Carillion: Who's delusional?

Without wishing to absolve the people at the top of responsibility, the co-chairs of the joint committee of MPs looking into Carillion’s collapse were a bit mean with their post-hearing comments.

The MPs’ minds were made up: there were to have been no mitigating circumstances; these people were bad and must be told so

Rachel Reeves and Frank Field dismissed legitimate concerns over the business culture of the Middle East and technical problems on the Royal Liverpool University hospital as the attempts of a management desperate to point the finger of blame elsewhere.

Their statement had the whiff of having been written before they actually listened to what, in particular, Richard Howson and his successor as chief executive Keith Cochrane had to say. The MPs’ minds were made up: there were to have been no mitigating circumstances; these people were bad and must be told so.

Carillion’s travails in the Middle East are not the first time a UK firm has come unstuck in the region. To dismiss Howson’s evidence – which basically said recovering a £200m unpaid bill over there is vastly different to the UK and fraught with difficulty – betrays a lack of understanding.

But people need scapegoats, and here they all were lined up to be pelted with the equivalent of rotten fruit

All seven who appeared before this week’s committee were written off as “delusional characters” – again, a little harsh. People who made bad decisions – and Howson admitted as much – for sure. But delusional? Howson and Cochrane, who had six months to save the firm, fared well under questioning; Zafar Khan, one of the firm’s former finance directors asked to give evidence, less so. His performance visibly incurred the wrath of Reeves, in particular.

But people need scapegoats, and here they all were lined up to be pelted with the equivalent of rotten fruit.

Carillion going bust is still a shock and the financial hits the contractor was taking on jobs were eye-watering. Where were the checks and balances? There didn’t appear to be many, if at all. If one lesson comes out of this, it’s this: chasing turnover, which is what Carillion did, is the fast track to oblivion.