The MPs committee which grilled Carillion’s former directors earlier this week have described its board as “delusional”, and published the firm’s final business plan.
The joint Business, Energy and Industrial Strategy and Work and Pensions Committee said the contractor had been in a “desperate dash for cash”.
Frank Field MP and Rachel Reeves MP, co-chairs of the committee, said they listened to “a series of delusional characters [who] maintained that everything was hunky dory until it all went suddenly and unforeseeably wrong.
“We heard variously that this was the fault of the Bank of England, the foreign exchange markets, advisers, Brexit, the snap election, investors, suppliers, the construction industry, the business culture of the Middle East and professional designers of concrete beams. Everything we have seen points the fingers in another direction – to the people who built a giant company on sand in a desperate dash for cash.”
The “recovery plan” had been presented days before the company was forced into liquidation on 15 January 2018.
It sets out the management’s take on what was wrong with how the company had operated. It appears that Philip Green, who appeared before the MPs, was to continue his tenure as chair of the company regardless of this analysis.
The business plan said that “the group had become too complex with an overly short-term focus, weak operational risk management and too many distractions outside of our ‘core’”.
Other concerns highlighted by the document included: “insufficient understanding of, and adherence to, contract requirements”; “ineffective change control”; “poor planning and lack of effective contract controls”; “portfolio not balanced”; and “no focus on contract demobilisations”.
The company listed its net working capital at -£834m by the end of 2017, and was not forecasting positive working capital until 2021.
The MPs noted that there was “scant mention” of Carillion’s pension schemes, which are now estimated to carry a £990m deficit.
