Carillion: fat-cat bosses in ‘reward for failure’ row
Up to 30,000 small companies may never be paid for outsourced work
The CEO who presided over Carrillion’s downfall is at the centre of a “reward for failure” row following the revelation that he is still being paid his $660,000 salary despite standing down last July, when the company issued its first shock profit warning.
Up to 30,000 small firms are waiting to see if they’ll ever be paid for outsourced work in the wake of the construction giant’s collapse, but Carillion’s former chief Richard Howson will keep collecting his £55,000 per month salary until October, the Daily Mirror reports. And Howson is not the only former Carillion executive still being paid hundreds of thousands of pounds.
Trade union Unite called it a “classic” case of rewards for failure in which “taxpayers’ money appears to be siphoned off into private boardrooms”, the Daily Mail says.
The 200-year-old construction firm was forced into liquidation on Monday with £900m of debt and a £587m pension deficit - leading to fury about its generous pay and executive bonus packages.
Critics point out that executives changed their bonus policy in 2016 so the company could not demand cash back if the business went bust, The Guardian says. Howson and ex-finance chief Richard Adam made £591,000 and £418,000 respectively in bonuses and long-term incentives last year, adds The Times. Howson could not be reached for comment.
In an editorial entitled “Reaping the consequences of corporate greed”, The Guardian says the Carillion crisis has been looming for years. Whistle-blowers complained of “woeful leadership” and described a firm “surviving hand to mouth, day by day”, City A.M. reports.
Hedge funds made an estimated £300m by betting the company would fail, Metro adds.
Carillion was involved in everything from the HS2 high-speed rail line to military contracts and maintaining hospitals, prisons and schools. Oxfordshire firefighters are on standby today to serve 18,000 school dinners as the collapse of the privatised services firm threatens to leave pupils hungry.
Meanwhile, the fate of Carillion’s 20,000 UK workers is uncertain. From tomorrow, Carillion’s private sector contract workers won’t be paid unless other companies step in to take them on, Sky News reports.
Some critics are also blaming Theresa May’s government for presiding over a “shambles”, the Daily Mail says, after it emerged that ministers awarded Carillion government contracts worth a total of £2bn even after Carillion issued repeated profit warnings, and left the troubled firm unsupervised for three months.
Work has been delayed on a number of Carillion’s 450 contracted public sector projects, including the £335m Royal Liverpool Hospital, the £350m Midland Metropolitan Hospital and the £745m Aberdeen Bypass.