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The incompetence and greed that brought Carillion down

Outsourcing - 14 Dec 2020

Bob Wylie’s “Bandit Capitalism - Carillion and the corruption of the British state” is not just a riveting read. It is an indictment. The GMB is proud to sponsor it.

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In January 2018 Carillion, the construction giant and outsourcer of huge Government construction and services contracts, went bust.

Thousands upon thousands of jobs were lost on sites the length and breadth of Britain. Thirty thousand small businesses in Carillion’s supply chain, were left out for £2 billion they were owed. A majority crashed.

In its final accounts Carillion had a turnover of £5 billion. But when it tobogganed to disaster there was only £29 million left in the bank.

The total losses were just south of a staggering £7 billion.

The bosses trousered millions in their time at the top. And walked away when Carillion crashed. They have still not been held to account.

Carillion’s downfall is one of the great financial scandals of our times.

Take the Carillion pension fund. When Carillion went down the pension deficit was £990m.

According to the Government that cost the UK taxpayer £2.6 billion to square up. And even then, every Carillion worker lost 10% of their own pension pay-outs.

But the Carillion executives’ pensions weren’t down a penny. In the five years that Richard Howson was the chief executive, and Richard Adam the finance chief, Carillion paid £1.8 million into their private pensions.

 

"Bob Wylie’s “Bandit Capitalism - Carillion and the corruption of the British state” is not just a riveting read. It is an indictment."

There was no deficit in their pension pots - they were gold standard.

The Carillion directors told lies to the Parliamentary Inquiry. They said the pension fund was one of their ‘great priorities’. They said they ‘took it very seriously’. Right. Enter Richard Adam, the finance chief. He cashed in three quarters of a million quid in shares when he left Carillion. That was two months before an £845 million hole showed up in Carillion’s books.

Adam said everything was fine when he left. He never saw that coming. If you believe that you’ll believe the spies who poisoned the Russian father and daughter in Salisbury were actually there to see the Cathedral.

Bob Wylie’s “Bandit Capitalism - Carillion and the corruption of the British state” is not just a riveting read. It is an indictment.

An indictment of the gorging greed of executives who looted the company for tens of millions and begged for legal immunity when it went bust; an indictment of the auditors who permanently looked the other way when the books were cooked; an indictment of the so-called Regulators who did nothing and turned out to be lap-dogs not watchdogs; and an indictment of the Government politicians who have done nothing and moved on to next business.

And when Wylie’s story of Carillion’s fall is completed in the book, he explains how we got here with an analysis of the 2008 Crash.

A crisis that was, as he says ‘of the bankers, for the bankers and by the bankers’.

But those who were not responsible for the crisis turned out to be the ones who paid for it in ten years of savage Tory austerity.

That means that today one in four kids in the UK is brought up in poverty. A reality the UN described as ‘not just a disgrace but a social calamity and an economic disaster all rolled into one’.

“An excoriating book on the corruption that can lurk within contemporary capitalism. Wylie focuses on the case of now-bankrupt Carillion…But he stresses Carillion is merely an extreme example of corporate malfeasance. When management is expected to run companies for the purpose of enriching themselves trouble is sure to ensue. It did and it does”.

Martin Wolf, Financial Times, 18 November 2020.

Bandit Capitalism is a must-read for every trade unionist.

You can get it at: birlinn.co.uk/product/bandit-capitalism

When you get to the purchase page use the code GMBWYLIE2020 to get 15% off the book. That reduces cover price from £14.99 to £12.45.

 

 
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