Defined Benefit  

MPs demand Big Four tell all on Carillion collapse

MPs demand Big Four tell all on Carillion collapse

MPs from committees across two government departments have jointly written to the Big Four financial services firms - KPMG, EY, PWC and Deloitte – demanding details about their relationship with collapsed outsourcing giant Carillion.

MPs on the work and pensions committee and the business, energy and industrial strategy (BEIS) committee are asking for detailed accounts of any and all services these firms have offered Carillion, its subsidiaries and its pension scheme, over the last ten years, and what fees they were paid.

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The defined benefit (DB) pension schemes of Carillion, one of the UK government's biggest contractors, are all either in the retirement fund of last resort, the Pension Protection Fund (PPF), or will soon enter it.

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

After unsuccessful talks with its lenders and the UK government, Carillion made an application on 15 January to the High Court for compulsory liquidation.

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.

The committees, which launched a joint inquiry into the company’s collapse earlier this week, said that “there have been conflicting reports as to the extent of the involvement of the four firms’ provision of professional services to Carillion, over various issues and transactions”.

MPs want to establish a clear timetable setting out who was involved, in what, when, and expect answers from the auditors by 2 February.

The committees also sent some specific questions to KPMG.

They said: “It is known that KPMG have audited Carillion’s accounts every year since the company’s inception in 1999, receiving £29.4m in fees in the process.

“The latest set of audited financial accounts were signed off by KPMG with an unmodified opinion in March 2017, only for the company to go bust nine months later.”

The company is being asked to clarify whether it conducted a cold review of 2016 audit, and if so, does it stand by their audit opinion that gave Carillion’s consolidated accounts a clean bill of health, among other questions.

maria.espadinha@ft.com