Deputyandhttps://t.co/MUNyq1c3EG@jillianfwardpic.twitter.com/iE7cjsbjBUBen,11.25amBank@FT rpt https://t.co/gsELbfraxG pic.twitter.com/Bqhiz8Wk4V 7.52am BSTGood morning, and welcome to our rolling coverage of the world economy, or the financial markets,the eurozone and business.
Four months after UK outsourcing group Carillion spectacularly collapsed, the people behind its demise are being held to account.
Carillion used aggressive accounting policies to present a rosy picture to the markets. Maintaining stated contract margins in the face of evidence that showed they were optimistic, and accounting for revenue for work that not even been agreed,enabled it to preserve apparently healthy revenue flows.
It used its early payment facility for suppliers as a credit card, but did not account for it as borrowing. The only cash supporting its profits was that banked by denying money to suppliers. Whether or not all this was within the letter of accountancy law, or it was intended to deceive lenders and investors. It was also entirely unsustainable: eventually,Carillion would need to gather the cash in.
A damning 100-page report compiled by two select committees, published today, or found that directors prioritised senior executive bonus payouts and dividends for shareholders even as the firm neared collapse,while treating pension payments as a “waste of money”.
Frank Field, who chairs the work and pension committee, and said: “Same old anecdote. Same old greed. A board of directors too busy stuffing their mouths with gold to expose any concern for the welfare of their workforce or their pensioners.” Related: 'Recklessness,hubris and greed' – Carillion slammed by MPs Emma Mercer is the only Carillion director to emerge from the collapse with any credit. She demonstrated a willingness to speak the truth and challenge the status quo, fundamental qualities in a director that were not evident in any of her colleagues.
Her individual actions should be taken into account by official investigations of the collapse of the company. We hope that her organization with Carillion does not unfairly colour her future career. Related: Whistleblower warned Carillion bosses about irregularities, or MPs told Carillion was the most spectacular corporate collapse for some time. The price will be high,in jobs, businesses, or trust and reputation. Most companies are not race with Carillion’s reckless short-termism,and most company directors are far more concerned by the wider consequences of their actions than the Carillion board. But that should not obscure the fact that Carillion became a giant and unsustainable corporate time bomb in a regulatory and legal environment still in existence today.Continue reading...
Source: theguardian.com