Carillion investors were ‘fleeing for the hills’ in the run-up to company’s collapse, MP says

INVESTORS IN Carillion were “fleeing for the hills” after spotting that the construction giant was heading for disaster, it has been revealed, as the number of workers who have lost their jobs as a result of its collapse has topped 1,000.

Evidence to a Parliamentary inquiry into the company’s collapse last month showed that one leading investor was considering suing Carillion, and believe management should be investigated.

Auditors KPMG will be questioned on Thursday by the Business and Work and Pensions select committees and asked why Carillion’s accounts were signed off.

Frank Field, chairman of the Work and Pensions Committee, said there was a disconnect between what Carillion directors told MPs earlier this month - that all was sunny, until problems with a contract in Qatar hit them “out of the blue”.

The MP said: “Their stewardship had, they proudly told us, been adjudged ‘best in class’ by their friends at KPMG.

“On the other hand, investors were fleeing for the hills, and it appears those who looked closest ran fastest.”

Rachel Reeves, who chairs the Business Committee, said: “Investors spotted that Carillion was heading for disaster and fled.

“The company had unsustainably high levels of debt, weak cashgeneration and was saddled with a widening pensions deficit.

“It’s a tragedy for those who have lost their jobs and the suppliers left struggling for survival that Carillion directors ignored these issues.

“Carillion’s annual reports were worthless as a guide to the true financial health of the company. The fact that it was impossible to get a true sense of the assets, liabilities and cash generation of the business raises serious questions about Carillion’s corporate governance.

“KMPG will have to explain why they signed-off on accounts which appeared to bear so little relation to reality.”

The number of Carillion workers who have been made redundant now totals 1,141, after news that a further 152 former employees are being made redundant this week. The Official Receiver said that 7,610 jobs have been saved, including 942 following agreements over the past week to buy contracts held by Carillion.