Carillion bosses were fantasists chasing pot of gold, MPs say

Top executives at Carillion were “fantasists” who assumed the company would receive fees that might not be paid, according to MPs. In the latest in a series of critical statements, a joint parliamentary select committee investigating the collapse of the construction firm also accused Carillion’s former leadership of making a “litany of excuses” for the demise of the construction group.

The comments came as the joint inquiry being conducted by the work and pensions committee – in conjunction with the business, energy and industrial strategy select committee – published conflicting accounts of Carillion’s corporate dispute with Msheireb Properties, a Qatari customer that Carillion directors have accused of being a significant cause of the company’s collapse in January.

In previous evidence, the former Carillion chief executive Richard Howson – who was sacked after a profit warning last July but kept on by the firm as an executive – said he felt like a “bailiff” while trying to collect about £200m owed for Carillion’s work on a project to redevelop downtown Doha.

For their part, the Qataris have accused Howson of “misleading” the joint committee, arguing that they believe the UK company “owed Msheireb Properties a similar amount of money”.

Frank Field, chair of the work and pensions committee, said: “This extraordinary exchange reinforces the impression that the upper reaches of Carillion were stocked with fantasists. It takes a special kind of optimism – that of a man kept on after his sacking to keep up morale – to classify money one hopes to earn in the future, on a challenging project, as money ‘owed’ to you. He cannot tell the difference between money he’d like to be paid, he wishes would be paid, and money that is actually owed to him.”

He added: “The likes of non-executive directors and auditors are there to guide the company – and its books – back down to earth. In the case of Carillion it was, unfortunately, a crash landing.”

Correspondence published by the committees illustrates the extent of the breakdown in the relationship between the two companies.

Howson had previously told the committee that an accounting provision taken against the Qatar contract in June 2017 had been triggered when Msheireb had “elected to appoint a third-party contractor to complete the works, which we disagreed with, at our cost”.

Msheireb wrote to MPs and stated that the switch occurred when it became “objectively clear that Carillion was unable to complete the works, and was not paying its subcontractors” and the Qataris had “little option but to hire a new contractor”, at cost to Msheireb.

Rachel Reeves, chair of the business, energy and industrial strategy select committee, said: “The Carillion directors’ litany of excuses for the collapse of the company is fast unravelling. While spiralling debt problems and failing contracts signalled the alarm to almost everyone but Carillion’s directors and auditors, their former chief executive was jet-setting off to Qatar to chase a pot of gold that may never have existed.

“Once again Carillion’s directors appear to have shut their eyes and ears to the real problems at the company and failed dismally to take meaningful action to avert its tragic collapse.”

The exchanges emerged as another select committee inquiry into Carillion heard further evidence from former executives on Tuesday.

The former finance director Emma Mercer, who had been named in Carillion board minutes released on Monday as the person who exposed the group’s problems, told the a joint hearing by the public accounts committee and the public administration and constitutional affairs committee that she didn’t consider that her intervention classified her as a “whistleblower”.

Before she was promoted to the firm’s top finance role, and just six weeks after returning to the UK from a post in Canada, Mercer had raised questions last spring over the company’s accounting practices. Carillion folded in January with just £29m in cash on its balance sheet.