It has been revealed that Carillion paid out £6.4m in fees to various advisers, including EY, KPMG and PwC, the day before asking government for a £10m bailout which was refused, forcing the outsourcing giant to apply for insolvency the next day
Information received from the Official Receiver shows that Carillion’s auditor, KPMG, was paid £78,000 for advisory services while its liquidator, PwC, was paid £276,000. EY had the highest bill of all the advisers at £2.5m.
Aside from three of the Big Four firms other advisers included legal firms and asset managers. Business advisory firm, FTI Consulting, was paid £1.1m and law firm Slaughter and May was paid £1.2m.
Rachel Reeves MP, Chair of the Business, Energy and Industrial Strategy (BEIS) Committee said: ‘This 11th hour ransom note lays bare the cynical leadership of the Carillion board. Directors' management ensured that the costs of failure would be picked up by the taxpayer – either from a bail-out or footing the bill for a desperate clean-up operation.
‘Expensive advisers still pocketed millions while workers risked losing jobs and long-suffering suppliers faced financial ruin.’
Government refused the £10m bailout at a meeting with Carillion chair, Philip Green, on 14 January 2018. Carillion then had no choice but to apply for insolvency on 15 January.
In a letter to the Permanent Secretary for the Cabinet Office asking for a bailout Green stressed that the government bailout would be put in place alongside support from commercial banks. He also said that the bailout would be ‘temporary support’ and it would be cancelled and repaid in full upon completion of the restructuring along with interest.
Green said: ‘We are increasingly confident that it will be possible to achieve a restructuring. There has been tremendous progress over the last few weeks with key stakeholders, and we have every reason to expect that it will be possible to agree the commercial terms of a deal before the end of January.’
Chair of the Work and Pensions Committee, Frank Field, said: ‘With the company teetering on the abyss, Green had the cheek to try and get the government to surrender another £160m of taxpayers' money. I am not surprised the government took with a pinch of salt his assurances that all would be reimbursed once he had unscrambled the eggs.’
The full list of advisers and fees is as follows:
Amount paid (£)
WILLKIE FARR AND GALLAGHER UK LLP
SACKER & PARTNERS LLP
MILLS & REEVE
LAZARD & CO LTD
FTI CONSULTING LLP
FRESHFIELDS BRUCKHAUS DERINGER LLP
ERNST & YOUNG LLP
CLIFFORD CHANCE LLP
AKIN GUMP LLP
SLAUGHTER AND MAY
Report by Amy Austin