Newsletter
Workers stand outside a Carillion construction site in central London
Image: Workers stand outside a Carillion construction site in central London. REUTERS/Simon Dawson

452 More Jobs to Go in Carillion Collapse

by -
Image: Workers stand outside a Carillion construction site in central London. REUTERS/Simon Dawson

A further 452 people have lost their jobs at the collapsed outsourcer Carillion, on top of the 377 redundancies announced on Friday last week.

The fresh round of job cuts cover a broad range of roles linked to private and public sector contracts, and back-office functions. The redundancies are part of a wider review of Carillion’s contracts after it went into liquidation on 15 January after rescue talks with its creditors and the UK government broke down.

Carillion Trying to “wriggle Out of its Pensions Obligations”

They come as Frank Field, chairman of the government’s World and Pensions Committee, accusing Carillion of “trying to wriggle out of its obligations to pensioners” while paying out tens of millions of pounds in dividends to shareholders, as well as “handsome” salaries for its bosses.

Carillion’s liquidation left £900m in unpaid debt, a £590m pension deficit and hundreds of millions of pounds of unfinished public contracts.

About 28,000 members of Carillion’s 13 pension schemes face cuts to their retirement benefits.

Field said: “It’s clear that Carillion has been trying to wriggle out of its obligations to its pensioners for the last 10 years.

“The purported cash flow problems did, of course, not prevent them shelling out dividends and handsome pay packets for those at the top.

“This culminated in negotiating deficit contributions away entirely last autumn to enable more borrowing. Remarkably, this was endorsed by the trustees and the Pensions Regulator.”

He added that “once again” the regulator had questions to answer: “When 10 years later the company collapses with £29m in the bank and £2bn in pension liabilities, it doesn’t look good for them,” he said.

Rehana Azam, national secretary of the GMB trade union, said: “The more we see, the more it appears that the workers are paying the price for the failures of corporate bosses and government ministers.

“Thousands of Carillion workers still don’t know what will happen to them as their pay, terms and conditions hang in the balance – and worse, the prospect of their pensions being raided.

“The system that has allowed this to happen is broken and it must change. The Government needs to get on with it – this mess needs sorting out, and it’s a mess that’s lies directly at their door.”

The Financial Reporting Council, an independent regulator, launched an investigation into Carillion’s auditor, KPMG, under the Audit Enforcement Procedure last week.

Carillion Auditor Under Investigation

The probe will check whether KPMG breached any relevant requirements including the “ethical and technical” standards auditors must uphold.

The investigation will cover 2014 to 2016, and additional audit work carried out during 2017.

The investigation into KPMG is the third inquiry into accounting and management practices at Carillion.

The Financial Conduct Authority is probing financial statements Carillion issued before a surprise profit warning last July.

Greg Clark, the business secretary, asked the government’s Insolvency Service to fast-track an investigation into the conduct of Carillion’s directors.

The FRC can issue unlimited fines on accounting firms if it establishes wrongdoing.

A KPMG spokesman said: “As we have already commented, we believe that we conducted our role as Carillion’s auditor appropriately and responsibly.

“Transparency and accountability are vital in building public trust in audit. We believe it is important that regulators acting in the public interest review the audit work related to high-profile cases such as Carillion. We will cooperate fully with the FRC’s investigation.”

Note: The opinions expressed in this article are the author's own and do not necessarily reflect the view of Alvexo on the matter.