“A Rotten Corporate Culture”

The Finance Director refused to make adequate contributions to the company pension scheme, saying they were “a waste of money”.  He then left and sold £¾m worth of shares before anyone else realised the company was in trouble.

The Chief Executive was said to have “little understanding of the basic failings of governance”, but still got a £¼m bonus in 2017, not long before the company went down.

The Chairman oversaw the calamity.. up until 2016, he was a corporate responsibility adviser to the government, despite the Pensions Ombudsman warning the government about him.

The Head of Internal Audit did not turn up to the key Audit Committee meeting where an £845m write-down on its contracts was agreed – he might have raised a point about the viability of the business.  He told the  Select Committee of MPs that he didn’t feel he had to go to every Audit Committee – his role was to advise the board on risk management and financial control.

One MP at the televised Select Committee told the external audit partner: “I would not hire you to do an audit of the contents of my fridge, because when I read it, I would not know what was actually in my fridge or not”

Last week’s 100-page report by MPs summarised it as a story of “recklessness, hubris and greed”.

What was left was a £2.6bn hole in the pension fund, unpaid suppliers, staff transferred to other companies, or retained with a very uncertain future, or made redundant.

This was Carillion, the outsourcing contractor and construction company that collapsed on January 15th this year.

Another example of bad corporate culture undermining governance and risk management.

 

Story sources: The Financial Times, www.parliament.uk, www.theaccountant-online.com

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