UK parliamentary committee launches inquiry after Carillion collapse
- Author: Zachary Reyes Jan 16, 2018,
Jan 16, 2018, 20:14
With its significant involvement in the public sector, key projects have been placed in jeopardy.
Leading British lenders including Barclays, the Royal Bank of Scotland and Lloyds Banking Group face the prospect of hundreds of millions of pounds in outstanding loans going unpaid from Carillion's collapse on Monday.
Britain's biggest corporate failure in a decade has provoked anger among the country's lawmakers.
The issue of pension shortfalls is a political hot potato in the United Kingdom that flared up again past year when Toys "R" Us Inc.'s British unit avoided bankruptcy by agreeing to pump money into its retirement fund for workers.
The number of "tracker" funds and exchange-traded funds, which aim to replicate the performance of a particular index, that appear among the company's top investors is testament to how far out of favour the stock had fallen among active fund managers.
A global presence, with 43,000 staff worldwide, it ran up £900 million of debt and nearly £600m of pensions deficit. The government may not have agreed to bail out the company like it did with the banks in 2008 but the taxpayer will still pay.
Previously the firm had the right to reduce bonuses not yet paid.
In July past year, a week after its initial profit warning, it was named as one of the contractors on Britain's new High Speed 2 rail line, a flagship project that will better connect London with the north of England.
Carillion brought in Keith Cochrane as chief executive in July.
"This is a very sad day for Carillion, for our colleagues, suppliers and customers that we have been proud to serve over many years". Workers, however, were left in the dark, and jobs, pensions and essential social provisions hang in the balance. Its partners may be happy to shoulder its share of the work but in some cases they will be obliged to, and it might not benefit them.
"When Carillion started to get into trouble a year ago we were considering that we would scale back our involvement with them". Those not yet retired will lose at least 10 percent. There will be a cost to the taxpayer of doing so although the government hasn't given any indication what it expects that to be.
Carillion announced it would go into liquidation early in January 2018Who is Carillion's chairman?
Despite the red flags, the government continued to award the company major public contracts, including on a flagship new high-speed rail project, leading to increasingly scathing criticism.
Given that 99% of the industry's 280,000 businesses are SMEs, we would also ask that the Paul Uppal, Small Business Commissioner, support this plan.
Political calculations account for the decision to keep handing Carillion money.
Labour leader Jeremy Corbyn has been, predictably, the first to take the hammer to government policies on privatisation, most notably what he terms the "out-source first dogma". "However", he told PE, "it is clearly a wake-up call when the second largest contractor in the United Kingdom, with numerous government contracts, can go into liquidation".
Majedie Asset Management was also once ranked among the company's top investors, with the team behind the Majedie UK Equity fund holding a stake worth £8.2 million at the end of June previous year.