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Britain asks for whom the bell tolls at Carillion

Tens of thousands of jobs in the UK and abroad may be lost following the news that Carillion is to go into liquidation.
Tens of thousands of jobs in the UK and abroad may be lost following the news that Carillion is to go into liquidation. ANDY RAIN

BOSSES at British construction and services giant Carillion face an investigation into a "shameful” bid to protect their bonuses before the firm went bust.

Carillion collapsed on Monday when banks refused to lend it any more money, putting hundreds of major projects in Britain and overseas in doubt and crashing one of the government's most important suppliers.

The multinational's collapse threatens to turn into a major corporate and government scandal.

The British Government warned directors of the firm, which handled hundreds of public contracts, they would be hit with "severe penalties” if found guilty of misconduct in securing some $A7 billion in handouts last year.

The bonuses were branded "exorbitant” in the Commons - one former cabinet minister likened the situation to a "British Enron”, and Labour leader Jeremy Corbyn said the collapse was a "watershed moment” for privatisation.

The firm provided meals and cleaning services to almost 900 schools; delivered maintenance and facility management services to hospitals with almost 12,000 beds, catering for 19,000 meals a day; built road, rail and hospital projects; maintained 50,000 homes on military bases; and was building prisons and other major construction projects worth hundreds of millions of dollars.

As the fallout spread, government ministers were adamant fault lay squarely with the firm's management and said taxpayers would avoid significant extra costs, despite stepping in to ensure Carillion-provided public services continued.

But a slew of inquiries are expected to pick through not only Carillion's downfall, but the actions of ministers who handed the firm 450 contracts in recent years.

After Carillion failed, having racked up debts and liabilities worth $A2.6 billion, MPs heard how bosses tweaked rules in the firm's 2016 annual report to make it harder for investors to claw back bonuses if the company hit trouble.

Previously the firm had the right to reduce bonuses not yet paid. But after the 2016 report, so-called "claw back” provisions could only be applied if financial results had "been misstated” or the participant was "guilty of gross misconduct”.

A few months later, an accounting crisis wiped more than $A1 billion off the firm's share value.

Labour MP Emma Reynolds's constituency has 400 of the 20,000 UK jobs that are at risk.

She branded the bonuses "exorbitant” while workers' pensions were at risk, creditors were set to get nothing and the public was destined to lose services and facilities.

- INM

Topics:  bonuses carillion clawback provisions collapse construction & services jeremy corbyn scandal uk watershed for privatisation



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