POLITICS
16/01/2018 12:31 GMT | Updated 16/01/2018 13:08 GMT

Carillion Collapse: Business Secretary Greg Clark Demands Fast-Track Investigation Into Directors

'Any evidence of misconduct will be taken very seriously.'

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Business Secretary Greg Clark

Business Secretary Greg Clark has demanded the Insolvency Service fast-track the investigation into the role Carillion directors played in the mega-contractor’s collapse. 

The minister has written to the regulator and called on Official Receiver investigators to broaden their probe to include former directors. 

Carillion, which had public sector contracts worth £1.7bn, went into liquidation on Monday. 

Clark’s letter comes after it emerged the firm’s former director Richard Howson is still receiving a hefty £600,000 payout despite Carillion’s finances spiralling out of control on his watch. 

He said: “It is important we quickly get the full picture of the events which caused Carillion to enter liquidation, which is why I have asked the Insolvency Service to fast-track and broaden the scope of the Official Receiver’s investigation.

“In particular, I have asked that the investigation looks not only at the conduct of the directors at the point of its insolvency, but also of any individuals who were previously directors. Any evidence of misconduct will be taken very seriously.”

Howson pocketed £1.5 million in salary, bonuses and pension payments during 2016 and, as part of his departure deal,Carillion agreed to keep paying him a £660,000 salary and £28,000 in benefits until October.

Former finance chief Zafar Khan, who left Carillion in September, will receive £425,000 in base salary for 12 months.

Interim chief executive Keith Cochrane, meanwhile, will be paid his £750,000 salary until July, despite leaving the company in February.

Meanwhile in the House of Commons, Shadow Chancellor John McDonnell accused the Government of being “too close” to Carillion, handing the failing firm public sector contracts despite profits warnings.

McDonnell accused Chancellor Philip Hammond of “colluding” with Carillion to “buoy up an obviously failing company”.

The Labour MP said: “We are asking questions now about when it was obvious this company was failing and what the Treasury role was. 

“I put it no stronger than this. At this stage there are real suspicions the government was too close to this company and too wedded to its privatisation role.

“We need full transparency of the meetings and discussions that took place between government ministers, civil servants and representatives of Carillion.

“When there were loud and clear worrying signs about Carillion, why instead of intervening did the Treasury ministers collude in the strategy of dip feeding more contacts to Carillion to buoy up an obviously failing company?”

Ministers have previously said contracts awarded after the profits warning were joint ventures and therefore “low risk”. 

Liz Truss, Chief Secretary to the Treasury, told McDonnell it was “regrettable” what was happening to Carillion. 

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Chief Secretary to the Treasury Liz Truss' department was accused of being "too close" to Carillion, but she hit back at Labour

She pointed out, however, that Labour-run Leeds City Council, was prepared to hand Carillion a £100m contract for roadworks barely a week ago. 

“We are making sure that those people employed by Carillion have the support form Job Centres,” she said.

She added: “It would be comply wrong for a company to get itself in this state to be bailed out by the state - that is what we are not doing.” 

Outsourcing and construction giant Carillion - which employs 20,000 British people - issued its third profits warning last year. 

It has public sector or public/private partnership contracts worth a staggering £1.7bn and ministers were so worried about the implications an emergency COBRA meeting was called on Monday so they could discuss the crisis.

The group’s massive portfolio included providing school dinners, cleaning and catering at NHS hospitals, building HS2 and maintaining 50,000 army base homes for the Ministry of Defence, but it had been struggling under £900m of debt and a £587m pension deficit.