16 May 2018 | Herpreet Kaur Grewal
Carillion's business model was "an unsustainable dash for cash", according a report published today by the Work and Pensions and Business, Energy and Industrial Strategy select committees.
The report said Carillion's story was one of "recklessness, hubris and greed".
The perception of Carillion as a healthy and successful company was "in no small part due to its directors' determination to increase the dividend paid each year, come what may".
It said in the company's final years, "directors rewarded themselves and other shareholders by choosing to pay out more in dividends than the company generated in cash, despite increased borrowing, low levels of investment and a growing pension deficit".
MPs criticised Carillion for using "aggressive accounting policies to present a rosy picture to the markets".
The report also slams Carillion's former chairman Philip Green, who they say "interpreted his role as to be an unquestioning optimist, an outlook he maintained in a delusional, upbeat assessment of the company's prospects only days before it began its public decline".
MPs said Richard Howson, Carillion's chief executive from 2012 until July 2017, displayed a "misguided self-assurance [which] obscured an apparent lack of interest in, or understanding of, essential detail, or any recognition that Carillion was a business crying out for challenge and reform".
Keith Cochrane, who was an inside appointment as interim CEO, served as a non-executive on the board "that exhibited little challenge or insight".
The report says: "There are no easy solutions, but there are some bold ones". The committee's full recommendations can be found here.