The Guardian/Rob Davies : Ex-Carillion director viewed pension fund as 'waste of money'

The Guardian

Carillion
Ex-Carillion director viewed pension fund as 'waste of money'

Comment revealed in meeting minutes as MPs criticise Pensions Regulator and KPMG

Rob Davies @ByRobDavies

Thu 22 Feb 2018 11.33 GMT
Last modified on Thu 22 Feb 2018 22.00 GMT

Shares
72
Graffiti at the site of the Royal Liverpool hospital, which was being built by Carillion
Graffiti at the site of the Royal Liverpool hospital, which was being built by Carillion. Photograph: Pat Hurst/PA

Carillion’s former finance director considered putting cash into the firm’s pension deficit a “waste of money”, according to the minutes of a meeting written by the pension scheme trustees.

The meeting was raised as MPs voiced concerns about Carillion’s attitude to pensions during a parliamentary evidence session in which the Pensions Regulator and accountancy firm KPMG, which audited the firm’s accounts, faced stinging criticism.

The regulator said it was investigating whether it could force Carillion bosses to hand back millions of pounds in bonuses to compensate nearly 30,000 pensioners, whose payouts are likely to be cut by up to 15% due to the company’s failure.

But it came under fire for a perceived lack of action to force Carillion to pay enough money into the schemes.
Quick guide
All you need to know about Carillion

As MPs questioned officials from the regulator, the work and pensions committee chair, Frank Field, referred to a meeting between trustees and the regulator in 2013, the minutes of which indicate that trustees thought the finance director at the time, Richard Adam, considered pension payments a “waste of money”.

Three witnesses from the regulator said they had not been at the meeting.

The regulator’s director of case management, Mike Birch, said it later threatened to impose increased contributions on Carillion, prompting an increase in payments of £85m spread over 15 years.

Documents released by MPs earlier in the inquiry showed trustees believed that far more, an extra £30m a year, was necessary to fund the scheme, which has a deficit estimated at nearly £1bn.

Field said directors instead chose to pay “mega dividends” and were boasting to the City about doing so.

He said: “They were shovelling money out to themselves, they were shovelling it to shareholders, why didn’t you get them to shovel it to pensioners?”
Q&A
What is a pensions deficit?

The regulator’s chief executive, Lesley Titcomb, who faced ridicule for failing to remember key figures, said the organisation should in hindsight have done more to extract higher pension contributions from Carillion.

Titcomb, who took the job in 2015 after the period in question, said: “We would not have continued so long in that negotiation situation,” she said. “We need to be clearer, quicker and tougher. We will change further.”

    I wouldn’t trust you to audit what’s in my fridge
    Peter Kyle MP

KPMG also came under fire for signing off the 2016 accounts just a few months before Carillion announced £845m of writedowns and issued a profit warning.

The Labour MP Peter Kyle said: “I wouldn’t trust you to audit what’s in my fridge.”

The business committee chair, Rachel Reeves MP, referred to the Guardian’s interview this week with a former Carillion executive, who said financial problems were apparent in mid-2016.

She said: “Investors seemed to know, people who worked for the company seemed to know, the only people who didn’t see what was happening were those who were paid to: the directors and the auditors of the company.”

Speaking after the evidence session, Field said auditors and regulators were “mere spectators – commentators at best, certainly not referees – at the mercy of reckless and self-interested directors”.

Reeves said the auditor’s work appeared to be a “colossal waste of time and money, fit only to provide false assurance to investors, workers and the public”.

Peter Meehan, a KPMG partner, said his team had done “the best we could”, insisting most of Carillion’s problems emerged after he signed off the company’s 2016 accounts in March last year.

He also cast doubt on a claim by Carillion’s former chief executive Richard Howson that Qatari firm Msheireb Properties had owed the company £200m, a claim the Gulf property firm also denies.

Meehan added that KPMG, which received more than £29m in fees from Carillion over a decade, warned directors they were at the “more optimistic” range when assessing the value of their contracts.

Separately, Unite raised concerns about “missing” pension payments it said had been deducted from members’ pay packets before Carillion’s collapse but had not reached the retirement scheme.

“We need to know what has happened to these payments, possibly involving more than £1m,” said the trade union’s national officer for health, Colenzo Jarrett-Thorpe.

“At present, they appear to have mysteriously disappeared into the financial abyss.”
Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk
Since you’re here …

… we have a small favour to ask. More people are reading the Guardian than ever but advertising revenues across the media are falling fast. And unlike many news organisations, we haven’t put up a paywall – we want to keep our journalism as open as we can. So you can see why we need to ask for your help. The Guardian’s independent, investigative journalism takes a lot of time, money and hard work to produce. But we do it because we believe our perspective matters – because it might well be your perspective, too.

    I appreciate there not being a paywall: it is more democratic for the media to be available for all and not a commodity to be purchased by a few. I’m happy to make a contribution so others with less means still have access to information.
    Thomasine F-R.

If everyone who reads our reporting, who likes it, helps fund it, our future would be much more secure. For as little as £1, you can support the Guardian – and it only takes a minute. Thank you.
Become a supporter
Make a contribution
Paypal and credit card
Topics

    Carillion

    Pensions Industry
    Frank Field
    Construction industry
    House of Commons
    Corporate governance
    news

    Share on LinkedIn
    Share on Pinterest
    Share on Google+

more on this story

    Carillion job losses rise above 1,000
    4d
    Carillion job losses rise above 1,000
    Carillion shareholders considered suing after profit warning
    4d
    Carillion shareholders considered suing after profit warning
    Carillion: 11,800 wait to learn their fate as 4,400 more jobs are saved
    12 Feb 2018
    271
    Carillion: 11,800 wait to learn their fate as 4,400 more jobs are saved
    Carillion links put fracking firm’s scheme in doubt
    10 Feb 2018
    596
    Carillion links put fracking firm’s scheme in doubt

        Another 1,200 Carillion workers are told they will keep their jobs
        8 Feb 2018
        Another 1,200 Carillion workers are told they will keep their jobs
        Carillion executives accused of giving misleading evidence to MPs
        7 Feb 2018
        Carillion executives accused of giving misleading evidence to MPs
        Highlights from the Carillion directors' evidence to MPs
        6 Feb 2018
        Highlights from the Carillion directors' evidence to MPs
        Carillion's ex-bosses face MPs: questions they could answer
        6 Feb 2018
        6
        Carillion's ex-bosses face MPs: questions they could answer

Most viewed

    Money
    Property
    Pensions
    Savings
    Borrowing
    Careers

back to top

    become a supporter
    make a contribution
    securedrop
    ask for help

    advertise with us
    work for us
    contact us
    complaints & corrections

    terms & conditions
    privacy policy
    cookie policy
    digital newspaper archive

    all topics
    all contributors
    Facebook
    Twitter

© 2018 Guardian News and Media Limited or its affiliated companies. All rights reserved.