Carillion Crisis

It will all get repeated when Capita goes..

[denphone]

Exactly as they can dress it up in bright and shiny new clothes but the deep fault lines still remain the same.

[denphone]

An unpublished report, commissioned by the board of the collapsed construction firm Carillion four months before its liquidation, has been released by MPs.

The report, by independent consultants the firm hired, suggested Carillion had "aggressively managed" its balance sheet to make accounts look better.

To help with cashflow, Carillion quadrupled payment terms on its subcontractors from 30 days to four months.

Some of those subcontractors now face bankruptcy.

www.bbc.co.uk/news/business-43275605

https://www.telegraph.co.uk/business...ings-finances/

[denphone]

'Recklessness, hubris and greed' not my words but the words of the select committees.

Carillion collapsed as a result of “recklessness, hubris and greed” among directors who put their own financial rewards ahead of all other concerns, according to an excoriating report into the firm’s demise that spreads the blame between board members, the government, accountants and regulators.

https://www.theguardian.com/business...slammed-by-mps

https://www.theguardian.com/business...-and-its-board

http://www.bbc.co.uk/news/business-44129678

Not just the Carillion bosses.

The two select committees also attacked the big four accounting firms for approving Carillion's accounts despite its spiralling debts.

They said Ernst & Young was paid £10.8m for "six months of failed turnaround advice", while Deloitte received £10m to be Carillion's internal auditor, but was either "unable or unwilling" to identify failings in financial controls, or "too readily ignored them"

They also said KPMG had failed to question Carillion's financial judgements, while PwC was "continuing to gain" as its official receiver "without adequate scrutiny".

Ms Reeves said the competition authorities should consider breaking up the big four accountancy firms "to help increase competition and deal with conflicts of interest".

[Mr K]

Outsourcing, nearly always a bad deal for the tax payer.

[denphone]

Originally Posted by Mr K

Outsourcing, nearly always a bad deal for the tax payer.

But governments now and before keep telling us all how good it is Mr K.

[heero_yuy]

The real problem IMO is those doing the outsourcing contracts don't do the cost - benefit analysis properly so poor deals seem to be the norm.

As for those who should have been keeping tabs on these companies:

Quote from Politics Home:


Rachel Reeves, chair of the Business, Energy and Industry Strategy Committee meanwhile trained her fire on audit firm KPMG, which vetted Carillion’s accounts for almost two decades before its collapse.

She said it and other members of the so-called 'Big Four' group of accounting giants - PwC, Deloitte and EY - should be "in the dock for this catastrophic crash".

Ms Reeves warned: "They are guilty of failing to tackle the crisis at Carillion, failing to insist the company paint a true picture of its crippling financial problems. The sorry saga of Carillion is further evidence that the Big Four accountancy firms are prioritising their own profits ahead of good governance at the companies they are supposed to be putting under the microscope.”

The committee is urging the Government to refer the accounting giants to the Competition and Markets Authority or risk “a crisis of confidence in the audit profession”.

Shocker the financial services industry doing a lousy job and making profit as they fail upwards.

[richard s]

Now we have the East Coast rail-line train operators fiasco... Chris Grayling taken it back into government control.... Privatization seems to have failed here as well...

Public and private in the current state is not working we need to find a third effective way for our essential services and we also need to reduce the power of the financial sector or at the very least have true accountability with real punishments for anti customer performance. The big four accounting companies don't care right now as there is little in the way of real consequences when they act negligently or illegally and until someone's head is on a real block they won't change they will just pass client's around between them.

[heero_yuy]

Quote from the Independent:


Carillion’s collapse will cost taxpayers at least £148m, with the true bill expected to be higher, the public spending watchdog has found.

The National Audit Office said the final cost to the public purse of the company’s collapse could take years to establish.

The NAO found that huge losses revealed by the engineering giant in July 2017 came as a surprise to the Cabinet Office.

That month, the Cabinet Office began contingency planning for the possibility that Carillion – one of the government’s key strategic suppliers – might collapse.

But almost two-thirds of government departments did not provide details on their preferred options for contracts with Carillion in the event that it went bust.

Looks to me like a lot of civil servants deserve a good kick up the backside over this debacle.

But as usual the tax payer picks up the tab.

[denphone]

Originally Posted by heero_yuy

Looks to me like a lot of civil servants deserve a good kick up the backside over this debacle.

But as usual the tax payer picks up the tab.

You can be rest assured there will be more debacles to follow for the taxpayer to pick up the tab for...

[denphone]

FCA investigates allegations of insider trading at Carillion.

The City watchdog has revealed it is investigating allegations of insider trading at the building and services contractor Carillion before its spectacular collapse in January.

https://www.theguardian.com/business...g-at-carillion

[denphone]

More trouble ahead perhaps?

https://www.theguardian.com/business...-to-raise-cash

Shares in the construction firm Kier, which is working on major infrastructure projects such as HS2 and Crossrail, have plunged by a third after it announced an emergency plan to raise £264m to cut its debt pile.

Kier, in a statement to the stock market, said its debt position had become more risky amid greater reluctance among financial institutions to lend to the construction sector.

The outsourcer Interserve has also become the focus of concern about the strength of its finances in recent months.