That is how the report from the Work and Pensions and BEIS Committees describes the collapse of Carillion following the completion of its inquiry. The committees conclude that the government has "lacked the decisiveness or bravery” to address the failures in corporate regulation that allowed Carillion to become a “giant and unsustainable corporate time bomb."
Carillion's Board, its non-executive directors and auditors are all slammed in the report, and the key regulators - the Financial Reporting Council (FRC) and the Pensions Regulator (TPR) are described as being "united in their feebleness and timidity."
Carillion left a pension liability of around £2.6 billion. It also owed around £2 billion to suppliers, sub-contractors and other creditors, who, like the pension schemes, will get little back from the liquidation.
Rt Hon Frank Field MP, Chair of the Work and Pensions Committee, says: "Same old story. Same old greed. A board of directors too busy stuffing their mouths with gold to show any concern for the welfare of their workforce or their pensioners. They rightly face investigation of their fitness to run a company again.
"This is a disgraceful example of how much of our capitalism is allowed to operate, waved through by a cosy club of auditors, conflicted at every turn. Government urgently needs to come to Parliament with radical reforms to our creaking system of corporate accountability. British industry is too important to be left in the hands of the likes of the shysters at the top of Carillion."
Rachel Reeves MP, Chair of the BEIS Committee, says: "Carillion’s collapse was a disaster for all those who lost their jobs and the small businesses, contractors and suppliers left fighting for survival.
"The company’s delusional directors drove Carillion off a cliff and then tried to blame everyone but themselves. Their colossal failure as managers meant they effectively pressed the self-destruct button on the company.
"However, the auditors should also be in the dock for this catastrophic crash. They are guilty of failing to tackle the crisis at Carillion, failing to insist the company paint a true picture of its crippling financial problems. The sorry saga of Carillion is further evidence that the Big Four accountancy firms are prioritising their own profits ahead of good governance at the companies they are supposed to be putting under the microscope.
"KPMG, PwC, Deloitte and EY pocket millions of pounds for their lucrative audit work - even when they fail to warn about corporate disasters like Carillion. It is a parasitical relationship which sees the auditors prosper, regardless of what happens to the companies, employees and investors who rely on their scrutiny. The Competition and Markets Authority must now look at the break-up of the Big Four accountancy firms to help increase competition and deal with conflicts of interest.
"The collapse of Carillion exposed terrible failures of regulation. The Government needs to stop dithering and act to ensure regulators are up to the job of intervening before companies fail, rather than trying to pick up the pieces when it is too late."
The report recommends that the Insolvency Service should now "carefully consider" whether Carillion's former directors - Richard Adam, Richard Howson and Philip Green - breached their duties under the Companies Act and should be recommended to the Secretary of State for disqualification.
It also calls on Government to carry out an: “ambitious and wide-ranging set of reforms,” to: “reset our systems of corporate accountability,” and adds: “The mystery is not that it collapsed, but that it lasted so long.”
To read a full summary of the report, click here.
To read the conclusions and recommendations in more detail, click here.
