Carillion bosses 'delusional' to have expected £20m taxpayer bailout, say MPs

‘Economically logical’ outcome was for the Government to have provided financial support for the construction company, says former interim CEO

Former interim chief executive Keith Cochrane said he was surprised that the Government did not agree to lend Carillion money prior to its collapse (PA)

Carillion’s former bosses were “delusional” to think that taxpayers would bail the company out right up until its collapse last month, the chair of an influential committee of MPs has said.

Speaking on Tuesday, Carillion’s former interim chief executive, Keith Cochrane, insisted he was “still somewhat perplexed” that the Government did not offer support in the final moments before the construction giant entered liquidation.

“I was very, very disappointed,” Mr Cochrane told MPs on the Public Accounts Committee. “I was surprised, yes, because for me it was not the rational, logical decision to make.”

He said that the company’s board had managed to convince the banks to lend the company £10m if the Government did the same, a few days before Carillion went into liquidation on 14 January, leaving behind a mountain of debt and hundreds of public-sector contracts in turmoil.

He added that if the company had been able to show that it was making progress on its restructuring, the Government would have lent the company a further £10m the following week with the banks providing the same.

Committee chair Meg Hillier continually probed Mr Cochrane and former Carillion chairman Philip Green as to how realistic it was to expect taxpayer funding in the circumstances.

“It seems, and you might have picked up the mood around the table, delusional that you would assume or believe that Government would use taxpayers’ money to prop you up at that point,” said Ms Hillier.

Mr Cochrane said he thought it was the “economically logical” outcome for the Government to have provided financial support.

“Just as we see in many other instances, your major customer would participate in supporting a business, given the potential downsides which regrettably we have seen play through over the last weeks,” he said.

“We were not looking for a bailout. This was a short-term loan to help us facilitate further restructuring,” he said.

Mr Cochrane and Mr Green both maintained that they thought the company could continue to operate until the moment the Government rejected the £20m rescue deal.

“Once you look past the legacy contracts and the cash-burn associated with those legacy contracts you had a viable, profitable business that could generate cash,” Mr Cochrane said.

MPs also heard that the Cabinet Office was told in November that a liquidation would see creditors receive no more than 1p in the pound for the debt that they were owed.

The news came as two other Commons committees published Carillion board minutes showing that the company’s chief financial officer had blown the whistle on alleged accounting irregularities in May 2017.

Emma Mercer’s findings triggered a review of contracts, though the board’s initial decision to have an independent element to this review was later reconsidered.

“Emma Mercer took just six weeks to spot and pull the thread that began the entire company unravelling,” said Frank Field, chair of the Work and Pensions Committee.

“That the next chief financial officer had to go through whistle-blowing procedures to get her concerns about accounting irregularities taken seriously by the Carillion board is extraordinary.

“So too is that the board’s response was to reject an independent review and get KPMG, their pet rubber-stampers, to mark their own homework.”