Carillion bosses were ‘fantasists’ over £200m Qatari contract dispute

Senior management at collapsed construction group Carillion was “stocked by fantasists”, the co-chair of the Parliamentary committee looking into the collapse of group has said.

Frank Field made his comments in response to claims by the company that the problems with a Middle Eastern contract were one of the contributory factors to the firm going under.

The latest criticism from the joint Work and Pensions and Business, Energy and Industrial Strategy Committee came as it published correspondence from Msheireb, the Qatari contractor Carillion directors laid significant blame to for the company’s collapse on when they gave evidence to the committee on February 6.

The Doha letter systematically refutes points made particularly by former chief executive Richard Howson, who had claimed the company was owed around £200m from the contract when it collapsed in January.

Mr Howson had told the committee that he had spent the last few months of his tenure as a bailiff, commuting backwards and forwards between Qatar and Wolverhampton in an attempt to recover payments.

However, the committee said Carillion’s accounts suggested the amount owed at December 31, 2016 was actually £72m.

Msheireb said it disputed the claims made by the company and said monthly payments had been made between January 2012 and January 2017 without exception.

In fact, the Qataris said it was Carillion that owed them money.

The letter states that Msheireb considered that Carillion owed it “a similar amount of money” – ie £200m – comprising:
• Substantial “good faith overpayments” made “to assist Carillion” “despite these monies not being owed”
• Direct payments that Msheireb made to subcontractors which Carillion had not paid, to “ensure that they continued with the work”, despite the fact that “these were often works which we had already paid to Carillion”, and which they intended to recover
• Contractual delay damages due because of Carillion’s failure to complete work “in a timely manner” and “delays caused by Carillion’s resourcing, financial issues and problems with their supply chain”

In a letter subsequent to his evidence to the committee, Mr Howson has stated there were around £317m in outstanding external claims on the Msheireb contract, of which 80% (£253m) was attributable to Carillion.

Responding to the claims, Mr Field said: “This extraordinary exchange reinforces the impression that the upper reaches of Carillion was stocked with fantasists.

“It takes a special kind of optimism – that of a man kept on after his sacking to keep up morale – to classify money one hopes to earn in the future, on a challenging project, as money ‘owed’ to you. He cannot tell the difference between money he’d like to be paid, he wishes would be paid, and money that is actually owed to him.

“The likes of non-executive directors and auditors are there to guide the company – and its books – back down to earth. In the case of Carillion it was, unfortunately, a crash landing.”