Carillion-style collapse could happen again, says committee of MPs
‘Same old story. Same old greed. A board of directors too busy stuffing their mouths with gold to show any concern for the welfare of their workforce or their pensioners…This is a disgraceful example of how much of our capitalism is allowed to operate, waved through by a cosy club of auditors, conflicted at every turn. Government urgently needs to come to Parliament with radical reforms to our creaking system of corporate accountability. British industry is too important to be left in the hands of the likes of the shysters at the top of Carillion.’
Acquisitive company directors. ‘Aggressive accounting’. A ‘parasitical relationship’ between the company and its auditors*. All flourishing within a feeble, timid and ineffective regulatory system.
It sounds like a plot outline for a mini TV series, perhaps called The Toads of Property after a lithograph by George Grosz produced in 1922. It shows ‘fat cat capitalists’ scooping up their winnings while unemployed workers look on.
Carillion’s collapse wasn’t just a company failure, the full report says. It was also ‘a failure of a system of corporate accountability which too often leaves those responsible at the top – and the ever-present firms that surround them – as winners, while everyone else loses out.’
Carillion ‘became a giant and unsustainable corporate time bomb in a regulatory and legal environment still in existence today,’ the report says,
Successive governments are responsible for this useless regulatory framework. Successive governments – and the report makes this clear – have ‘nurtured a business environment which made a collapse like Carillion’s almost inevitable’.
The MPs on the two committees have a stark warning:
‘Carillion could happen again, and soon’ unless the Government stops prevaricating and puts in place ‘an ambitious and wide-ranging set of reforms that reset our systems of corporate accountability in the long-term public interest’.
Whether this happens in uncertain. We were promised a crackdown on corporate greed after the financial crisis. But as far as many companies are concerned it’s business as usual. It’s an environment where ‘shysters’ can flourish.
All this matters. Carillion provided support services to schools, hospitals and other public organisations. Essential services are at risk when companies contracted to operate them run into difficulties. Yesterday, the East Coast Mainline. Today, a National Audit Office report into NHS England’s management of the primary care support services contract with Capita found, among other criticisms, that ‘Failure to deliver key aspects of the end-to-end service, delivered by Capita and other organisations, impacted primary care services and, potentially, put patients at risk of serious harm.’ And tomorrow…
*KMPG, PwC, Deliotte and Ernst and Young