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MPs blast Carillion pension policy as KPMG faces probe

MPs have accused Carillion of trying to “wriggle out” of pension contributions for the “last 10 years”.

Work and pensions select committee chairman Frank Field attacked the failed contractor, claiming that it used “purported cashflow problems” to negotiate deferring pension deficit contributions in order “to enable more borrowing”.

Mr Field took aim at trustees and the Pensions Regulator, which he accused of endorsing Carillion “shelling out dividends and handsome pay packets for those at the top” while ignoring its pension contributions.

The comments are based on a letter from Robin Ellison, chair of the trustees of Carillion’s pension scheme, in which he responds to initial questions from the committee into Carillion’s pension deficit.

Mr Ellison is scheduled to give evidence in person tomorrow (30 January).

His appearance is part of the Carillion inquiry, a joint effort from the Department for Work and Pensions and the Department for Business, Energy and Industrial Strategy.

Top Carillion executives including former chief executives Richard Howson and Keith Cochrane are due to be questioned by MPs next week.

Carillion auditor KPMG is also under investigation from the Financial Reporting Council (FRC) into whether it contravened “ethical and technical standards” when signing off the contractor’s accounts.

The accountancy firm’s work on Carillion’s financial statements for 2014, 2015 and 2016 will be examined by the regulator, as well as its audit work on Carillion in 2017.

The FRC’s enforcement division will examine how Carillion reported revenue on significant contracts as well as the “disclosure of the going concern basis of accounting”.

The regulator has published a letter directed at boards of companies in the construction sector following Carillion’s collapse reminding them of their reporting obligations.

Meanwhile the Ministry of Justice has announced it will form a new company to take over the delivery of Carillion’s prison facilities management services.

The move will see around 1,000 staff, including 100 contractors, move across to the new company known as Gov Facility Services Limited. 

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