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Carillion directors to be questioned by MPs over contractor's collapse

MPs will question how a company that auditor KPMG said was a going concern less than a year ago could crash
Carillion's demise left several public sector contracts in doubt

Carillion's PLC (LON:CLLN) former directors will be questioned by MPs to explain what led to the collapse of the construction and outsourcing firm.

The company went into liquidation last week after failing to secure a rescue deal in talks with lenders and the government.

A series of profit warnings and large debts led to Carillion’s demise, putting several of its contracts with the government in doubt. Contracts included the construction of schools, roads and the HS2 rail line.

READ: Carillion collapse confirmed as firm takes steps to enter compulsory liquidation

Two committees of lawmakers have called on Carillion’s former chief executive Richard Howson, who left after a profit warning in July, interim chief executive Keith Cochrane and chairman Philip Green, to give evidence.

A joint inquiry by the Work and Pensions and Business, Energy and Industrial Strategy (BEIS) will first take evidence on January 30 from accountancy watchdog, the Financial Reporting Council, about KPMG’s audit of the company.

READ: Carillion debacle - Six lessons investors can draw from the construction contractor's collapse

The committees will question how a company that auditor KPMG said was a going concern less than a year ago could crash.

At the same session, they will probe the trustees of the company’s retirement scheme, which is expected to leave the Pension Protection Fund with £900mln of liabilities.

MPs will then move onto the directors at another session on 6 February.  

“Another day, another company goes bust hot on the heels of a clean bill of health from a ‘big four’ financial services firm,” said Work and Pensions Select Committee chair, Frank Field.

“The particularly nasty twist in this now grimly familiar tale is the mountain of debt and giant pension deficit this public services contractor leaves in the wreckage of its collapse – with an accompanying massive hit to the public purse.

“It must also be time now for the auditors who cosily signed off this disaster-in-the-making as a ‘going concern’ less than a year ago to begin to account for themselves.”

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January 29 2019
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