As I See It
Action needed to sort out this corporate malaise
This week we have seen his namesake, the former chairman of Carillion, take a verbal battering for his own and his board’s failure to avoid the failure of the construction giant. Perhaps worse was his board’s inept and dismissive approach to dealing with the firm’s workers and their pension scheme.
One of Theresa May’s first pledges on becoming Prime Minister was to clean up corporate Britain, by which she meant sorting out the sort of self-seeking behaviour that continues unabated in boardrooms across the nation. Mrs May needs to turn tough talking into tough action, and Carillion should serve as a lesson plan for working out what needs to be done.
At least Mr Green admitted his part in the company’s collapse. Even so, it took a lot of questioning for his fellow executives, described by the joint chairmen leading the inquiry as “delusional characters”, to admit to anything but other circumstances and other people for the firm’s downfall.
Rachel Reeves, who chairs the Business, Energy and Industrial Strategy Committee, deserves credit for her no-holds-barred response to the feeble responses of those whose first priority appears to have been to make sure their own, and their shareholders’ pockets, were adequately lined.
Ms Reeves’ most damning comments were reserved for a company which had become a notorious late payer and, as such, a totem for one of industry’s biggest causes of company failures. The MP accused the company’s board of “ruthlessly exploiting their position to bully their contractors in a desperate bid to prop up their precarious business model.”
This was stirring stuff, made more appalling by the dreadful irony that Carillion was signed up to the Prompt Payment Code, described by Ms Reeves as “a cruel joke” for those businesses the firm took 120 days or more to pay.
Former RBS CEO Fred Goodwin and his counterpart at HBOS James Crosby forfeited their knighthoods for their part in the banking crisis. Now that he has admitted his own failings, perhaps Philip Green should similarly surrender his CBE, awarded for services to business and charity just four years ago.
As an added irony, Mr Green could have joined the ranks of Britain’s bankers. He was lined up as chairman of Williams & Glyn, the proposed UK challenger bank that was due to be carved out of Royal Bank of Scotland until the plan was aborted last year.
Now that the Carillion board has been rebuked, perhaps it will spur Mrs May into an appropriate response to the malaise that runs through the higher echelons of British business.
That should include a root and branch review of cosy backslapping remuneration committees and money-for-nothing non-executive directorships. Institutional shareholders are doing more to monitor behaviour, but not enough, and are often part of the problem. Auditors are somehow managing to earn high fees while watching as Rome burns.
Working people deserve better than being left to pick up the pieces when their managers, and those responsible for managing them, fail in their duties.