Grayling quizzed over Carillion collapse

The respective chairmen of the Work and Pensions and the Business, Energy and Industrial Strategy committees have written to Secretary of State for Transport Chris Grayling regarding the collapse of Carillion and the appointment of professional services company Ernst & Young (EY).

In the letter, they ask Grayling whether or not he was aware that EY was carrying out due diligence checks on Carillion’s financial standing for HS2 while simultaneously advising the nowfailed contractor on its finances.

They ask if he considers it a conflict of interest, what steps (if any) were taken to mitigate that, when EY’s work for HS2 started, when it was completed, and whether it was competitively tendered for.

They also claim that EY billed HS2 £197,001 for 2017 financial tests, of which “approximately £29,000 was attributable to Carillion’s role in consortium bids in which it was involved”.

Grayling is also asked to explain what the due diligence tests were, how Carillion performed against them, whether they were solely dependent on published information, whether he is “satisfied that £29,000 of due diligence was proportionate to the size of the contracts and Carillion’s financial circumstances”, and if the tests were repeated following Carillion’s subsequent profit warnings.

The chairmen say that Ernst & Young billed Carillion more than £13 million for restructuring work between July 2017 and January 2018, of which £10.8m was paid, including £2.5m on the last working day before the company collapsed.