP)