Tuesday 18 December 2018

Carillion chiefs admit failures as they face down MPs

Former boss Keith Cochrane is among a string of executives being grilled by MPs.

Keith Cochrane answering questions at a joint hearing of the Commons Business, Energy and Industrial Strategy Committee and the Work and Pensions Committee (PA)
Keith Cochrane answering questions at a joint hearing of the Commons Business, Energy and Industrial Strategy Committee and the Work and Pensions Committee (PA)

By Kalyeena Makortoff and Ravender Sembhy, Press Association City Staff

The former head of defunct construction giant Carillion has admitted he should have acted sooner before its collapse, while the firm’s finance chief denied being “asleep at the wheel”.

Former boss Keith Cochrane, who is among a string of executives being grilled by MPs, claimed all the decisions he took were in the best interests of the company.

But he added: “Clearly the business did have issues – undoubtedly. And clearly, do I wish we had done something about it sooner? Absolutely. I recognise that.

“I can assure you that all the decisions I took in seeking to do the best thing for the business at that juncture.”

The appearance of Carillion directors, including former finance chief Zafar Khan, comes just weeks after the outsourcing and construction giant collapsed in mid-January.

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Keith Cochrane, left, Emma Mercer and Zafar Khan answering questions at a joint hearing at Portcullis House

Carillion was struggling under nearly £900 million of debt and last year reported a £587 million pension deficit when it fell into liquidation.

When pressed about his responsibilities, Mr Cochrane added: “From my perspective as non-executive director during this period of time, the role of the board was to challenge on the basis of information that was provided from management, that is what we sought to do.”

Mr Khan, meanwhile, denied being “asleep at the wheel” and expressed his surprise over the firm’s liquidation.

He said that Carillion was grappling with mounting debt, significantly underperforming contracts and tough construction markets in the UK.

Despite the precarious position the company found itself in, Mr Khan insisted he “did everything” he could have done.

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Zafar Khan answering questions at a joint hearing of the Commons Business, Energy and Industrial Strategy Committee and the Work and Pensions Committee at Portcullis House in London

“No, I don’t believe I was asleep at the wheel because as soon as I came into the role, we were looking to tackle the issues and the key focus of my time in the role was to bring net debt down.”

He added: “I believe I did everything that I could have done, essentially.”

When pushed by MPs on the Business and Pensions Committees, he added that he did not expect the company to collapse.

“I was surprised at the outcome that eventually came to pass,” Mr Khan said.

The executives brushed off suggestions that Carillion was looking out for shareholders at the expense of employees, having continued to pay dividends while the company was struggling under the weight of a hefty pension deficit last cited at £587 million.

But Mr Cochrane said cancelling the £50 million dividend payment in 2017 would not have had a significant impact on the company’s finances.

“I don’t think you can say definitively that it would have changed the outlook, but could it have helped? Possibly – I think I would have to recognise that.

“Did it fundamentally change the position of the pension fund? I don’t believe so.”

Carillion’s schemes are being transferred to the public Pension Protection Fund (PPF), which means eligible staff are likely to receive just a portion of their promised pensions.

The former finance director went on to pin the company’s collapse on issues including Brexit, saying it compounded the difficulties in replacing a number of contracts that were coming to a close.

“We had some contracts that we were preferred bidders for that continued to drift out to the right because of the Brexit-related uncertainty and that was amplified by the general election.”

He added: “To my mind (it) had an impact on our ability to replace contracts that were coming off.”

Press Association

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