Opinion: Enquiry needed into Rok shock

Grant Prior 13 years ago

Rok has gone from the Nation’s Local Builder to the country’s biggest construction collapse in just a few hours.

But a stunned industry is still struggling to understand how the  firm fell from grace so quickly despite the management’s assurances that all was well financially.

Rumours had been circulating since Connaught’s fall in September that Rok could be the next maintenance specialist to run into trouble.

But chief executive Garvis Snook moved quickly to distance his firm from the troubles surrounding Connaught and there was even brave talk of buying a few contracts from the failed firm.

Snook was well practiced by then in soothing city and industry fears following a traumatic summer that saw Rok’s share price plummet following another profit warning.

Accounting problems were discovered at the plumbing division but Snook insisted the troubles were localised and the group enjoyed a healthy order book.

Rok even declared a share dividend and the subsequent months saw a steady stream of good news as it picked up major insurance contracts with Axa and Tesco and repair work across the Scottish Highlands.

But some more cynical rivals were not convinced  about Rok’s financial footing and a series of  announcements added to their fears.

The firm was forced to apologise to departing finance director Ashley Martin who had earlier been wrongly blamed for the plumbing division disaster.

Then PwC was brought in last month to advise on a refinancing deal with the banks. That obviously didn’t work and PwC is now in charge of the company as administrator.

The accountants are now trying to shift the social housing maintenance contracts as quickly as possible with Mears the likeliest buyer.

But yet again trade suppliers will lose out and subcontractors will pay an even bigger price at Rok’s construction business which had an annual turnover of around £250m.

The collapse will be a logistical nightmare for PwC with hundreds of small building jobs hit.

One thing is for sure, it will be the trade suppliers who lose out.

The fall of Connaught is feared to have cost subcontractors more than £100m. That bill could be even higher for Rok.

Those suppliers left with unpaid bills will want to know whether they were spun a line about the firm’s finances.

A full enquiry into the circumstances of Rok’s collapse is the least the industry deserves.

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