Watchdog MPs slam Carillion restructuring gravy train

Aaron Morby 6 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

Plan rejected for 42-storey tower above historic building

Councillor describes as ludicrous plan to build 300 flats above Georgian mansion
13 mins ago

Ventilation deal could hike product prices for contractors

Watchdogs at CMA launch probe after duct firm acquires rival
22 mins ago

Tide gets go-ahead for London 412 student flats scheme

Volumetric developer secures planning for West Ealing project
53 mins ago

Green light for £75m Friar Gate Goods Yard in Derby

Construction set to start this summer on revamp of historic buildings
35 mins ago

Winners named for £2bn Healthy Homes framework

CHIC reveals line-up of over 40 firms for net zero and building safety works
14 mins ago

Plan lodged for tallest skyscraper outside London

Developer Salboy submits plan for 76-storey Manchester resi tower
23 hours ago

Curo starts £170m race for new homes framework

Bath housing association plans to build up to 300 homes a year
23 hours ago

Gove approves major Cambridge North mixed-use scheme

Government backs controversial scheme of 424 flats and 600,000 sq ft of tech and lab space
23 hours ago

Pontins holiday park to house Sizewell C builders

Suffolk holiday park to house 500 nuclear construction workers
23 hours ago

Adrian Bloor targets 1,000 homes-a-year

Expansion plans after major investment into challenger house building business HarperCrewe
23 hours ago

Housing firm fined £528,000 after cable strike

Maintenance workers given no information on underground services
24 hours ago

Berkeley subbies face six weeks without payments

Introduction of new finance software means payment hiatus for suppliers
2 days ago

Pagabo reveals 56 winners of latest £1.6bn retrofit deal

Decarbonisation Solutions Framework launched: Full list of winners
2 days ago

Go-ahead for £100m Liverpool Love Lane flats

500-flat scheme will be built across four blocks in Vauxhall area of city
2 days ago

Unions win HS2 site access battle at Old Oak Common job

Skanska, Costain, Strabag JV now the last denying unions access to HS2 sites
2 days ago

Contractors jack 1,100t viaduct into place in 13-hour operation

158m-long composite deck structure jacked into place 10-hours ahead of schedule
2 days ago

Wates wins former Daily Mail printworks transformation

British Land advances major cultural venue at London’s Canada Water
3 days ago

Mace poaches Ramboll chief to be Head of Engineering

Martin Feakes will develop civil and structural engineering offer at Mace
3 days ago

Subcontractors form alliance for major civils jobs

Trio of specialists join forces to collaborate and offer Tier 1 contractors a turnkey solution
3 days ago

Fear of supply chain failures boosting collaboration

Procurement survey also reveals project bank account use is rising
3 days ago

Wates sets up business to target 160,000 mouldy social homes

Healthy Homes service will be offered to social landlords across England
3 days ago

Higgins wins £75m Peabody Passive House job

Latest phase of Deptford Landings to start construction
3 days ago

Contractors and unions agree Sizewell C working deal

New deal offers improved sick pay and parental leave over Hinkley Point deal
3 days ago

Competition chiefs win legal fight for more construction raids

High Court rules CMA officials can raid a domestic property as part of investigation
4 days ago

More Osborne companies file administration notices

Three more divisions lodge notices with court
4 days ago

McLaren wins multi-storey urban logistics contract

South London win with British Land is pioneering urban logistics hub
4 days ago

Big social housing schemes at risk over funding uncertainty

Housing associations warn uncertainty over public funding beyond 2026 is curbing new schemes
4 days ago

Kier wins Worcestershire town centre renewal

Firm secures Bromsgrove commercial and cultural hub project
4 days ago

BAM signs Kent school contract at £42m

Sevenoaks school rebuild signed off at £8m more than first estimates
4 days ago

RG Group signs £121m Newcastle rental homes job

Developer Olympian Homes advances 519 flats plan at Pottery Lane site
7 days ago

Contractor services