Carillion collapsed two years ago today in a tale of stunning corporate greed and mismanagement, enabled by a system obsessed with privatisation and short-term profit.
But the Government has failed to learn the lessons. Nothing has changed and it could happen again. [1/10]
But the Government has failed to learn the lessons. Nothing has changed and it could happen again. [1/10]
When Carillion collapsed, thousands lost their jobs, suppliers went unpaid and large-scale infrastructure projects like hospitals went unfinished.
I co-led the cross-party inquiry into what went so badly wrong at Carillion, and this is what we found: [2/10]
I co-led the cross-party inquiry into what went so badly wrong at Carillion, and this is what we found: [2/10]
Carillion’s collapse was caused by the recklessness, hubris and greed of its directors.
They allowed its debts to spiral out of control, constantly seeking to expand into new markets and make acquisitions even as its problems became more obvious. [3/10]
They allowed its debts to spiral out of control, constantly seeking to expand into new markets and make acquisitions even as its problems became more obvious. [3/10]
Carillion was notorious for paying its suppliers late. Its standard repayment terms were 120 days. Suppliers had to pay to get paid earlier.
Carillion owed its 30,000 suppliers around £2 billion when it collapsed. [4/10]
Carillion owed its 30,000 suppliers around £2 billion when it collapsed. [4/10]
Carillion’s board deliberately chose not to make adequate contributions to its pension schemes.
Its Finance Director for 10 years, Richard Adam, considered them a “waste of money”.
Upon collapse, its pensions liability was £2.6 billion. [5/10]
Its Finance Director for 10 years, Richard Adam, considered them a “waste of money”.
Upon collapse, its pensions liability was £2.6 billion. [5/10]
At the same time, Carillion paid a record dividend of £79 million and huge bonuses just months before it collapsed.
Carillion’s board chose to prioritise lining their own pockets over building a sustainable business. [6/10]
Carillion’s board chose to prioritise lining their own pockets over building a sustainable business. [6/10]
Their recklessness and greed was enabled by an audit industry complicit in a systematic manipulation of Carillion’s accounts that allowed it to paint an imaginary picture of its finances when alarm bells should have been ringing. [7/10]
KPMG was paid £29 million to be Carillion’s auditor for 19 years, and signed off Carillion’s accounts year after year.
As debts and deficits ballooned, it complacently signed off Carillion’s figures without qualification. [8/10]
As debts and deficits ballooned, it complacently signed off Carillion’s figures without qualification. [8/10]
Two years on from Carillion’s collapse, nothing has changed.
The Government has failed to reform auditors, failed to give regulators powers and make them use them, and failed to end its obsession with outsourcing public services. [9/10]
The Government has failed to reform auditors, failed to give regulators powers and make them use them, and failed to end its obsession with outsourcing public services. [9/10]
Disaster happened with Carillion and it will happen again if changes aren’t made NOW. [10/10]
