The UK’s largest union, Unite, has urged a public inquiry into the collapse of Carillion, following a recent dispatches investigation which aired on Channel 4
In the programme senior business analysts compared the Carillion operation to that of a Ponzi Scheme, saying that it was possibly insolvent in 2016 but continued to trade for over a year.
The dispatches investigation also highlighted the ‘aggressive accounting’ practices said to have taken place during Richard Adam’s tenure as Finance Director. Allegedly, accountants who forecast losses on major schemes were instructed to re-work the numbers to show only profitable projects.
The government’s approach to contract awards has also come under scrutiny. In June, Unite was among the many organisations voicing their concern at the government’s decision to award a 12-year contract to outsource the Ministry of Defence’s firefighter service to Capita, despite the company having a financial health score of three out of 10.
Unite Assistant General Secretary Gail Cartmail said: “As information continues to emerge about the collapse of Carillion, the need for a public inquiry grows.
“Thousands of workers have lost their jobs and companies in the supply chain have gone to the wall, though no fault of their own and yet no one has been held responsible.
“Rather than learn from its huge errors which contributed to Carillion’s collapse the government is acting as though it is business as normal. There is a growing concern that the government’s inaction could result in further collapses of outsourcing giants resulting yet again with workers losing their jobs and the taxpayer picking up the tab.”
When Carillion collapsed into liquidation it was employing 19,000 people, with a further 35,000 people employed by its sub-contractors and across its supply chain.
The company went into liquidation with £7bn of liabilities and only £25m in the bank. The cost of closing the company exceeds £50m in fees charged by auditors PwC alone. According to Unite, the taxpayer will have to foot the bill for both the auditors fees and the cost of making thousands of staff redundant.
