Here’s a story that sums up the Carillion debacle. The boss of a major builder was considering a potential recruit who had previously worked at the failed contractor. “No harm in looking,” he thought. The candidate had worked on the Battersea power station project, where Carillion had been involved in building more than 800 flats in the first phase of the redevelopment, called Circus West. What went wrong there, the boss wondered. Everyone knew the job had cost Carillion money, but how?

The candidate on the opposite side of the desk told him that Carillion had bid £500m for the job, but that this was £50m too high for the client. Carillion’s chief executive Richard Howson soon called him to say it would be doing the job for £450m after all, because the client would be giving them £16m in cash up front. The London builder was incredulous. “I don’t understand what they were doing,” he says.

That might have sounded like a tall tale a year ago, but, given what has emerged since Carillion went bust six months ago, it doesn’t seem so ludicrous any more. In early summer last year, everything seemed tickety-boo and then, a year ago this week, Carillion shocked pretty much everyone when it announced an £845m profit warning. At the time it went bust, it seemed unthinkable that a firm with its turnover and its history could go under. Since then, the revelations about the way it did business – the losses it was racking up, the blind optimism about getting money it thought it was owed, the hapless performance of some of its executives before MPs, their “we were as surprised as anyone when it went under” chutzpah and the fact that a £5bn-turnover firm had just £29m left in the bank when it collapsed – mean it’s not just unsurprising that Carillion went under, it’s incredible it survived for so long.

“The most shocking revelation is that a £5bn global company was run by a bunch of incompetents”

Rudi Klein, SEC Group

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