MPs Launch inquiry into Carillion’s collapse

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Sang Nkhwazi

Sang is a Patent & Trade Marks Representative & Director of Franks & Co Mancunium Ltd, a firm of European Patent & Trade Marks Attorneys based in Cheadle, Stockport. The firm advises on the protection and enforcement of Intellectual Property Rights and assists with the procedures involved in obtaining protection for inventions, trade marks, designs and artistic works. You can contact him on 0161 820 2891 or email
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Carillion, Britain’s second biggest construction company has gone into Compulsory Liquidation, with the official Receiver appointed Liquidator. Today Parliament’s Pensions and Business Committees announced the launch of a joint inquiry into the company’s demise.
Thousands of smaller firms relied on Carillion’s employment, and the company was involved in several major projects such as the HS2 high-speed rail line, as well as concessions managing various schools and prisons. Besides being the second biggest supplier of maintenance services to Network Rail, it also maintained 50,000 homes for the Ministry of Defence.
The Kier Group, a competitor to Carillion who were also in a joint venture partnership with the troubled company has now taken over Carillion’s work on HS2 and smart motorways traffic management projects. Kier confirmed it is now in a 50/50 joint venture with Eiffage (a French construction company), and that around 200 Carillion employees, including apprentices, have been offered jobs, to ensure work continues smoothly with no disruption to HS2.

But there has been a significant fallout from Carillion’s collapse.

Carillion‘s liquidation has left behind a £900m debt pile, and a £590m pension deficit. That’s before you consider the hundreds of millions of pounds worth of unfinished public contracts, and thousands of people who have lost their jobs.

The ‘big four’ accountancy practice KPMG believes it will be investigated by the Financial Reporting Council for its role in the collapse of the giant infrastructure firm, according to Melanie Richards, KPMG’s UK deputy chair. In 2016 KPMG certified that Carillion was on a sound financial footing.
Some of the UK’s popular investment funds, including infrastructure investment trusts that invest in private finance initiative (PFI) projects have also experienced sharp share price falls following the collapse. The large British investment company HICL Infrastructure Company and the £1.2 billion FTSE 250 investment company John Laing Infrastructure Fund have seen sharp share price falls.

HICL and John Laing Infrastructure have since reassured investors with plans to replace Carillion on the affected projects.

There has also been repeated calls for Carillion’s bosses to be investigated after it was reported that many of the company’s senior executives received more than generous pay packages despite Carillion’s profit warnings. Former chief executive Richard Howson is said to have pocketed £1.5m in 2016 (which included a £122K cash bonus and £231k in pension contributions).

Over the years, Carillion has absorbed businesses such as Alfred McAlpine, Mowlem and Wimpey, to grow into a giant with 20,000 employees in the UK (the company employed 43,000 staff worldwide.). It also has a significant international business presence, including supplying the Canadian government and being involved in a large construction project in Qatar related to the 2022 FIFA World Cup. Domestically, Carillion was involved in three large UK public sector construction projects (construction of the £350m Midland Metropolitan Hospital in Sandwell, the £335m Royal Liverpool Hospital, and the £745m Aberdeen bypass).