Minutes reveal concerns
Pressure mounts on KPMG over ex-CFO’s warning
Frank Field: “company was falling apart in full view of the board and their auditors”
More questions were directed at the auditor KPMG after it was revealed a former Carillion director raised concerns about the firm just six weeks into her job.
The Work and Pensions and Business Select Committees have published new information which show that financial director of construction services, Emma Mercer warned of problems at the construction company.
Minutes of Carillion board meetings show that on her return from Canada and just six weeks into the job as FD of Construction Services in the UK, Mrs Mercer was raising concerns about the accounts she found – or “whistle-blowing” as it is described in the minutes.
Apparently not satisfied with the response she got from then CEO Richard Howson or FD Zafar Khan when she flagged these concerns, so took them up with the Group HR Director.
The joint MPs notes say that “Mrs Mercer’s revelations threw up some serious questions, not least for the company’s auditors, KPMG. At stake was whether the 2016 year-end traded position could still be supported.”
Frank Field, chairman of the Work and Pensions Committee, said: “Emma Mercer took just six weeks to spot and pull the thread that began the entire company unravelling.
“That the next Chief Financial Officer had to go through whistle blowing procedures to get her concerns about accounting irregularities taken seriously by the Carillion board is extraordinary. So too is that the board’s response was to reject an independent review and get KPMG, their pet rubber-stampers, to mark their own homework.
“While our witnesses have been reticent in oral testimony, these minutes begin to reveal the true picture of a company falling apart at the seams in full view of the board and their auditors.”
Rachel Reeves, chairman of the Business, Energy and Industrial Strategy Select Committee, said: “Carillion directors say they couldn’t foresee what investors and company staff could – that spiralling debt problems and failing contracts were destined to sink the company.
“These board minutes point to a very different scenario – Emma Mercer was sounding the alarm but none of the Carillion directors were willing to wake up and listen.”
It was revealed yesterday that after a decade at the helm of Carillion’s finances, Richard Adam sold his entire existing shareholding the day the 2016 accounts were published, and the remaining shares the moment they vested, netting himself £776,000 from shares that are now worthless.