Easy ride for miscreants

GREG Clark’s announcement of a ‘fast-track’ Insolvency Service probe into the collapse of Carillion and its current and former directors should be treated with contempt.

Carillion chairman Philip Green can resume his search for honours, former chief executive Richard Howson can retreat to his Swiss chalet and serial non-executive director and former Tony Blair acolyte Dame Sally Morgan can look for the next job. There is little to fear.

We have been here before. after the outcry over the collapse of BHS, then Business Secretary Sajid Javid announced a similar ‘fasttrack’ inquiry by the Insolvency Service on May 3, 2016. Since then the world has moved on. Former BHS proprietor and namesake Sir Philip Green made good on the pension fund. Dominic Chappell has had his first days in court and been found guilty of failing to provide the Pensions Regulator with timely information. and the new Qatari owners of BHS are making an international success of the brand on the web.

That is more than can be said about the snail-like response of the Insolvency Service. The last heard from it was a guarded letter to Frank Field MP in February 2017 informing his committee that the issues were complex, the volume of evidence great and it planned to be in a position to pursue proceedings against former directors earlier than april 2019.

In other words, the 11,000 former BHS employees, its suppliers, retirees and everyone else connected to the company will have waited up to three years to see justice done, if at all.

What is equally frustrating is that the work of the Insolvency Service is so opaque. In the more complex Carillion failure, which reaches deep into government and involves a byzantine collection of joint ventures and a complicated supply chain, all those involved deserve proper answers quickly.

a judge-led probe, with directors required to give evidence in public and under oath, would be ideal. one thinks back to the late lord Justice Bingham’s inquiry into the collapse of BCCI in 1992 which was completed and published within a year.

as for the Financial Reporting Council probe into KPMG and the accountants working for Carillion, there can be no hope for a definitive or speedy response.

Hedge funds and short traders could see that Carillion was racing towards the buffers by careful reading of the accounts and monitoring of the construction media.

But the audit report gave no clues. If HBOS is any guide, however, KPMG will sail magnificently on with partners collecting average salaries of £722,000.

not bad money for a lousy job.

GKN alert

Too often pension scheme members are the last thing on the minds of those involved in takeover battles. How attentive was the board of Carillion as it swallowed up construction firms Wimpey, Mowlem and alfred Mcalpine and three years ago had an unsuccessful tilt at Balfour Beatty?

So it is fascinating that the pension fund trustees are rippling their muscles as quoted predator Melrose, private equity group Carlyle and activists Elliott Partners put the engineer Gkn under siege.

The GKN pension fund trustees note that after a cash injection of £250m into the pension fund in the last year, the retirement schemes are still in deficit to the tune of £1.1bn or potentially £1.8bn depending on how the computations are done. Indeed, with 32,337 members the GKN schemes are larger than BHS and Carillion.

not surprisingly, given the recent history of firms seeking to ditch pension funds, making sure the covenant is strong enough and the pension scheme properly funded is a key piece of any takeover. as the trustees point out, they are significant stakeholders and if the company were to be reshaped (by doing the splits) or bought they need to be part of the deal and have a say in the strategic future.

as far as the predators are concerned pension liabilities are a poison pill.

Obama legacy

FORMER president Barack obama’s war on British Petroleum, as he deliberately called it after the Deepwater Horizon explosion in 2010, is still costing UK savers and pensioners dearly.

BP has announced that it is setting aside a further £1.2bn to cover environmental damage claims, bringing the total cost of the incident to a whopping £45bn.

no one ever suggested that obama should be banned from these shores.