Watchdog MPs slam Carillion restructuring gravy train

Aaron Morby 7 years ago
Share

Carillion shelled out £6.4m to advisers the day before it pleaded for an emergency £10m loan from the Government.

Details revealed of chairman Philip Green's last ditch bid for taxpayer funding
Details revealed of chairman Philip Green's last ditch bid for taxpayer funding

The payments form part of fresh revelations about the last days of the business when Carillion’s chairman mounted a last-gasp bid for a Government bail-out.

In a letter sent to the Cabinet Office seeking funding, chairman Philip Green warned the company would fall into destructive insolvency while a day before a dozen advisers and consultants were paid out.

In the letter Green states: “If  HM Government determines in the near term not to support Carillion, that will lead very rapidly into what is likely be a very disorderly and value destructive insolvency process, with no real ability to manage the widespread loss of employment, operational continuity, the impact on our customers and suppliers, or (in the extreme) the physical safety of Carillion employees and the members of the public they serve.

“Any attempt to manage this process will come with enormous cost to HM Government, far exceeding the costs of continued funding for the
business.”

The letter adds: “It will not be a bailout, and there can be no basis for saying that Carillion – or its shareholders or management – is being rewarded for failure or for past mistakes.”

Green said: “The previous senior management team have all exited the business” and argued “the key beneficiaries of a restructuring will be our employees”.

The Government refused the emergency loan at a meeting with Green on Sunday and Carillion was forced into liquidation the next day.

Chairs of the joint committee probe have blasted the letter as a ransom note and dubbed the restructuring exercise a gravy train for consultants.

Rachel Reeves, Chair of the Business, Energy and Industrial Strategy Committee said: “This 11th hour ransom note lays bare the cynical leadership of the Carillion board. Directors’ management ensured that the costs of failure would be picked up by the taxpayer – either from a bail-out or footing the bill for a desperate clean-up operation.

“Expensive advisers still pocketed millions while workers risked losing jobs and long-suffering suppliers faced financial ruin.”

Frank Field, chair of the Work and Pensions Committe, said: “With the company teetering on the abyss, Mr Green had the cheek to try and get the Government to surrender another £160m of taxpayers’ money. I am not surprised the Government took with a pinch of salt his assurances that all would be reimbursed once he had unscrambled the eggs.

“The most troubling element of this letter is its demands for an immediate £10m from taxpayers, the very next day after Carillion shelled out £6.4m to its illustrious advisers, including the EY restructuring gravy train and half the law firms in the City of London. The smaller suppliers that are the lifeblood of the British economy of course got no such treatment.”

Previously the committee had reported around £3.1m was paid out just before Carillion’s  collapse, but fresh information from the Official Receiver shows that the firm paid out over twice that much, at £6.4m, to a series of advisers.

11th hour Carillion payments to advisers
Advisor name Amount paid (£)
KPMG LLP 78,000
WILLKIE FARR AND GALLAGHER UK LLP 164,016
SACKER & PARTNERS LLP 37,211
MILLS & REEVE 20,621
LAZARD & CO LTD 551,716
FTI CONSULTING LLP 1,018,666
FRESHFIELDS BRUCKHAUS DERINGER LLP 91,165
ERNST & YOUNG LLP 2,508,000
CLIFFORD CHANCE LLP 149,104
PRICEWATERHOUSECOOPERS LLP 276,000
AKIN GUMP LLP 305,549
SLAUGHTER AND MAY 1,196,093
Total 6,396,141

Latest news

Credit insurance saves Billington from ISG hit

Steel specialist puts on extra shifts at its plants to cope with demand
33 mins ago

M&E specialist Dodd doubles profit on retrofit surge

Family-owned Telford specialist deliver record revenue of nearly £250m
28 seconds ago

Go-ahead for 800-home Croydon dual towers

One Lansdowne Road build to rent scheme to cost £260m to build
47 mins ago

Construction inflation set to return raising tender prices

End of 2024 to mark the bottom of present inflationary trough
49 mins ago

Start date for vast Balfour and Costain carbon capture power job

£4bn Teesside project to start construction next year creating 3,000 jobs
17 hours ago

Plans go in to start revamp of North Finchley town centre

Developer Regal unveils first details of Barnet masterplan
47 mins ago

Plan unveiled for 31-storey London Fenchurch Street tower

Demolition work to start in 2026 for new office tower
1 day ago

Vinci Building buys tower cranes for first time

Contractor invests in two WOLFFKRAN all-electric cranes at £138m Sheffield site
1 day ago

30 local firms land United Utilities £500m framework

Minor works deal win for North West civils and M&E specialists
1 day ago

Restructure pays off as Higgins returns to profit

Housing contractor recovers from £25.9m loss last year
1 day ago

Former Heathrow boss joins Mace in board rejig

Firm completes string NED appointments to expanded group board
2 days ago

Planning officers to get powers to bypass committee stage for housing

Rayner reform plan to cut out local council planning committees
2 days ago

National Insurance hike to delay construction recovery

Arcadis paints varied picture with full recovery delayed until 2026
2 days ago

Gratte Bros rides out cost rises with profit increase

M&E specialist warns of further upward pressure on wage costs
2 days ago

Sellar’s 36-storey London City office tower approved

Demolition work to start in 2026 at 60 Gracechurch Street site
4 days ago

Roofers caught using phone lights to work at night

Roofing boss handed suspended prison sentence for lack of edge protection
2 days ago

£380m North West housing framework out for bid

St Helens-based Torus aims to build 9,000 homes by 2029
2 days ago

Historic property magazine to close

Estates Gazette has been in business since 1858
5 days ago

M&S Marble Arch rebuild approved after three-year planning fight

Plans were delayed when Michael Gove backed carbon campaigners
6 days ago

£191m revamp funding approved for London Barbican Centre

Construction to start in 2027 on five-year programme
5 days ago

RED Construction tops £100m turnover

Builder maintains profit margin at 1.7% as business nearly doubles in size
5 days ago

Timber designs shortlisted for roads ‘footbridge of the future’

Three of five designs for National Highways propose timber structures over busy highways
5 days ago

PM pledges to fast-track 150 infrastructure schemes

Fresh promise to speed up planning decisions on infrastructure and house building
6 days ago

Amey FM firm fined after legionella kills prisoner

Court fines company £600,000 for prison upkeep failures
5 days ago

Buyers report boom in commercial work

Construction bucks slowdown in general economy
6 days ago

Plans in for £250m Stockport 8 housing-led scheme

Work to start on phase 1 by the end of next year
6 days ago

Galliford Try tops monthly contracts league

Contract awards slow down in November
6 days ago

Erith explosives set demolition record at Sizewell

Watch blast at former nuclear turbine hall: Video
6 days ago

Vistry to build 950 homes next to Olympic Park

Developer signed for £600m Pudding Mill Lane scheme in East London
6 days ago

Inflatable formwork used for 45m tall cement silo

Ground-breaking dome silo inflated at Tilbury Docks
6 days ago

Contractor services