Finance Monthly March 2019 Edition

26 www.finance-monthly.com SPECIAL FEATURE - CORPORATE ACCOUNTABILITY n 2016, Carillion was the UK’s second largest construction company with annual revenue of over £5 billion and 43,000 staff globally. Yet the company was clearly not too big to fail. As the media trawled through the wreckage left by Carillion’s collapse, many commentators asked: “Where were the regulators?” A joint report by two House of Commons select committees found that directors had prioritised executive bonuses and shareholder dividends over pension payments for staff - even as the company veered towards bankruptcy. The report stated that: “The chronic lack of accountability and professionalism now evident in Carillion’s governance were failures years in the making. The board was either negligently ignorant of the rotten culture at Carillion or complicit in it.” Carillion’s auditors, KMPG, also came in for criticism, with one MP saying he would not trust the firm to audit the contents of his fridge. MPs found that Carillion’s Finance Director thought that making adequate pension payments for staff was “a waste of money”. The joint committee recommended a wide- ranging overhaul of the UK’s systems of corporate accountability. The Financial Reporting Council’s Code of Corporate Governance, issued in July 2018, is perhaps a modest first step in the right Carillion’s 2016 annual accounts carried the now-ironic tagline: “Making tomorrow a better place”. By mid-2017, the company was issuing profit warnings. By January 2018 it collapsed completely, leaving debts of £7 billion in its wake. MPs squarely blamed the “recklessness, hubris and greed” of Carillion’s directors for the debacle. Carillion’s collapse wreaked financial havoc on public services across the UK. Thousands of workers saw their jobs vanish overnight. Yet Carillion’s directors walked away relatively unscathed. One year after the company’s demise, Anca Thompson from Excello Law explores how corporate accountability can be imposed on public services firms. I AFTER CARILLION WHERE NOW FOR CORPORATE ACCOUNTABILITY?