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Jessica Fino 7 Feb 2019 12:28pm

PwC “milking the cash cow dry” on Carillion, say MPs

MPs have accused PwC of “milking the cash cow dry” after it was revealed it is charging £44.2m for one year’s work as special managers on the administration of Carillion

The construction company collapsed last year with £7bn in liabilities.

Frank Field, chair of the Work and Pensions Select Committee, and Rachel Reeves, chair of the Business, Energy and Industrial Strategy Committee, shared letters they exchanged with the Insolvency Service that revealed the fee total.

The Big Four firm had already announced that its partners working on the insolvency of Carillion were paid up to £1,156 per hour.

Field said, “And so the gravy train grinds on. A year since Carillion’s collapse, four since BHS, and still nothing to stop greedy, ruthless or just complacent directors taking a one way bet with the livelihoods and pensions of their workers, with their small business suppliers and with the UK taxpayer.

“In this they are ably assisted by a merry little band of advisors and auditors, conflicted at every turn and with every incentive to milk the cash cow dry – right down to re-appearing as butcher to flog off the collapsed remains for a hefty cut, as PwC did in this case.

Meanwhile, Reeves welcomed the news that the Official Receiver has managed to recover £413m in realisations. David Chapman said in a letter to the joint committees, released today, that a number of recoveries are still expected and these will come from asset sales, insurance recoveries and debtor recoveries.

It was also revealed that the cost of the administration will be significantly lower than previously expected by the National Audit Office, from £148m to around £72m.

However, she said it is “far too little and too late “for the workers, suppliers and customers of Carillion.

“Of course, Carillion’s directors walked away with their bonuses, refusing to take any blame, and yet are still to face any consequences for driving the company into the ground. PwC’s special managers, conflicted before and after the company’s collapse have raked in more than £40m to date for combing through the remains of the business,” Reeves added.

PwC reacted to the committee’s comments by arguing that a number of parties have reviewed its appointment and considered whether there was any conflict of interest.

A spokesperson for the firm said, "The Official Receiver applied to the Court to appoint PwC to resource a liquidation of exceptional size and complexity as quickly and effectively as possible. We helped keep public services, such as the maintenance of prisons, hospitals, roads and schools, running safely across the country - minimising the disruption caused by the collapse - while transferring contracts and saving thousands of jobs.

“Without this work the cost to UK jobs, the economy and the taxpayer would have been considerably higher.

“From the outset it has been clear that PwC’s fees for assisting the Official Receiver on the liquidation of Carillion are subject to scrutiny and approval by the Official Receiver and the court," they added.

The Joint Committees have previously accused all the Big Four firms of “feasting” on the “carcass” of Carillion after receiving a combined total of £71.6m in fees.

After receiving letters from the four firms, the joint committees revealed that KPMG was paid a total of £20.2m for its work on Carillion since 2008, with £16.8m coming from the company itself and £3.4m from government work.

PwC was paid most of the four firms in fees. It got paid a total of £21.1m, with £8.5m from Carillion, £6.5m from government and £6.1m from pension schemes.

EY was paid £18.3m from Carillion over the last 10 years (£15.6m from the company and £2.7m from government) and Deloitte was paid £12m (£10.3m coming from the company and £2.7m from government).

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