Government failed to retrieve £364m from Carillion
The Government failed to retrieve more than £360 million from Carillion, ignoring advice from accountants.
A plan presented by the accountants EY would have involved breaking up the Wolverhampton-based firm and selling off the profitable parts.
The firm says that some of the estimated £364m generated could have been put into company pension schemes.
The Cabinet Office, which is responsible for Government contractors, apparently did not pressure Carillion’s directors to accept EY’s proposals, according to reports.
It came as the Official Receiver announced that to date, 8,216 jobs had been saved and 1,458 jobs made redundant through the liquidation.
It means that around 8,000 jobs are still hanging in the balance, including 400 in Wolverhampton.
Two potential scenarios were offered by EY – the break-up plan which would have raised £364m and an involuntary insolvency which would leave little money left over.
A spokesperson for the former directors admitted that they rejected the break-up plan, believing they could still engineer a turnaround by convincing banks to swap some of their debt for stakes in the company.
“Both options were communicated to government, the company’s lenders and pension trustees at the time,” said the former directors’ spokesperson.
The Cabinet Office confirmed it had seen the options presented by EY, but declined to comment on how it responded.
A spokesman said: “Throughout this process, the Government has been clear that its priority is to ensure that public services continue to run properly, and we regularly meet with our strategic suppliers and monitor their financial health.
"Since the collapse of Carillion, our plans have ensured that public services can continue to run as normal.”
Carillion was one of the Government's most important contractors before it collapsed into administration in January with debts of around £1.5bn.
The collapse raised fears about the future of hundreds of major projects, including the Midland Metropolitan Hospital in Smethwick.
The next stage of the probe into Carillion by the Business, Energy and Industrial Strategy Committee and the Work and Pensions Committee is due to take place tomorrow.
