The government should not have given construction giant Carillion so much work, according to former UK auditor general Sir John Bourn.
Carillion collapsed into liquidation in January after failing to secure a rescue deal, putting almost 500 public contracts in jeopardy.
In an interview with The Telegraph, Bourn said he was “angry and disappointed” when Carillion failed. Bourn, who was auditor general from 1998 to 2008, said Carillion was subject to “inadequate” government scrutiny.
“You could see that Carillion was in trouble – it was all rather like a Ponzi scheme because it was taking small contracts as a way of keeping the bigger contracts going,” he told the newspaper.
Bourn slammed the government for awarding Carillion eight public sector contracts, worth almost £2bn, after it issued an £845mln profits warning in July 2017.
“I was surprised the government went on giving it contracts – you couldn’t have had a better warning to be careful,” said Sir John. “It wasn’t a good idea to give [this work] to a company in such a dicey position”.
READ: UK parliamentary committee: Carillion collapse exposes flaws in using private companies to deliver services
Carillion held government contracts to build hospitals and other infrastructure as well as to provide services to schools and NHS hospitals.
A Commons select committee warned last month that the collapse of an outsourcing company like Carillion could happen again unless “lessons are learnt about risk and contract management and the strengths and weaknesses” of the sector.