Carillion

The other thing is that other firms must have spent a lot of time and money to put in tenders and bid for some of this work, only to seem the contracts go to the same firm again and again - one which they knew could possibly go under.
The bids they put in could have been based on sensible pricing too, but they lost out because Carillion was cheaper.

How would the government do this?
Many of these contracts Carillion got were dealt with ‘in house’ by Govt depts and Councils etc.

Yes, at one time, but Government Departments no longer have the expertise - and a lot of people who worked for the Government are, of course, the same people who now work in the private sector.

It was nothing but a Ponzi scheme (getting in savers by promises of big returns, paid for by savings from new savers) or in this case, * getting contracts by under bidding, hoping to make up the profits by getting in more contracts by underbidding. Failing that borrow more money to expand the business. - and repeat from to * as often as necessary.

Carillion have been in trouble for some time, the debt mountain has been growing and they twice published profit warnings last year.

What I cannot understand is why the government were prepared to place so many government contracts with them. It is basic business sense not to be too reliant on one supplier. Whether their's was the lowest bid or not, that should not be the only factor in deciding who you award a contract to. Also, what were the auditors doing? Surely they should have posted a warning with the accounts.

Carillion is RBS all over again; Corporate hubris, and a belief that it would all sort itself out in the end. - and it has - but not in the way they planned

However you try to wrap this up, it was a very bad call by the government. They were warned more than once, but continued to give lucrative contracts to a big Tory donator.

The huge bonuses they gave themselves should be refunded.

Love the fact that the Carillion boss advised Maybot on corporate responsibility.

One thing for sure Carillion is a failed model that should not be repeated elsewhere like the NHS

Apparently the City Hedgefunds were betting on their demise, which can't have helped matters. I wonder if that Peston man had anything to say about it? I blame him for the demise of the Northern Rock.

It would be a blessing (in disguise) if the HS2 contract was cancelled as a result of this but somehow doubt it.

I wonder how much Carillion owed to HMRC? A few years ago we asked for 3 months to pay a tax bill after one of our customers went bust on us owing us £thousands. We were met with a firm NO.

Interesting to see the final figures and who they owed the bulk of the money to.

There has been murmuring for years about these contracts. The government should and could have put in a Crown Representative. They could then have moved parts of the contract to other companies - still with the CR . It is ridiculous to a) push companies into bidding so low that they cannot carry out the contract and b) not keep an eye on what they are doing with our - not government - money.

Why give them a contract like HS2 when they knew how high risk this was. They are an incompetent shower.

And that establishment includes Labour, Maizie, as Leeds council, which is Labour-run, gave Carillion a £14 million contract last week.

I'm not defending them. Councils of any colour don't always have the expertise to cut through the wiles of corporate bodies. And sometimes they're just incompetent. Look at Sheffield Council where Amey are busily cutting down Sheffield's much loved street trees. The councillors who signed it didn't even read the contract (and as it was thousands of pages long I'm not altogether surprised...)

I do agree that a public inquiry would help shed light on the reasons for the collapse. Carillion has hundreds of subsidiary companies - it's a huge mess to untangle what went wrong and where.
Anyone who thinks borrowing billions to build infrastructure is easy & will cost nothing as it pays for itself should probably think again.

Yes MazieD exactly.

And that establishment includes Labour, Maizie, as Leeds council, which is Labour-run, gave Carillion a £14 million contract last week.

Too big to fail, gillybob and well in with the 'establishment'.

Carillion just got too big for their boots, bidding for contracts they couldn't fulfill and in services they knew nothing about. Typically everyone was taken in by them and it was allowed to go on and on until now.

All over the country small businesses are going down because all the Conservatives think life is about is money

Exactly GGM2 but no-one gives a stuff about a small business, we can't get a penny in help and the banks either won't lend at all or charge exorbitant rates of interest. How on earth Carillion were aloud to run up such eye watering debts is beyond me.

Also, I think there must be a real problem with the tendering process. We've seen it recently with the East Coast Main Line; companies putting in unrealistic bids in relation to expected profits. Surely bids, and the companies tendering them, should be thoroughly checked for viability before being accepted?

Let's hope that there is a very thorough Public Inquiry into the collapse of Carrillion.

Is that until October 2018, trisher?

And, of course, the ailing company acted early to ensure that its bosses got their bonuses

This is from the Daily Mail, no less

Troubled engineer Carillion introduced tougher rules that protect bonuses paid to bosses – just months before it was embroiled in an accounting crisis that wiped £600million off its shares.

The firm changed the wording of its pay policy to make it harder for investors to claw back bonuses paid to executives in the event it ran into financial difficulty.

Read more: www.thisismoney.co.uk/money/markets/article-4873710/Carillion-protected-bosses-4m-bonuses-crisis.html#ixzz54FxTfx3Y
Follow us: @MailOnline on Twitter | DailyMail on Facebook

www.thisismoney.co.uk/money/markets/article-4873710/Carillion-protected-bosses-4m-bonuses-crisis.html

When my DP worked a a Regional Manager for a very large national transport company bonuses were given if the region performed well over the year. When the company as a whole was struggling bonuses were cut or eliminated altogether. According to the linked article Carrillion was underperforming, dividends to shareholders were cut but the bosses still received very large, £1million+ bonuses. Why?

I haven't been able to track down donations said to have been paid by Carrillion to the tory party, but this is another highly questionable culture. The tory party unashamedly offers access to ministers in return for 'membership fees' of 'donor clubs' (i.e donations) for various levels of access to ministers. I have no problem with lobbying, it's all part of the democratic process, but privileged access in return for a 'membership fee' sounds rather corrupt to me.

www.conservatives.com/donate/Donor-Clubs

It has been suggested that political parties are funded by the state, with no private donations (apart, I think, from standard ,membership fees). I think that wouldn't be a bad thing. At least all citizens trying to influence politicians would be starting from a level playing field. And it would make it difficult or impossible to breach rules for campaign spending.

Plenty of the contracts were awarded to joint companies - the government doesn't just award the whole of things like HS2 to one company.
So you think the government should have forced Carillion into liquidation earlier trisher?

Or they could have awarded contracts to other companies who needed the work. Presumably they employ people as well? The argument that they kept people in work is untenable. There were contracts, someone had to do them, someone would employ the necessary people. Of course the really clever people got out early
And as the blame game intensified over Carillion's failure, unions accused the board of offering 'rewards for failure' as it emerged former chief executive Richard Howson, who left the company after a profits warning last summer, will continue to draw his £700,000 pay packet until October

Many of these contracts Carillion got were dealt with ‘in house’ by Govt depts and Councils etc.
Instead of it being done to actual cost these companies want to do it cheaply and still make a profit for their shareholders.

I don't know what you mean by 'They could just as easily used the good money they were throwing after bad to run contracts for themselves'

How would the government do this?

Why prop up a private company by giving them additional contracts? They could just as easily used the good money they were throwing after bad to run contracts for themselves for some time while they discovered what the issues were. (although I could guess)

This is typical of the government. All over the country small businesses are going down because all the Conservatives think life is about is money. They are just as bad as some supermarkets, contracting a company at a reasonable level and then reducing and reducing what they will pay.

Some may see 'the tax-payer' being to ones who suffer but it will affect the workers, those waiting for hospitals to be built, those expecting a pension in the future, etc. So far few 'tax-payers' who can afford to do so have been asked for more to support this government as it lurches from crisis to crisis. It has taken from the poorest to try and make their excessive adherence to their 'beliefs' work.

I feel so sorry for the smaller businesses that are affected by this smaller family businesses who depended on those contracts genuine honest people who have mortgages and families to keep will now wonder where they are going to go to keep their head above water.

In the meantime, how many other smaller firms went to the wall and how many jobs were lost because Carillion with its special relationship with government kept being awarded contracts?

But the size of the ‘propping up ‘ contracts was pretty huge wasn’t it?

Carillion was allowed to get far too big
Yes gillybob, although I had heard of them of course, I hadn't realise that they had emerged out of Tarmac and encompassed a lot of other firms such as Mowlem, Alfred McAlpine - so perhaps there was also a lack of competition when tenders were submitted.

I think that they employ over 43,000, 20,000 in this country. However, it is not just this firm, as it also sub-contracts work out to other, smaller firms too who will now be put at risk as well as their suppliers.

I think the government was probably trying to prop them up with new work maryeliza - one issue was not enough work in the pipeline.
It's a tough call - do you give them the work they need to stay afloat or do you give it to someone else knowing they will fail without it. They were probably trying to help save 20,000 jobs and it didn't work. I'm not sure I would slate them for trying.

I think it will be up to an inquiry to sort out who knew what and when, and to justify decisions made. Politicians who use this sort of collapse to throw out cheap soundbites make themselves look totally ignorant and wholly unsuitable for any sort of leadership in my opinion.