Government lobbies for long-term bans for top Carillion execs

Written by Jim Dunton and Sam Trendall on 21 January 2021 in News
News

Court orders sought to disqualify directors of the fallen firm, which held an array of technology, infrastructure, and outsourcing contracts with the public sector

Credit: Nick Youngson/Alpha Stock Images/CC BY-SA 3.0

Three years after the collapse of outsourcing giant Carillion, the Insolvency Service has applied to the High Court seeking orders disqualifying eight directors and former directors of the firm from holding such posts in future.

Carillion held approximately 450 contracts with government when it went bust, with clients including the Department for Transport, the Department for Education, the Department of Health and Social Care, the Ministry of Justice, and the Ministry of Defence.

It also had a role in delivering superfast broadband across the UK, via the Carillion telent joint venture which, at the time of the construction firm’s collapse, held close to £2bn in contracts to deliver connectivity infrastructure. 

The entity was legally separate and was taken over by the telent – although when its former partner collapsed in January 2018, broadband firms acknowledged that there might be a “minor impact on delivery schedules” over the coming months and years.


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Three years on, the Insolvency Service said the bid to secure orders that could see eight former executives barred from senior management roles for up to 15 years had followed an investigation by the Official Receiver and was made on behalf of the secretary of state for business, energy and industrial strategy.

A spokesperson said: “We can confirm that on 12 January 2021 the Insolvency Service, acting on behalf of the secretary of state, applied for director disqualification orders against eight directors and former directors of Carillion. The application was made in the public interest.”

The Insolvency Service is an executive agency sponsored by the Department for Business, Energy and Industrial Strategy.

Carillion was wound up on 15 January 2018 and the Official Receiver was appointed as the liquidator. The firm was understood at the time to have debts of around £1.5bn.

The Official Receiver investigates the causes of the failure and the promotion, formation, business, dealings and affairs of a company which has been wound up by the court.

The Insolvency Service said that following a report about the conduct of each director submitted by the Official Receiver, the business secretary had determined that disqualifying orders should be sought against the eight directors and former directors. 

It added that the grounds for the move had been that their conduct, while acting as a director of Carillion, made them unfit to be concerned in the management of a company.

The individuals for which disqualification orders are being sought are: Richard Adam, Richard Howson, Zafar Khan, Keith Cochrane, Andrew Dougal, Phillip Green, Alison Horner and Ceri Powell.

Cochrane was chief executive of Carillion at the time of the firm’s collapse. He took over the role from Howson in July 2017.

A National Audit Office report into the Carillion collapse published in summer 2018 said government departments had been creating contingency plans for the firm’s failure since it issued a profit warning in July 2017.

Initially, officials worked to establish a complete list of government contracts, but the NAO found some departments did not respond with details until then Cabinet Office minister Damian Green wrote to them in December.

Ultimately, 65 contingency plans from a total of 26 public bodies were received, fewer than the number sought.

 

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