Carillion cracked hospital beams remedial work unfinished

Aaron Morby 6 years ago
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Watchdog MPs probing into the collapse of Carillion have revealed remedial work to cracked beams at the Royal Liverpool Hospital still needs to be completed.

Problems were first uncovered with major structural beams at the Royal Liverpool Hospital in November 2016
Problems were first uncovered with major structural beams at the Royal Liverpool Hospital in November 2016

A bombshell letter from the Hospital Company (Liverpool) was published as MPs grilled the pension regulator and Carillion auditors about the events leading to the group’s collapse.

It discloses that Carillion knew about major structural defects on the new PFI hospital as far back as November 2016, nine months before the July £845m writedown.

During questioning works and pension committee MPs revealed they had been contacted by a whistleblower with evidence that invoices were being bunched and delayed for payment until after annual reporting deadlines.

MPs also noted that the Guardian newspaper had published claims from a former director that Carillion was in serious financial difficulty by the middle of 2016, but major problems were not being disclosed.

During sometimes blistering questioning, KMPG auditor Peter Meehan repeatedly confirmed the auditors had no knowledge of the full extent of Carillion’s problems at the time the 2016 accounts were signed off in February 2017, four months before the writedown.

KPMG also audited The Hospital Company accounts.

The head of the pension regulator also admitted it needed to be “clearer and quicker and tougher” when dealing with firms failing to plug pension funding gaps.

The letter from the director of the hospital reveals that work still needs to be completed on two of the eight beams found to require strengthening.

All work on the hospital is now on hold, following Carillion’s collapse, while negotiations are underway to restart the job.

The director states that the costs of the defects are currently being borne by the beam designers, while liability is established.

Carillion group firm TPS Consult has overall responsibility for the structural design of the works.

The letter adds that design and installation of the relevant floor plates and integral beams was subcontracted to Heyrod Construction, which in turn subcontracted aspects of the structural design work to Freyssinet.

Frank Field MP, Chair of the Commons Work and Pensions Committee, said: “These famous beams are becoming an ever more perfect parable for the whole company.

“The cracks were visible long before the directors or auditors admit, and while they were dutifully added to the litany of factors and organisations to blame for Carillion’s spectacular demise – anyone and anything but the people running it – they were only ever holding up one part of one of Carillion’s thousands of projects.”

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