Originally Posted by
X
Master, mate, you need to be in possession of the full facts.
I know Carillion extremely well indeed on a first hand basis.
I have set up and run Joint Ventures with them, have competed against them in bids, have bought and sold businesses to them, have taken over contracts from them, and have dealt with them when they have taken over contracts from us. I have TUPE transferred staff from them and to them. I have poached their staff and they have poached mine. I have many friends who work for them. My wife also worked directly for Carillion very recently indeed, for many years.
As usual, journalists who do not have a clue are offering simplified reporting and viewpoints which are prejudiced by their own beliefs. Equally, on this very forum, we have had people conveniently cherry picking stuff to add to their already formed world view.
It is true that Carillion's directors have failed, and should not be rewarded for that failure. The 'golden parachutes' awarded for failure are just wrong and should not have been made. If it is true, as has been reported, that the remuneration board changed the bonus rules in 2015, again that should be investigated. Note, though, that nobody on that Board is a Carillion employee. The head of it is the HR Director of Tesco. Why is nobody asking the non-executive directors these questions. They are the ones who have also actually failed because their role is governance and to provide outside perspective.
The vultures at EY are now making millions by running the liquidation. But it was KPMG who signed off the accounts every year, earning hundreds of thousands of pounds. When EY fuck up somebody else's accounts, KPMG will Be the liquidators and earn millions. Why is nobody challenging this cosy and illegal cartel?
The reasons the company went bust are complex, but essentially it boils down to them being too aggressive in how they book cash and profit. They booked profit every year on long term contracts when the actual profit was unclear. I have known this for a fact for over 5 years. This was driven by their demanding shareholders ..... 72% of whom are banks.
Nobody comes out of this well.
Carillion's directors have clearly failed. They then ended up in a Ponzi like scheme where they 'bought' shit new contracts in an attempt to mask underlying long term losses. Their middle management are guilty of being complicit in the whole shambles for many years and taking undeserved bonuses too. Accountants are guilty of overstating cash and profit. Carillion staff are also bonused, they were happy to take the bonuses. Their competitors are guilty of joining the race to the bottom in terms of bidding for work with little or no margin possibility.
The government are acting all pious and surprised. However, two thirds of Carillion's work was with the government. Government contracts are not particularly profitable, but do provide reliable cashflow. PFI and PPP contracts are now weighted firmly in favour of the government, with margins usually in the 2.5 to 3% region, which is not blatant profiteering. The government knew Carillion were in trouble and needed cash, so they aggressively negotiated new and existing contracts in their favour. My wife's public sector customer regularly applied penalties to Carillion, which resulted in the contract being permanently loss making. Her customer said 'we need the money as our budgets have been cut and you're a big enough business. Oh, and by the way, if you don't agree to do this extra work for free, I will just make sure I get it back next month in penalties anyway.' Her customer was shambolic, and wasteful in the way they ran their own business.
Terrible customers, who believe that the company was a magic money tree.
Central government say that they will not bail out a private company for the benefit of shareholders ..... unless its a bank, eh! And it is those banks that ultimately drove the company into liquidation.
The Opposition are jumping onto the bandwagon to make this a case for broader nationalisation, because public services should be delivered by a public sector with a public sector ethos. That's a joke, it was two thirds of Carillion's customers who helped make them bankrupt by being awful customers. Great ethos.
Anybody close has known for at least 5 years that the company was in trouble, including all of the above. But now everybody is acting surprised. Hypocrisy at its best.
incidentally, I have to pull you on your comment about directors stealing people's pensions. Carillion have a huge black hole in their final salary pension schemes (not in any other scheme). In 1996 their final salary pension pot stood at +127%. That is a healthy, well invested surplus. In 1997, chancellor Gordon Brown raided private company pension schemes for about £120 BILLION. They charged a tax levy, changed tax rules and - at the time of the next valuation - Carillion's final salary pension was nearly £1 billion in deficit. They had not changed their investment strategy and their returns were consistent to what they were before. Pension funds are quite well protected from their own companies, but not government. It wasn't the Carillion directors who stole the staff pensions.
My wife is really upset by what has happened, and I suspect I am much closer to it than anyone else on this forum. It is annoying when people spit out opinions when they do not know the facts, so much of the stuff I've seen on TV isn't even credible.
Rant over, and I'm not having a go at you, Master. I won't be getting into any sort of debate about this on the internet, because there is no value in doing so.
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Carillion directors to be investigated
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