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Former directors face questioning over Carillion’s collapse

The Insolvency Service is to start interviewing former directors of the collapsed government contractor Carillion as it steps up an investigation into one of the biggest corporate failures in recent British history.

Nearly seven months after Carillion entered liquidation, the government agency said it had finished transferring 278 contracts to new suppliers as part of a painstaking process designed to ensure smooth continuity of public services.

Officials are now expected to devote more time to an investigation into why the company failed, including a closer examination of the role played by former directors, who were branded “delusional” by MPs earlier this year.

The service has the power to disqualify people from serving as company directors for up to 15 years if it finds them guilty of misconduct and can pass information to criminal enforcement bodies in the most serious cases.

Earlier this year, the business secretary, Greg Clark, called on the government agency, which has 1,700 staff, to fast-track its investigation.

But while officials are understood to have been in contact with directors, who were accused of “recklessness, hubris and greed” in a report by MPs, they are yet to be interviewed.

The government’s official receiver, Dave Chapman, is expected to start the interview process in the coming weeks following the completion of the transfer of public and private sector contracts.

In a statement, the Insolvency Service said Chapman had “wide-ranging powers to obtain information, material and explanations”.

The inquiry will run alongside two parallel investigations into Carillion’s failure, which is likely to cost the government at least £150m due to the expense of hiring a team from the accountancy company PricewaterhouseCoopers to help manage its liquidation.

The Financial Conduct Authority is looking into allegations of insider trading, while the Financial Reporting Council (FRC) is examining the role played by its auditor, KPMG, and the former finance directors Zafar Khan and Richard Adam.

The Insolvency Service is turning its attention to the directors after completing the “trading phase” of the liquidation, which involved finding new companies to take on contracts for public services such as cleaning hospitals, serving school dinners, and road and rail projects.

A further 429 jobs have been rescued, taking the number saved since Carillion’s collapse to 13,945 – more than three-quarters of the company’s pre-liquidation workforce.

The number of redundancies has reached 2,787, while 1,272 have retired or found work elsewhere, the Insolvency Service said.

A further 240, mainly in Carillion’s former head office in Wolverhampton, have been retained by the Insolvency Service to help wind down its remaining activities.

Chapman said: “Carillion is the largest ever trading liquidation in the UK.

“The continued uninterrupted delivery of essential public service since the company’s collapse in January reflects the significant effort put in by its employees, supported by my team and those employed by the special managers [PwC].”

He said the Insolvency Service was still overseeing the transition of “limited” services to some suppliers and would also work with suppliers who have continued to provide goods and services during the liquidation to make sure they get paid.

“My investigation into the cause of the company’s failure, including the conduct of its directors, is also under way,” he said.

Carillion’s failure in January led to widespread recriminations, with former directors, regulators and the government all facing criticism over a company that managed huge construction projects and provided government services.

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