Mark Whitehead 16 May 2018

'Recklessness and greed' at heart of Carillion collapse say MPs

MPs have condemned the demise of outsourcing construction company Carillion as 'a story of recklessness, hubris and greed'.

In a scorching report, two House of Commons committees say the company's board presided over a 'rotten corporate culture', and was to blame for its collapse in January with debts of £1.5bn.

The multi-national had extensive contracts with public sector organisations including schools and local councils which were left to find alternative provision.

The report by the work and pensions committee and the business, energy and industrial strategy committee calls for the big four audit firms to be broken up after they 'waved though' the indebted firm's accounts.

They attack the Government for lacking 'decisiveness and bravery' in tackling corporate regulation failures and call for Carillion's directors to be banned from other company boards.

In their 100-page report, the MPs say the company's collapse exposed systemic flaws in corporate Britain and showed regulators were toothless.

They warn that 'Carillion could happen again, and soon.'

Rachel Reeves, chair of the business committee, today accused Carillion's directors of a 'relentless dash for cash' by taking on low-margin contracts which would not make money.

A Cabinet Office spokeswoman said: 'We have recently announced a number of measures to support government suppliers - strengthening our commitment to prompt payment; protecting staff, businesses and small suppliers from irresponsible directors.

'We welcome the report from the joint select committee and will respond fully in due course.'

Read our feature exploring if there is a crisis in local government outsourcing.

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