MPs today slammed Carillions “rotten” corporate culture and called for a break up of big four audit firms.
A report published today by the Work and Pensions and Business, Energy and Industrial Strategy (BEIS) Committees said that Carillions collapse was a “story of recklessness, hubris and greed”.
The report said the government had lacked the “decisiveness or bravery” to address the failure in corporate regulation that allowed the failed outsourcer to become a “giant and unsustainable corporate time bomb”.
The MPs also criticised Carillions auditor KPMG which they said was “complicit” in the companys “questionable” accounting practices.
The report said the collapse revealed the UKs audit market as a “cosy club” that was unable to provide the degree of independent challenge needed.
The report called on the government to refer the audit market to the Competition and Markets Authority and to consider breaking up the audit arms of the big four or splitting audit services from non-audit services.
Former Carillion directors Richard Adam, Richard Howson and Philip Green were criticised by the committees who said the Insolvency Service should consider whether they breached their duties and should be disqualified from holding company directorships.
Adam said in a statement: “The reasons for the collapse are clearly complex, however, I reject the unwarranted conclusions the Committees have reached concerning my role at the company.”
Chair of the BEIS committee Rachel Reeves said: “KMPG, PwC, Deloitte and EY pocket millions of pounds for their lucrative audit work – even when they fail to warn about corporate disasters like Carillion.”