Carillion knew of pension risk for six years

CARILLION bosses were warned about the damage spiralling debts and huge dividends were doing to the construction giant’s pension fund as far back as 2012, it has emerged.

Advisers told pension trustees six years ago that executives were prioritising hefty pay-outs to shareholders over filling the widening gap in the fund, documents show.

Robin Ellison, chairman of Carillion pension scheme trustees, told MPs last week he had repeatedly asked in vain for more cash for the scheme.

The revelations will heap pressure on Carillion bosses including former chief executive Richard Howson, 49, who will be hauled in front of MPs this morning to face questions about the firm’s collapse.

Carillion went bust last month with a deficit of £990m in its 28,500-member pension funds, and owing around £3bn. It had only £29m cash in the bank. The black hole in its pension fund is likely to cost the Pension Protection Fund, a lifeboat funded by other pension schemes, around £900m.

Yesterday Parliament’s Work and Pensions Committee, who will grill Carillion bosses, published reports from corporate finance experts Gazelle, which advised the trustees of the pension scheme. They said Carillion chose to pay dividends rather than plugging the black hole in the pension fund. Carillion paid £46.6m towards plugging its pension deficit in 2016 and £47.4m in 2015, accounts show. It handed shareholders £79.3m in 2016 and £78.5m in 2015. In a report this year, Gazelle said Carillion could pay around £21m extra into the pot each year.

Frank Field, chairman of the committee, said last night ‘the directors of this company trampled over the rights of their tens of thousands of pension scheme members’.