Carillion: two years later "the government has learned nothing" | Business

Carillion: two years later "the government has learned nothing" | Business

The government was accused of not learning any lessons from the collapse of the outsourcing giant Carillion two years ago, when more than 3,000 jobs were lost and 450 public sector projects including hospitals, schools and prisons were thrown into crisis.

The United union said it was shocking that the government “proposed not to do exactly anything” to reform the accounting rules to prevent such a corporate disaster caused by “rampant banned capitalism”.

Gail Cartmail, assistant to the UN secretary general, said that the UK’s accounting and auditing system “clearly is not fit for purpose” and accused the government of not requesting reforms because “it has many friends among major corporations accounting “.

“The collapse of Carillion and other high-profile corporate bankruptcies have led to thousands of workers losing their jobs,” said Cartmail on Wednesday, exactly two years since Carillion collapsed with £ 7 billion in debt on January 15, 2018. ” In all these cases apparently healthy companies suddenly had financial problems and in several cases collapsed.

“The UK’s existing auditing and accounting system for major companies is clearly not fit for purpose and as a result workers suffer from it. Despite this, the government, which has many friends among leading accounting firms, proposes not to do exactly nothing. “

The circumstances of the Carillion crash were examined by the Financial Reporting Council, the National Audit Office and the Official Receiver. However, two years after the devastating collapse, none of them published reports. The FRC has warned that it will take at least another six months before it can publish its results. NAO will issue its verdict on Friday.

Carillion’s death was the UK’s biggest corporate bankruptcy in the past few decades, affecting hundreds of thousands of people across the country:

More than 3000 jobs have been lost in the company and the crash has affected 75,000 people working in its supply chain.

He went bankrupt with debt of £ 7 billion, more than his annual sales of £ 5.2 billion.

The company was working on around 450 public sector projects that have been delayed or that costs have risen. They include: £ 475 million Midland Metropolitan hospital in Sandwell, in the western Midlands; £ 335 million Royal Liverpool hospital: £ 745 million Aberdeen ring road; the Lincoln Eastern ring road for £ 153 million.

The Ministry of Justice was forced to start a £ 4 million business for the maintenance and cleaning of 42 prisons.

About 45% of the company’s revenue in the UK came from public sector projects and the government continued to award contracts for around £ 2 billion despite Carillion issuing two earnings warnings.

The HS2 north-south rail link signed two £ 1.3 billion contracts with Carillion just 21 days after the company issued a profit warning.

It was the largest corporate bankruptcy ever faced by the official receiver, costing the taxpayer over £ 150 million.

Despite this, Carillion’s former bosses left with millions of pounds in wages and bonuses. Richard Howson, who was CEO from 2012 until his resignation after issuing a shock earnings warning in July 2017, earned £ 1.5 million in 2016, including £ 591,000 in bonuses. He continued to receive a £ 660,000 salary until October 2018.

Rachel Reeves, Labor MP who hopes to be re-elected chairman of the commune selection committee for municipalities, said it was unacceptable that two years after the Carillion implosion the public “is still waiting for official investigations to report what went wrong. “.

“The government needs to urgently reform the way businesses operate by strengthening controls over the governance and audit process of these companies,” Reeves told the Guardian. “Ministers must learn lessons from the Carillion disaster so that businesses work in the best interest of the economy in general, not just those of the council.

“The government’s political obsession with outsourcing often results in poorer services, lower wages and heavier costs for the taxpayer. Ministers must end that shortsighted mentality and consider maintaining or restoring services internally “.

Reeves, who dragged Carillion’s former leaders to parliament in 2018, previously said: “The company’s delusional directors took Carillion off a cliff and then tried to blame everyone but themselves. Their colossal failure as manager means who actually pressed the self-destruct button on the company. “

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