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Investment house points finger at Carillion auditors

Investment house points finger at Carillion auditors

The chairman of Scottish investment firm Kiltearn Partners, which owned 10 per cent of Carillion, has pointed the finger of blame at the collapsed contractor's auditors.

Murdo Murchison told MPs today (7 March) that he was "extremely frustrated with the audit performance" in the Carillion case.

He said: "We rely heavily on audited financials, the disclosure of minutes.

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"It is clear that investors have lost a lot of money here, pensioners have lost a lot of money here, suppliers have been compromised and the folks closer [to the problem] don’t seem to have any liability."

Carillion went into liquidation in January after unsuccessful talks with its lenders and the UK government.

KPMG, which signed off Carillion’s latest accounts, is now being investigated by the Financial Reporting Council.

Previous documents released by MPs on the work and pensions committee and the business, energy and industrial strategy committee showed the Big Four financial services firms - KPMG, EY, PwC and Deloitte – had billed Carillion, pension schemes and the government £71m, for their work over the past 10 years

Questioned by Labour MP Frank Field, chair of the work and pensions committee, if the audit market is working well, Mr Murchison said: "There appears to be a lack of competition in a key part of the financial system that periodically causes a lot of other participants in that system a lot of trouble, and therefore I would like to see more competition."

Kiltearn Partners was considering suing the contractor over suspicions that its directors knew the company was in trouble, it was revealed in documents published by the committees.

If the failed contractor had not gone into liquidation, Kiltearn would have "considered participation in civil legal action against Carillion with a view to recovering a proportion of its clients' crystalised losses," Mr Murchison said at the time.

Carillion's defined benefit (DB) pension schemes are all either in the retirement fund of last resort, the Pension Protection Fund (PPF), or will soon enter it, meaning many members face a cut to their pension provision.

It has 13 final salary schemes in the UK with more than 28,500 members, and a deficit of £587m at the end of July.

Carillion, which employs about 43,000 people, has been struggling for several months, issuing a profit warning last year that sank its share price – which has fallen from more than £2 a year ago to about 14.2p just before it went into administration.

maria.espadinha@ft.com