Carillion chiefs tried to cut a deal to dodge fines for collapse of firm

BOSSES at collapsed builder Carillion tried to cut a deal to protect themselves from fines for wrongdoing, officials have found.

Executives at the government contractor – thought to be interim chief executive Keith Cochrane

(pictured left) and chairman Philip Green (right) – asked for immunity for the firm from fines or penalties by regulators for actions it took before July 2017, says the National Audit Office (NAO).

They made the request to the Government at the end of December 2017, three days before the City watchdog Financial Conduct Authority announced a probe into the company’s stock market announcements before July 2017. On July 10 last year, Carillion stunned markets by announcing major problems, raising questions about why it hadn’t disclosed them sooner. It collapsed five months later, owing around £3bn.

The request for immunity is revealed in an NAO report published today. It was listed in a table detailing requests made by Carillion, between December 31, 2017 and January 31, 2018. Under ‘other support’ it says: ‘Protection from the imposition of fined or penalties by regulators for actions taken by the company before July 2017.’ It is understood the wording of the request sought assurances over potential fines against the company from any potential investigations. It is believed directors were concerned hefty fines might put restructuring at risk. It is understood the Government would not consider such a request.

Bosses have repeatedly defended their handling of the firm, which had more than 420 government contracts and was helping build high-speed rail line HS2 as well as schools, hospitals and roads.

They have been accused of putting payouts ahead of pensions and manipulating accounts to make it look in better health.

Immunity was among a string of requests Carillion made of the Government as the firm fought for its survival at the turn of the year, the NAO report shows.

Bosses also wanted a £160m loan, a £63m tax waiver, assistance getting out of troublesome Middle East contracts, and help negotiating with the Pension Protection Fund.

But the Government denied the bailout, opting instead to let the company fall into compulsory liquidation. It believed this would cause less trouble and avoid setting a precedent. The request for immunity was withdrawn by January 8.

When it collapsed on January 15, Carillion owed more than £5bn, with a pension black hole of around £1bn. It had only £29m cash in the bank and employed around 20,000 UK workers.

Since then, 2,340 have been made redundant while 11,739 people have found new work. The rest are still employed by Carillion or have left.

Many of the 30,000 suppliers are expected to get back a fraction of the £2bn thought to be owed.

Carillion was struggling to bring in cash and was facing particularly heavy losses on public finance initiative contracts. These included £91m on building roads in Aberdeen.

As problems mounted, on average Carillion was paying almost one-third of its invoices more than 60 days later, the NAO report says.