‘A story of recklessness, hubris and greed’: committees' verdict on Carillion

‘A story of recklessness, hubris and greed’: committees' verdict on Carillion
A damning 100-page report, jointly published by the Work and Pensions and Business, Energy & Industrial Strategy (BEIS) committees, has accused Carillion’s board of ‘recklessness, hubris and greed’, holding them ultimately ‘responsible and culpable’ for the firm’s failure. Sarah Schütte, of Schütte Consulting Limited—a bespoke legal consultancy firm for the construction industry—warns that Carillion’s demise highlights the ‘desperate need for a big shake up in the way in which contracts are awarded’ in the public sector, while Gayle Monk, senior associate at Anthony Collins, warns of the dangers of ‘tick box’ thinking in the procurement process.

The report was commissioned in the wake of Carillion’s catastrophic demise earlier this year, leaving an estimated 2,000 people jobless and a pension liability of £2.6bn. The firm also owed around £2bn to its 30,000 suppliers, sub-contractors and other short-term creditors.The report also notes that Carillion’s collapse has ‘uncertain consequences’ for public service provision. The government has already committed £150m of taxpayers’ money to keeping essential services running. The firm’s collapse has left a ‘trail of chaos felt at all levels of society’, according to Schütte.

The report, jointly published by the Work and Pensions and Business, Energy & Industrial Strategy (BEIS) committees, has been highly critical of the both board and the failed system of ‘checks and balances’ which contributed to Carillion’s collapse. It produced the following findings:

Directors

Singled out were the former directors, Richard Adam, Richard Howson and Philip Green, who were accused of fostering a business model based on a ‘relentless dash for cash, driven by acquisitions, rising debt, expansion into new markets and exploitation of suppliers’.

It recommends that, during its forthcoming investigation, the Insolvency Service closely examines whether the directors breached their duties under the 

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