PwC faces MPs over accusations of ‘milking the Carillion cow dry’

Partners from PricewaterhouseCoopers will be questioned by the work and pensions committee on Wednesday about the accounting firm’s role in the collapse of Carillion, with PwC accused of attempting to “milk the Carillion cow dry”.

The committee said the correspondence between the Pensions Regulator and Carillion exposed the regulator’s weak position and the key role played by PwC. Most of the regulator’s negotiations were conducted via PwC, which advised Carillion’s directors on managing their pensions liabilities from 2012 to 2017.

In the autumn of 2017, PwC became advisers to the pension scheme trustees; it was also advising the government on its dealings with Carillion. After the construction firm’s collapse on 15 January, PwC was appointed special manager, tasked with trying to salvage money for the Pension Protection Fund.

The PPF is likely to pick up all but two of Carillion’s 13 pension schemes and has estimated the funding shortfall for the schemes at about £900m. It would cost an estimated £2.6bn for a pension firm to buy out the defined-benefit schemes, which is unlikely to happen.

Frank Field, the chair of the Commons work and pensions committee, said: “PwC had every incentive to milk the Carillion cow dry. Then, when Carillion finally collapsed, PwC adroitly re-emerged as butcher, packaging up joints of the fallen beast to be flogged off.

“For this they are handsomely rewarded by the taxpayer. They claim to be experts in every aspects of company management. They’re certainly expert in ensuring they get their cut at every stage.”

Three partners from PwC will face questions from MPs as part of the joint inquiry by the work and pensions committee and business committee into the collapse of Carillion: Marissa Thomas, head of deals; David Kelly, special manager; and Gavin Stoner, restructuring and pensions.

MPs on the two select committees have already accused the “big four” accountancy firms of “feasting on what was soon to become a carcass”. KPMG, Deloitte, EY and PwC banked £72m for work carried out on Carillion, its pension scheme and its government contracts in the 10 years leading to its failure.

Greg Clark, the business secretary, and Esther McVey, the work and pensions secretary, will also appear before the committees on Wednesday at a separate session.

They will be asked about the lessons from Carillion, especially in relation to the just-announced white paper on defined-benefit pensions and the consultation on corporate governance.

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Field stepped up his criticism of the Pensions Regulator (TPR) for not using its powers effectively with Carillion in forcing it to make higher contributions to its pension schemes.

Field said the regulator’s performance before the joint committees last month gave him “no assurance that the TPR leadership is equipped to bring about the necessary cultural change”.

He added: “It would hardly have scheme sponsors quaking in their boots and it is difficult to imagine TPR emerging victorious from negotiations with a ruthless American private equity firm.”