DELUSIONAL
MPs hammer the chancer bosses giving evidence in Parliament and blaming everyone but themselves for the collapse of the firm
BOSSES of failed construction firm Carillion have been described as “delusional characters” who blamed everyone but themselves for the collapse of the firm.
Disgusted MPs hit out at the company executives who enriched themselves while the outsourcing giants, who held dozens of Government contracts, went under.
Rachel Reeves MP and Frank Field MP, co-chairs of the Work and Pensions Committee’s inquiry into Carillion, issued a note of condemnation yesterday after taking evidence from the former boardroom bosses of the company, who went bust last month.
The MPs said: “This morning a series of delusional characters maintained everything was hunky dory until it all went suddenly and unforeseeably wrong.
“We heard variously that this was the fault of the Bank of England, the foreign exchange markets, advisers, Brexit, the snap election, investors, suppliers, the construction industry, the business culture of the Middle East and professional designers of concrete beams.”
The construction firm, who oversaw a number of Government projects, went into compulsory liquidation with debts of £1.5billion, leaving tens of thousands of jobs at risk and a huge deficit in their pension schemes.
Reeves and Field said everything they had seen “points the finger in another direction – to the people who built a giant company on sand in a desperate dash for cash”.
A report compiled by Carillion days before their collapse showed they were well aware of a growing pile of problems.
The presentation said: “The group had become too complex with an overly short-term focus, weak operational risk management and too many distractions outside of our ‘core’.”
It also highlighted “poor planning of effective contract controls and monitoring”, “insufficient understanding of and adherence to contract requirements”, and a “lack of ownership of issues”.
During the hearing, Keith Cochrane, who was chief executive when it went bust, admitted he should have acted sooner before the collapse, but the Scot claimed that all the decisions he took were in Carillion’s best interests.
Former finance director Zafar Khan defended his track record during nine months at the firm.
He said: “I don’t believe I was asleep at the wheel because as soon as I came into the role, we were looking to tackle the issues and the key focus of my time in the role was to bring net debt down.”
The executives denied suggestions Carillion were looking out for shareholders at the expense of employees, having continued to pay dividends while the company were struggling under the weight of a pension deficit last cited at £587million.
Cochrane said cancelling the £50million dividend payment in 2017 would not have had a significant impact on the company’s finances.
Field asked Cochrane how much Khan was paid when he was sacked. Khan was given a 12-month payoff of his full salary, paid out monthly, as was written into his contract.
Field said: “So you sacked him and then you paid him £425,000. Thank you.”
Cochrane later told the committee that he was “truly sorry” for Carillion’s collapse.
He added: “It was the worst possible outcome. This was a business worth fighting for.
“That’s what I sought to do during my time as chief executive.”