Carillion asked Cabinet Office to persuade PPF to accept £2.6bn pension liabilities

Written by Natalie Tuck
07/06/18

The collapsed construction firm Carillion asked the Cabinet Office to help “persuade” the Pension Protection Fund and The Pensions Regulator to accept its £2.6bn pension liabilities, according to a report by the National Audit Office.

Its report, Investigation into the government’s handling of the collapse of Carillion, noted that Carillion asked for additional support with its financial restructuring.

“It asked the Cabinet Office for support in its negotiations with different stakeholders that would be involved in this restructuring, including helping to persuade the Pension Protection Fund, Pensions Trustees, and the Pensions Regulator to accept the £2.6bn of pensions liabilities,” the report said.

It said that Carillion first asked the government for support when negotiating with the PPF and TPR on 31 December 2017.

In its investigation into Carillion, the Work and Pensions Committee also reported the former finance director Richard Adam believed funding the pension obligations was a “waste of money”, and the pension “contribution holiday” Carillion directors negotiated as they took on yet more borrowing.

Commenting on today’s report, Work and Pensions Committee chair Frank Field said: “This invaluable report adds new weight to what we found: Carillion hoodwinked the government as they did many others who were so naïve as to trust their published accounts. Philip Green, Richard Howson and Richard Adam were desperate to attribute their company’s explosion to some of its more exotic forays overseas.

"But the NAO’s explanations of why common or garden UK public sector construction contracts failed betray extraordinarily negligent planning. Surely they could not have been so incompetent? It is difficult to shake the impression that this was conscious cash-chasing, bugger the long term consequences and bugger the interests of suppliers, workers and pensioners.

“As special managers, with a contract to print money awarded without any competition, PwC will draw £50m for six months’ work. More money for PwC is less money for sub-contractors and the PPF. We have further questions about those payments—and how PwC’s conflicts of interest arising from their long history of work on Carillion are being managed—and have written to PwC and the Official Receiver requesting further information. I am particularly concerned that PwC’s conflicts could jeopardise action against individual directors.”

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