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Calls for public inquiry as Carillion bosses face disqualification

14 Jan 2021

On Monday 15th January 2018, Carillion, the construction and outsourcing conglomerate went bust. So the third anniversary of the downfall has just arrived. Bob Wylie’s book on Carillion - “Bandit Capitalism - Carillion and the collapse of the British State ” - was published last September. It was sponsored by the GMB. Here, Bob writes about some who paid the price for the Carillion catastrophe and others who didn’t.

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Steve Paul remembers clearly how he found out about the Carillion collapse. At the time he was running his plastering and flooring business in the West Midlands.

His company, SDP Floorscreeds Ltd, had big contracts with Carillion for building floors on the £300 million Midland Metropolitan Hospital project, in Birmingham.

On the day, in January 2018, Steve got a call from one of his supervisors on the Metropolitan project. It was about eight in the morning.

“He told me the gates were locked and the men couldn’t get on site. Everything was padlocked. There were security guards. All our materials and plant for the floors were locked inside the gates” Steve said when I interviewed him for the book.

He didn’t know it then, but that phone call foreshadowed financial ruin. His financial ruin.

Carillion was the second part of a double whammy to hit the business.

In the middle of 2017, he’d also been left out by another major construction contractor who didn’t settle an outstanding bill of around £400,000. They put ten were cent down, and then some, but no where near the total.

One of the company directors told Steve they had big London lawyers and they would see him in court if he could afford it. That meant there wasn’t enough money in Floorscreeds Ltd’s bank accounts to save the business when Carillion crashed.

It cost Steve hundreds and hundreds of thousands. Carillion’s downfall bankrupted him.

In the good old days, Steve employed hundreds and had a turnover of well over £10 million. Even by the time of Carillion, Steve had more than 300 workers on the books all over the West Midlands.

His attempts to save his business ended in a nervous breakdown. “We couldn’t pay the men, we couldn’t pay suppliers and we couldn’t pay for the plant. The dominoes came tumbling down.

I’ve taken some hits in business in my time but Carillion put me over the edge. It broke me.” he said.

On Monday 15th January 2018, Carillion, the construction and outsourcing conglomerate went bust.

I phoned Steve last week. He, and his wife Steph, finished up selling the entire business for two pounds - the price of their shares. They hoped that might save some of the jobs and some of the business. It didn’t.

The administrators came after him and Steph for the outstanding company debts after the sale failed.

After nearly 20 years in business almost everything they built has gone.

The nest egg for their retirement - gone. The properties they bought when business was booming - gone. The cars they had through the business - gone. What’s keeping them going is what’s left of their savings and the £70-a-week Steph got on Job Seekers Allowance for a while. In 40 years working she’s never claimed what she still calls ’the dole’.

Steve went to sign on but couldn’t bring himself to do it. He told me “To be honest, if you ask me what happened with Carillion, frankly I’d say it was organised crime. But the big people get away with it. And it’s the small people like us, who pay the price”.

Enter Richard Adam - one of the big people. He was Carillion’s director of finance for ten years. He left in December 2017, a year before Carillion went down. Funnily enough.

On 1st March 2017, the first time he could cash in some of his share options, when the accounts went public, he did just that. That brought in £534,000. Nice one on top his 2016 top line of £1.1m.

The next date he could sell the remainder of his share options was 1st May. So Richard did just that. Again. That raised £242,000 this time. That meant his shares sell off by May Day totalled £776,000.

That was two months before an £845 million hole showed up in Carillion’s books. By the end of 2017 the hole became more than a billion. When asked Adam said everything was fine when he left.

He never saw the crash coming. No-one could he said. If you believe that you’ll believe the Russian poison spies who said they were on holiday in Salisbury so they could see the Cathedral.

When Carillion went bust it had an alleged turnover topping £5 billion and contracts in the pipeline supposedly worth £41 billion.

But when the real numbers were crunched all those lies added up to debts reaching £7 billion and a £2.6 billion deficit in the workers’ pension fund. It’s official that 30,000 subcontractors, like Steve Paul, were owed £2 billion.

The third anniversary of the Carillion collapse was 15th January. It was looking like no-one was ever going to be held accountable because the anniversary was also the deadline for any legal action to be taken against the directors.

Then, out of the blue, the day before the deadline, the Insolvency Service, which handled the Carillion liquidation, announced that the Government had launched legal proceedings to disqualify 8 former Carillion directors, on the grounds that they were “unfit to manage a company”.

The action includes Richard Adam, and the former chief executives, Richard Howson and Keith Cochrane. All the directors could face bans of between 2 and 15 years if the court action is successful.

The STUC, GMB and Unite have been big supporters of “Bandit Capitalism”. So when the news about the legal action dropped I phoned Roz Foyer, the STUC’s General Secretary. She welcomed the move but added:

“The three years of silence on Carillion were beginning to look like yet another business cover-up with no-one held to account for the Carrillion catastrophe. The Establishment have a way of circling the wagons in times of crisis. For once, at some point in the future, the relentless looting of government contracts by big business, combined with fiddling the books to cover that up, might face a possible legal penalty”.

So make no mistake the STUC is continuing its public pressure for a public inquiry. She told me “ At a public inquiry people who appear have to give evidence on oath. That’s the only chance we have of getting to the truth of what really happened at Carillion.”

By the time Roz was in full conference mode she added:

“As well as the directors who looted the company for tens of millions facing potential sanctions, the auditors who permanently looked the other way when the balance sheets became financial fiction, the Regulators who collaborated in the cover-ups and the Government ministers who did nothing about all of that, still have to answer for Carillion. That’s the road to the truth for those who have paid the price for all the greed, the lies and the injustice.”

“Bandit Capitalism - Carillion and the corruption of the British State” by Bob Wylie is a must-read for every trade unionist.

You can get it at: birlinn.co.uk/product/bandit-capitalism

Bob Wylie

 
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