Lawyers protest outside parliament
Almost £4 million was thrown at City firms days before construction giant Carillion was declared insolvent. A damning report from the UK Work and Pensions and Business, Energy and Industrial Strategy (BEIS) committees states that, on 12 January, three days before the company went under and the day before chairman Philip Green asked the government for taxpayer funds, some £6.4 million disappeared, of which £3.9m was paid out to law and accountancy firms.
The 12 January payments were: Slaughter and May (£1.196m), Akin Gump (£305,549), Willkie Farr & Gallagher UK (£164,016), Clifford Chance (£149,104), Freshfields Bruckhaus Deringer (£91,165), Sacker & Partners (£37,211) and Mills & Reeve (£20,621). Big four accountancy firm EY was paid £2.5 million. MPs accused firms of ‘squeezing fee income out of what remained’ of the company. They also criticised Carillion directors of ‘recklessness, hubris and greed’ and of putting their own financial reward first. The committees said firms were operating a ‘cosy club,’ and the names of prominent law and accounting firms were ‘brandished by the board as a badge of credibility.’
Creaking corporate accountability
The report stated that the appearance of prominent advisers showed supreme willingness by the board to throw money at the issues was matched only by the willingness of the named firms to accept generous fees. 'By the end, a whole suite of advisers, including an array of law firms, were squeezing fee income out of what remained of the company,' the report said. Corporate governance reforms are needed to prevent a collapse on the scale of Carillion happening again, Frank Field MP, chair of the Work and Pensions Committee, said, adding 'Government urgently needs to come to parliament with radical reforms to our creaking system of corporate accountability.'