‘Responsible must be held to account’

Two of Carillion’s former finance chiefs are to be investigated by the UK’s accounting watchdog for their roles in the firm’s spectacular implosion.

Unite welcomed the move, but said the sheer scale of the scandal, which encompasses the company’s leadership, the government, the pensions regulator and accountancy firm KPMG, necessitates a full public inquiry.

Richard Adam and Zafar Khan were both group finance directors at the failed firm, which collapsed in January putting 30,000 jobs at risk.

The investigation by the Financial Reporting Council (FRC), which is also conducting a separate enquiry into KPMG’s role in the scandal, will look at the pair’s involvement in preparing and approving Carillion’s financial statements from 2014 to 2017.

Adam and King, along with other senior Carillion executives, have previously been grilled by MPs looking into the construction firm’s collapse.

MPs accused Adam of immediately dumping shares after he left the company in early 2017. Adam sold ÂŁ776,000 of shares as soon as he qualified for them following his departure in December 2016.

Khan, who replaced Adam, left the firm just four months before it collapsed with a ÂŁ425,000 pay-off.

‘Aggressively managed’

This month MPs released an internal report commissioned by Carillion’s board in 2017, that stated the firm had “aggressively managed” its balance sheet to give the impression its accounts were healthier.

Carillion’s bosses have also been accused of borrowing money to pay shareholders and executives, even as the firm was heading for the rocks.

Meanwhile it emerged that the government was informed of a plan to retrieve more than £360m from Carillion – helping to shield the public purse from the cost of the firm’s collapse and preventing losses to workers’ pensions – but refused to pressure directors into implementing it.

Along with the FRC, the Financial Conduct Authority and two parliamentary select committees are also investigating why and how Carillion collapsed.

“While Unite welcomes investigations into all those who were responsible for Carillion’s downfall, the sheer numbers of those involved in the scandal means a full public inquiry is necessary to bring all the strands together,” Unite assistant general secretary Gail Cartmail said.

“There was clearly something deeply wrong with the outsourcing business model Carillion was based on and the reckless culture it engendered.

“The government, the pensions regulator, the supposedly independent accountancy firm KPMG and Carillion’s disgraced leadership are all implicated.

“Those who are responsible must be held to account and just as importantly the systemic causes of this disaster must be uncovered and prevented from ever happening again.”