Home Business NewsBusiness Qatari contractor: Carillion “mismanaged the works, under-resourced them and starved the project of cash”

Qatari contractor: Carillion “mismanaged the works, under-resourced them and starved the project of cash”

28th Feb 18 10:30 am

New revelations 

The Committees are today publishing correspondence from Msheireb, the Qatari contractor Carillion directors appeared to lay significant blame for the company’s collapse on when they gave evidence in Parliament on February 6th

The Doha letter systematically refutes points made particularly by former Chief Executive Richard Howson, whose equivalent letter in response to follow up queries after the evidence session is also published today.  

Who owed whom £200 million?

Richard Howson told the Committees that Msheireb “owed us £200 million” when he was removed as CEO in July 2017, rising from “about £180 or £190 million” in March 2017. Carillion’s accounts suggests the amount owed at 31 December 2016 was actually £72 million.

Msheireb  “entirely disputes” the statement, instead stating that Mr Howson was “misleadingly” referring to “the value of construction work remaining to be completed” plus “the value of claims relating to further delays”. On the contrary, Msheireb considers that Carillion owed it “a similar amount of money”, comprising:

  • Substantial “good faith overpayments” made “to assist Carillion” “despite these monies not being owed”
  • Direct payments that Msheireb made to subcontractors who Carillion had not paid, to “ensure that they continued with the work”, despite the fact that “these were often works which we had already paid to Carillion”, and which they intended to recover
  • Contractual delay damages due because of Carillion’s failure to complete work “in a timely manner” and “delays caused by Carillion’s resourcing, financial issues and problems with their supply chain”

In his subsequent letter, Mr Howson states that there were around £317 million in outstanding external claims on the Msheireb contract, of which 80 per cent (£253 million) was attributable to Carillion.

Rt Hon Frank Field MP, Chair of the Work and Pensions Committee, said: “This extraordinary exchange reinforces the impression that the upper reaches of Carillion was stocked with fantasists. It takes a special kind of optimism – that of a man kept on after his sacking to keep up morale – to classify money one hopes to earn in the future, on a challenging project, as money “owed” to you. Hecannot tell the difference between money he’d like to be paid, he wishes would be paid, and money that is actually owed to him.

“The likes of non-executive directors and auditors are there to guide the company – and its books – back down to earth. In the case of Carillion it was, unfortunately, a crash landing.”

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