Carillion: chairman had 'no grip on reality' say MPs
Carillion's chairman was “upbeat” just days before massive profit warning, according to MPs probing the collapse of the company.
In a stinging attack on Philip Green, the chairman of the Parliamentary Work & Pensions Committee, Frank Field MP, said: "Carillion's chair appeared to lack even a tenuous grasp on the reality of the company's situation."
The joint inquiry by the Work & Pensions and Business, Energy and Industrial Strategy (BEIS) Committees have revealed company minutes that "demonstrate what appears to be an extraordinary refusal to accept clear evidence of the firm's rapidly deteriorating financial position".
The minutes show Mr Green, who had been on the board since 2011 and chairman since 2014, expressing his belief that "work continued toward a positive and upbeat announcement for Monday [10 July], focusing on the strength of the business as a compelling and attractive proposition".
Five days later the Wolverhampton-based construction and services company announced the £845m profit warning that marked the beginning of its descent into insolvency.
Mr Field added: "Five days before the profit warning that heralded the firm's public spiral into insolvency, Philip Green stands like the Mayor of Pompeii - smoke billowing from the volcano behind him, lava cascading down the slopes - trumpeting the forthcoming revelries of the village fete.
"It is difficult to believe the chairman of the company was unaware of its position, but equally difficult to comprehend his assessment if he was."
BEIS committee chairman Rachel Reeves MP added: "A good board should be asking difficult questions. By contrast, the Carillion board, when faced with difficult answers, declined to face up to facts and did nothing to address the causes of the company's decline.
"Its chairman, Philip Green's assessment of Carillion as "a compelling and attractive proposition” shows either a woeful lack of leadership or no grip on reality."
The joint committee said financial services group Morgan Stanley has revealed that, along with brokers Stifel, it had withdrawn as sponsors of a planned share issue to raise funds for Carillion in July last year.
The MPs say the letter from Morgan Stanley stated it was "increasingly of the view that Carillion's senior management could neither produce nor deliver an investment proposition that would convince shareholders and new investors to support the potential rights issue."
