FEEDING CARILLION CONTRACTS

by Brian Bamford

LAST November, the leader of the Liberal Democrat Party, Sir Vince Cable, expressed his anxiety that the Tory government was 'feeding' contracts to the blacklisting company Carillion.  iIn a speech at the Construction News Summit Sir Vince said that he was worried the troubled contractor was seen as 'too big to fail'.

This statement followed a claim by the public accounts committee chair, Meg Hillier, who had announced to The Times that any failure at Carillion would be 'catastrophic' for some government projects.

Last week, Kate Burgess, in the Financial Times wrote:
'If Carillion was a bricks n’mortar building rather than a bricks n’mortar business employing 43,000 workers it would be rubble by now.  It is a miracle of engineering that Carillion still stands. Its debt — close to £900m — plus a £590m pension deficit tower over equity.  The shares have fallen from above 200p a year ago to 17p, valuing the group at £75m, and it has only just averted breaching its banking covenants.'

What's interesting is that the now deceased chair of the Greater Manchester Pension Fund, Councillor Kieran Quinn, in September last year called for 'direct relationship with our contractors'.  At that time Coucillor Quinn juggled the job as Pension Fund Chair with his position as Labour leader of Tameside local council.   Significantly, Council Quinn had formed a close municipal partnership with Carillion in Tameside providing contracts for the troubled company at least since 2010.  When it was
pointed out to him by Tameside Trade Union Council that the company had long been up to its neck in the blacklisting of trade unionists in the British building trade - reply came there none!
{see www.alanwainwright.blogspot.com/2017/07/carillion-lies.html  }

Councillor Kieran Quinn died on Christmas Day, it remains to be seen who will replace him in his many jobs.

The Financial Times journalist Kate Burgess has written of Carillion’s current predicament:

‘Some may hope that Andrew Davies, who replaces Mr Howson as chief steeplejack this month, can repair the group’s stock market rating from his boatswain’s chair.  They will be lucky.  The group has staved off its lenders for a bit. But a debt-for-equity swap is on the cards.  The banks now in charge of Carillion will be slow to call in the demolition team. The group is, after all, one of the UK government’s biggest contractors, employs thousands of sub-contractors and is entwined with rivals in joint ventures.  Unravelling the cross-guarantees and insurance bonds would take time and skill. But when necessary, lenders are as adept as any demolition expert at causing unstable skyscrapers to implode and minimising the damage to surrounding buildings.  Note to investors, it takes months to prepare sites, but a building can fall in on itself in less than 10 seconds.' 

There is a saying that before the house falls in, one always hears the crack!

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