Carillion Plc., the 200-year-old British construction giant that crashed earlier this month, has left many questions unanswered. Questions are being raised as to the reason behind the failure of the giant even when it was supposed to have funds. The company’s top bosses enjoyed fat pay packets even at a time when it failed to meet its pension liabilities. The company’s inability to make higher pension contributions is being investigated as it continued to pay rich dividends to its top executives. The trustees of the company were not allowed to have access to more information.
Now, Parliament’s Work and Pensions Select Committee has said that the company has attempted to wriggle out pension obligations to pensioners for the last decade. The committee chair, Frank Field, condemned Carillion’s inability to perform its pension obligations while shelling out dividends and handsome pay packets for those at the top. The committee questioned how the company cited cash flow problems for not being able to make higher pension contributions for 2011 and 2013 while paying more than 70 million pounds in dividends to investors for those periods. It said that trustees were kept in dark regarding the company’s finances as the trustees had no power to ask for more information than was already available in the public domain.
The committee published a letter written by Carillion Pension Trustee Limited Chair Robin Ellison which said that the scheme’s deficit may be about 990 million pounds ($1.40 billion) compared to the 587 million pounds figure quoted in an earlier letter.
Earlier, Carillion collapsed as banks denied it lending, triggering Britain’s biggest corporate failure in a decade. This forced the government to step in to guarantee public services provided by the company ranging from school meals to road works which were used to be performed by Carillion earlier.
The Work and Pensions Select Committee will further question Ellison in person in a joint inquiry on Tuesday.
The Work and Pensions and BEIS (Business, Energy and Industrial Strategy) will investigate how a company that auditor KPMG said was a going concern less than a year ago could crash into liquidation with huge liabilities in such a short span of time. The collapse of Carillion swamped with debts and liabilities threatens suppliers, merchants and big banks.