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Howson hits back at 'incorrect' Carillion payment claims

Former Carillion chief executive Richard Howson has hit back at claims made during the Carillion joint inquiry in a letter to the select committees.

Three letters from the failed contractor’s ex-CEO were published by the business and work and pensions committees.

In them, Mr Howson addresses a number of statements he says he does “not consider to be correct”.

One excerpt sees him reject claims made by Federation of Small Businesses chairman Mike Cherry to the committee regarding Carillion’s alleged abuse of the early payment facility.

Mr Howson writes that Mr Cherry “ignores the reality” that Carillion’s supply chain was typically paid within 30 days on government contracts and 45 days for non-public works.

He goes on to claim that Carillion ensured its supply chain was paid even though it had not been paid by the government on certain deals.

Mr Howson alleges that this non-payment was a result of “very significant discrepancies” between the contracted scope and the actual scope of certain contracts to maintain government estates.

The former Carillion boss cites a Ministry of Justice contract which he suggests involved the maintenance of around 60 per cent more assets than stipulated in the agreement.

Mr Howson claims this left the contractor with a 35 per cent cost increase, which it sought to recover from the government having first paid its subcontractors.

He rejects Mr Cherry’s suggestion that the contractor delayed payments by finding technical faults in the way invoices were presented.

Mr Howson also documents a series of meetings he arranged with former finance director Emma Mercer, which he claims show he acted “promptly and appropriately” when he learned of her concerns about accountancy practices at the contractor.

He suggests the board was well aware of the level of debt carried by the business, claiming it had been “closely monitoring the situation for some years” and that measures of cost reduction had been implemented.

During his evidence to the joint inquiry in February, Mr Howson claimed Qatari developer Msheireb Properties owed Carillion around £200m for its work on the $5.5bn Doha Downtown project, and that he had to travel to the Middle East repeatedly in an effort to recoup the funds.

Msheireb rejected Mr Howson’s claims, stating that it “entirely disputes” the statements made during the former CEO’s evidence.

Carillion auditor KPMG also said it did not recognise the £200m figure during its evidence to the committee.  

Msheireb claimed that it made “good faith overpayments” to the contractor, suggesting Carillion was “unable to complete works” and had not been paying its subcontractors.

Mr Howson claims in his letter to the inquiry that he had to visit Qatar frequently due to “serially late monthly payments” and because of the “volume of design change required”.

The former Carillion boss alleges that his commercial team calculated that the cumulative delay in receiving payment from Msheireb was “around 1,000 days”.

Mr Howson also takes aim at the consultants on the Doha Downtown project, suggesting Turner International was not independent due to being “partially owned by the Qatar Foundation”.

He says that, while he believed the scheme’s other consultant Aecom was impartial, he claims its advice was “often ignored or overturned”.

The former CEO also accuses Msheireb of presiding over an “abnormal amount of change over a long period of time” in both the Doha Downtown project’s design and administration.

He suggests the developer “confused” the number of new drawings with the number of changes on the project, and that the contractor was not responsible for the project’s design because it was not a design-and-build contract.

Mr Howson goes on to allege that the contract with Msherieb was unlawfully terminated, and that “voluntary overpayments” the client said it had paid Carillion were actually owed retention monies.

The former Carillion chief suggests that other multinational construction firms had endured similar experiences in the Qatar and urged the inquiry to seek evidence from their bosses in this respect.

In a letter addressing bonuses and redundancy payments, Mr Howson alleges that the terms of his severance package were changed suddenly when he was sacked, with Carillion allegedly going back on a number of previous agreements.

Mr Howson claims these changes represented a “breach of contract”.

The Federation of Small Businesses, Msheireb, the Ministry of Justice and Turner International have been contacted for comment. 

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Readers' comments (1)

  • Many thousands of people in Carillion’s Supply chain would totally disagree with Howson’s claims that they were paid to terms, but they would be based on their own experiences and the evidence of their own bank accounts - rather than his wishful thinking. Who would you believe?

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