Carillion executives ‘deluded’ over £10m loan request to Government
Former Carillion executives expressed surprise that the Government would not agree to a £10 million loan to stave off liquidation.
Officials of collapsed construction giant Carillion have been accused of being “delusional” over a request to the Government for financial support to help stave off liquidation.
Former executives told MPs they believed a rescue plan drawn up last month would have been successful if the Government had matched a banking loan of £10 million.
It seems delusional that you would assume the Government would use taxpayers' money to prop you up Meg Hillier
Former chief executive Keith Cochrane and ex-chairman Philip Green both said they were surprised that the Government would not agree to the loan.
“We believed it was a logical case,” Mr Cochrane told a joint meeting of the Public Accounts and Public Administration and Constitutional Affairs committees.
“I felt confident that we would get Government support. I am still perplexed that we did not receive it. I was very, very disappointed because for me, it was the logical, rational decision to make.
“We were not looking for a bailout. This was a short-term loan to help us facilitate a restructuring plan.”
Mr Green said he was optimistic that a recovery plan could succeed, right up until the company went into liquidation last month, and he expressed “deep disappointment and surprise” at the Government’s response.
“We believed passionately in the business plan. We believed it was a business capable of making cash. Liquidation was the worst outcome for all stakeholders, including the Government.”
Meg Hillier, who chairs the Public Accounts Committee told them: “We have heard this belief that the Government should have bailed you out, or provided a loan. It seems delusional that you would assume the Government would use taxpayers’ money to prop you up.”
New information published earlier on Tuesday by the Work and Pensions and Business Select committees revealed that Emma Mercer was raising concerns about the accounts she found just six weeks into her job last year as Carillion’s financial director of construction services.
Mrs Mercer’s concerns triggered a review of contracts, although the board’s initial decision to have an independent element was later reconsidered.
Frank Field, who chairs the Work and Pensions Committee, said: “Emma Mercer took just six weeks to spot and pull the thread that began the entire company unravelling.
“That the next chief financial officer had to go through whistleblowing procedures to get her concerns about accounting irregularities taken seriously by the Carillion board is extraordinary.
“While our witnesses have been reticent in oral testimony, these minutes begin to reveal the true picture of a company falling apart at the seams in full view of the board and their auditors.”
Rachel Reeves, who chairs the Business, Energy and Industrial Strategy Select Committee, said: “Carillion directors say they couldn’t foresee what investors and company staff could – that spiralling debt problems and failing contracts were destined to sink the company.
“These board minutes point to a very different scenario – Emma Mercer was sounding the alarm but none of the Carillion directors were willing to wake up and listen.”
The collapse of Carillion has so far led to 1,371 job losses among former employees since the company went into liquidation last month.