Carillion’s former chairman Philip Green had only a “tenuous grasp” on the crisis in the construction firm’s finances, and was working towards an “upbeat announcement” to the City just five days before unveiling a £845m writedown, board minutes of the collapsed group reveal.
The board also rejected advice from its brokers that the company would be unable to raise emergency funds, describing their pessimistic view as “not credible” and then hiring alternative advisers.
The details are contained within the company’s board minutes, which were released on Wednesday by a joint select committee investigating the construction group’s collapse in January.
The business, energy and industrial strategy (BEIS) committee, along with the work and pensions committee, have been publishing extracts of the official Carillion corporate record each day this week.
Frank Field, the chair of the work and pensions committee, said: “Carillion’s chair appeared to lack even a tenuous grasp on the reality of the company’s situation. Five days before the profit warning that heralded the firm’s public spiral into insolvency, Philip Green stands like the mayor of Pompeii – smoke billowing from the volcano behind him, lava cascading down the slopes – trumpeting the forthcoming revelries of the village fete. It is difficult to believe the chairman of the company was unaware of its position, but equally difficult to comprehend his assessment if he was.”
Rachel Reeves MP, the chair of the BEIS committee, added: “Philip Green’s assessment of Carillion as ‘a compelling and attractive proposition’ shows either a woeful lack of leadership or no grip on reality.”
The minutes of the board meeting of 5 July 2017 record Green, who had been chairman since 2014, stating that the company should continue to work “toward a positive and upbeat announcement for Monday [10 July], focusing on the strength of the business as a compelling and attractive proposition, and mentioning the self-help and disposal position”. Five days later, Carillion announced the £845m profit warning that marked the beginning of the company’s death spiral.
The meeting was also partly attended by Peter Moorhouse of the investment bank Morgan Stanley, which was an adviser to Carillion. He told the meeting that the bank was “not able to underwrite the proposed equity issue” and had withdrawn as sponsors.
The Carillion directors rejected his view, the minutes show, concluding that it had “discussed the rationale given by Mr Moorhouse, reflecting that it was not credible”.
Green did not return phone calls.