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Inquiry MPs demand more details from Carillion bosses

By Simon Penfold | Business | Published:

MPs probing the collapse of Carillion have fired a barrage of questions at the company's directors and a 'litany' of organisations said to be involved in the failure of the Wolverhampton-based construction and services giant.

That includes the Hospital Company set up to build the Midland Metropolitan Hospital at Smethwick– one of the construction contracts said to have driven losses at Carillion and helping bring about its downfall.

Giving evidence to a joint inquiry by the Work & Pensions and Business, Energy & Industrial Strategy select committees, former Carillion boss Richard Howson blamed a building services design for problems at the Midland Met.

The joint committee has written to the Hospital Company – now 90% owned by Oldbury-based development family the Richardsons – asking who was responsible for the design, what delays did it cause, did Carillion cover the costs, what impact it had on Carillion and whether another contractor was expected to complete the hospital.

The MPs are asking for a response by next Wednesday.

Meanwhile they are also asking for a 'significant' number of Carillion's internal documents to be supplied by the Official Receiver, including the contracts review that sparked last summer's profit warning, committee papers and minutes and "former CFO Zafar Khan's presentation to the Carillion board which he told us 'spooked' the board and led to his removal".

The joint committee has also written to the directors and former directors for more detail "particularly where it appeared to contradict other evidence" during their four-hour grilling last week.

Richard Howson, for example, is asked for more detail about the flawed structural beams discovered as work neared completion at the Royal Liverpool Hospital, as well as his dealings on an unpaid Qatar contract. He is also asked how much he was paid for his continuing work in Qatar after he was removed as chief executive.

Former finance chief Zafar Khan has been asked to clarify the terms of his departure and whether a non-disclosure agreement was attached to it.

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Former chairman Philip Green has been asked about the 'surprise' deterioration in the company's cash flow shown in the September 2017 presentation that Zafar Khan stated had 'spooked' the board and led to his dismissal

In addition, a "litany of organisations", including Qatar contractors Msheireb, Slaughter and May, Lazard and Morgan Stanley have been contacted to ask about their involvement in Carillion's demise.

Meanwhile the Insolvency Service handling the liquidation of the company has said it is making a priority of paying redundancy owed to Carillion workers who have lost their jobs.

Nearly 1,000 have been made redundant so far, although nearly 6,700 have now been secured by new contractors.

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In a statement from the Insolvency Service, a spokesperson said: "All employees of the group will be eligible to make a claim for redundancy, including those transferring to new suppliers.

"We have established a specialist team spanning both the Redundancy Payments Service in the Insolvency Service and the company’s HR department to process these payments as quickly as possible. You should expect receive the information you need to submit your claim within seven days of being made redundant or transferring to a new employer.

"As a result of the systems we have established to prioritise these payments we are aiming to pay your claim quicker than our agreed 14 day target."

Simon Penfold

By Simon Penfold
Business Editor - @SPenfold_star

Business Editor based at the Express & Star's head office in Wolverhampton, looking for stories big & small.

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