The former chairman of Carillion has been lambasted for a ‘ransom note’ that threatened insolvency if the company did not get its hands on £10million of public money within two days.
The firm was demanding a total bailout of £160million, and said it needed £10million of that instantly.
MPs investigating the collapse have bridled at the letter sent to Ministers by the outsourcing group’s ex-chairman Philip Green within hours of handing a bumper payout to its highly remunerated City advisers.
It emerged last night that Carillion bosses shelled out £6.4million to accountants and lawyers the day before the £10million bailout demand. The sums handed out are twice as much as previously thought.
Work and Pensions Committee chairman Frank Field MP said: ‘With the company teetering on the abyss, Mr Green had the cheek to try to get the Government to surrender another £160 million of taxpayers’ money.’
Field criticised the ‘restructuring gravy train’ which included ‘half the law firms in the City of London’. He said the payments to advisers the Friday before the collapse were ‘the most troubling element’.
Rachel Reeves, chairman of the business Select Committee said Green’s demand letter ‘lays bare the cynical leadership’ at the firm which sought to ensure ‘that the costs of failure would be picked up by the taxpayer.’
Carillion’s board has been heavily criticised for failing to heed warnings of mounting financial difficulties. That included alarm bells raised by finance chief Emma Mercer who alerted them to ‘accounting irregularities’ last May.
Carillion’s ex-chairman Philip Green
According to the Official Receiver, the bill for advisers included £2.5million to accountants EY, £1.2million to legal firm Slaughter & May and £1.1million to consultants FTI.
Other advisers included accountancy firms KPMG and PwC. There were also a procession of lawyers including Clifford Chance, Sackers, Willkie Farr and Gallagher, Mills & Reeve and Akin Gump Strauss Hauer & Feld.
Financiers from Lazard were also on the payroll.
Green’s letter, sent to Ministers on January 13 laid out comprehensive demands for the £160million taxpayer bailout and said the Board had concluded that so long as key stakeholders including HM Government provided funding ‘it is appropriate to continue.’
But it added: ‘However, if support from any source is withdrawn, then that analysis will likely change, and the Board may well conclude that there is no longer a reasonable prospect of avoiding insolvent liquidation.’