MAJOR accountancy firms are “feasting on the carcass” Carillion – while collecting more than £70 million, MPs say.
Almost 1000 jobs have been lost since the construction giant collapsed last month, with some suppliers and subcontractors warning they may struggle to survive unless their fees are paid.
Now MPs running a joint enquiry into the failure of the public sector contractor have published a breakdown of fees collected by the UK’s four big accountancy firms in connection with the company.
KPMG, PwC, Deloitte and EY have pocketed a total of £71.6m in work related to Carillion since 2008. This includes services regarding its pension schemes.
Carillion’s liquidation left a £900m debt pile, a £590m pension deficit and hundreds of millions of pounds in unfinished public contracts.
Westminster’s business and pensions committees are conducting a joint enquiry into what went wrong and why its trouble was not spotted earlier.
Labour’s Frank Field, head of the Work and Pensions Committee, said: “The image of these companies feasting on what was soon to become a carcass will not be lost on decent citizens.
“The former directors of Carillion are, unlike their pensioners, suppliers and employees, alright.
“These figures show that, as ever, the big four are alright too. All of them did extensive – and expensive – work for Carillion.”
PwC, which is handling the liquidation process, comes in for particular criticism, with Field stating: “PwC managed to play all three sides – the company, pension schemes and the Government – to the tune of £21m and are now being paid to preside over the carcass of the company as special managers.
“It was perhaps telling that, with their three fellow oligarchs conflicted, PwC were appointed to this lucrative position without any competition.”
According to information published by the committees, KPMG has banked £20.2m in fees since 2008, PwC £21.1m, Deloitte £12m and EY £18.3m. The accountancy watchdog has opened an investigation into KPMG over its audits of Carillion under the Audit Enforcement Procedure.
The probe will cover the years ended 2014, 2015 and 2016, and additional audit work carried out last year.
Business committee head Rachel Reeves MP, who co-chairs the inquiry, said: “KPMG has serious questions to answer about the collapse of Carillion.
“Either KPMG failed to spot the warning signs, or its judgment was clouded by its cosy relationship with the company and the multi-million pound fees it received.
“For the sake of all those who lost their jobs at Carillion and in the interests of better corporate governance, KPMG should, as a bare minimum, review its processes and explain what went wrong.”
For its part, KPMG chairman Bill Michael wrote a lengthy riposte to the MPs’ claims.
The 18-page letter said his team’s audit work had been “appropriate and responsible”, but admitted that lessons must be learned from Carillion’s collapse.
Representatives from KPMG will appear before MPs next week to answer questions. The company said: “We are committed to building public trust in audit.
“We take the questions that have been asked of our profession in recent weeks very seriously and we welcome the opportunity to appear before the joint committee on February 22 and assist the inquiry with their investigations.”
Last week former Carillion executives were branded “delusional” and accused of playing the blame game by the MPs, as a damning report revealed how company bosses presided over a string of failures that led to the collapse of the firm.
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