Carillion ex-director to 'spill the beans' on the construction giant's collapse

Former Carillion finance director Zafar Khan is expected to lift the lid on the problems at the construction and outsourcing giant, when he appears before the Parliamentary inquiry into its failure on Tuesday.

Sources close to the Business and Work and Pensions Select Committees’ joint hearing into the collapse of Carillion believe that Khan will “spill the beans” and detail the events that led to its demise.

They point out that when he was appointed as finance director in January 2017, one of his first acts was to launch a review of the group’s finances and call in accountants KPMG to scrutinise its contracts.

The review identified a string of problems at the firm and led to it issuing a shock profits warning to the stock market on July 10. 

Additionally, Carillion registered nearly £900million of losses and provisions in its accounts and parted ways with its chief executive Richard Howson.

However, on September 11 the firm announced that Khan had left with immediate effect and that he would be replaced by Emma Mercer, who had previously been the finance director of Carillion’s UK construction business.

That is the division behind the Midland Metropolitan and Royal Liverpool hospitals PFI contracts, which are thought to have contributed to the group’s demise.

The inquiry will question Howson, Mercer, chairman Philip Green and interim CEO Keith Cochrane.

Khan’s predecessor as Carillion finance director, Richard Adam, will also appear before the committee.

According to Federation of Small Businesses chairman Mike Cherry, Carillion was “notorious” for paying its suppliers late, despite being signatories to the Government’s prompt payment code, under which firms are supposed to pay suppliers within 60 days.

In a letter to MPs, Cherry said that some Carillion suppliers, which included around 30,000 small firms, were left to wait 126 days for their money.

On Friday the Big Four accountancy firms, Deloitte, EY, KPMG and PwC, provided details of all the services they provided to Carillion.

MPs were particularly keen to hear from KPMG, as it was Carillion’s auditor and signed off on its last accounts in March 2017, only for it to collapse nine months later.