tag:blogger.com,1999:blog-8578343158425987632.post6628169180921297033..comments2024-03-29T13:05:24.150+00:00Comments on On Probation Blog: Carillion and the MoJJim Brownhttp://www.blogger.com/profile/00258147767051200157noreply@blogger.comBlogger30125tag:blogger.com,1999:blog-8578343158425987632.post-92195070838665657422018-01-16T20:42:29.805+00:002018-01-16T20:42:29.805+00:00"George Osborne to be paid £650,000 for worki..."George Osborne to be paid £650,000 for working one day a week<br />Former chancellor declares six-figure salary for job with US fund manager BlackRock, for whom he will work 48 days a year"<br /><br />All that insider knowledge must have been special...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8578343158425987632.post-46124988146652793232018-01-16T20:39:10.200+00:002018-01-16T20:39:10.200+00:00Good job, JBGood job, JBAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-8578343158425987632.post-73356258230147184722018-01-16T20:38:34.622+00:002018-01-16T20:38:34.622+00:00Good spot Jim. More than a whiff of corruption in ...Good spot Jim. More than a whiff of corruption in this latest scandal.... Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8578343158425987632.post-31052375267503009862018-01-16T15:54:39.204+00:002018-01-16T15:54:39.204+00:00Knew I'd seen it somewhere this on Political S...Knew I'd seen it somewhere this on Political Scrapbook website:-<br /><br />Last March, when Osborne was still in Parliament, he revealed he was working one day a week for the Blackrock Investment Institute. The entry also notes that he expects to receive equity in the company.<br /><br />Now it has emerged that Blackrock is among financial speculators and hedge funds who bet that Carillion’s share price would fall after the company issued profit warnings last year.<br /><br />The Financial News website reported:<br /><br />“BlackRock, the world’s largest fund manager, is among a group of investors to have won from the collapse of Carillion, the UK construction company that went into liquidation this morning.”<br /><br />The payout to Blackrock and others who backed a fall in Carillion’s share price was £80 million, according to an estimate from IHS Markit reported in the Guardian.<br /><br />The article ads that “much more [is] likely to have been banked” by the firms since the initial slump.<br /><br />Osborne can’t claim to champion the public interest while working for a firm benefiting from taxpayer’s losses…Jim Brownhttps://www.blogger.com/profile/00258147767051200157noreply@blogger.comtag:blogger.com,1999:blog-8578343158425987632.post-35257115045706218032018-01-16T14:35:10.647+00:002018-01-16T14:35:10.647+00:00Carillion is not a business that is going to colla...Carillion is not a business that is going to collapse quietly, and neither should it. As a construction company it has been involved in the building of some of the biggest infrastructure projects in the country, including HS2. <br /><br />As a leading outsourcer of what had been the preserve of government and a major participant in public-finance initiatives, it became a large operator of — and service provider to — schools, hospitals, student accommodation and military bases up and down the country. <br /><br />It is home to several of the great names of the past: Tarmac, Mowlem and Alfred McAlpine — none of whose founders, giants of their time, could ever have believed that it would come to this.<br /><br />But, most of all, it counted the Government among its main customers, which means the biggest casualty of its collapse may be the taxpayer. However strong the Prime Minister’s instinct is to look the other way, she will find that Downing Street is in the frame. <br /><br />And it will need to be a big frame. The business employs tens of thousands of people; it has debts of about £900 million; it has a deficit in its pension schemes of a further £500 million; and it has very little to sell that will make much of a dent.<br /><br />Much as Downing Street might like to pretend otherwise, this is as much a political as it is a business story. The company has gone into liquidation not just because British construction firms have always behaved as if they could defy financial gravity. Its demise is also the consequence of the relentless application of a neo-liberal political philosophy that for years has elevated financial engineering above real engineering; off balance-sheet finance above paying for things openly; and lauded the private sector above the public sector. <br /><br />It has fostered the belief that there is no financial challenge that cannot be solved by a deal, a sleight of hand, a willingness to screw suppliers and a taste for creative accounting. <br /><br />You see it in the way the Government runs the public finances. It is less visible but nonetheless prevalent — in the financial swamp that is the private finance initiative and where Carillion sought to make its mark.<br /><br />Thus the collapse of Carillion is an indictment of management but one in which the Government, Whitehall, City bankers and even investors are also complicit. <br /><br />That is why it’s right that there be no taxpayer bailout and no gerrymandering with the pension scheme, as the Government tried to do with Tata Steel. <br /><br />Taxpayers are already the victims; any further costs now have to be borne by the financial community, the bankers and the shareholders.<br /><br />(Got a funny feeling Black Rock was a hedge fund that made money out of shorting Carillion shares and I think the ES Editor is an adviser - just saying - Ed)Jim Brownhttps://www.blogger.com/profile/00258147767051200157noreply@blogger.comtag:blogger.com,1999:blog-8578343158425987632.post-87564129006889862502018-01-16T14:12:50.945+00:002018-01-16T14:12:50.945+00:00https://www.standard.co.uk/comment/comment/the-tax...https://www.standard.co.uk/comment/comment/the-taxpayer-should-not-pick-up-the-tab-for-carillion-s-crash-a3740246.htmlAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-8578343158425987632.post-60750959085186254362018-01-16T13:05:50.389+00:002018-01-16T13:05:50.389+00:00BBC website:-
The government has ordered a fast-t...BBC website:-<br /><br />The government has ordered a fast-track investigation into directors at the failed construction firm Carillion. The UK's second biggest construction firm went into liquidation on Monday, after running up losses on contracts and struggling with heavy debts.<br /><br />The Business Secretary has asked for an investigation by the Official Receiver to be broadened and fast-tracked. The conduct of directors in charge at the time of company's failure and previous directors will be examined.<br /><br />"It is important we quickly get the full picture of the events which caused Carillion to enter liquidation," said Business Secretary, Greg Clark, in a statement. Any evidence of misconduct will be taken very seriously," he said.<br /><br />The role of Carillion's auditor KPMG will be examined by the Financial Reporting Council. Chief executive Richard Howson stepped down in July of last year after a profit warning. He had been in charge since the end of 2011. <br /><br />Keith Cochrane was appointed as interim chief executive. There has been much criticism over the size of Mr Howson's pay award in 2016 which, including bonuses, totalled £1.5m. He is also due to receive a salary until October of the this year. Under his leadership Carillion was hit by cost overruns on big projects, problems with contracts in the Middle East and a large deficit in its pension schemes.<br /><br />In particular three building projects in the UK had resulted in hefty losses:<br /><br />The £350m Midland Metropolitan Hospital in Sandwell: opening delayed to 2019 due to construction problems<br /><br />The £335m Royal Liverpool Hospital: completion date repeatedly pushed back amid reports of cracks in the building<br /><br />The £745m Aberdeen bypass: delayed because of slow progress in completing initial earthworksJim Brownhttps://www.blogger.com/profile/00258147767051200157noreply@blogger.comtag:blogger.com,1999:blog-8578343158425987632.post-25154083518159480432018-01-16T11:56:06.380+00:002018-01-16T11:56:06.380+00:00Telling Parliament the contracts are not working, ...Telling Parliament the contracts are not working, then doing nothing about it but still paying £10 of millions?<br />I really want to be a fly on the wall when that ones being explained.<br />Good to see probation enter the debate. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8578343158425987632.post-13980791510901449602018-01-16T11:42:50.288+00:002018-01-16T11:42:50.288+00:00The MoJ have serious questions to answer about the...The MoJ have serious questions to answer about their contracts with Carillion after Sam Gymah told parliament twice last year that Carillion were not performing as they should be with prison maintenance contracts.<br />Still paid them millions though.<br /><br />http://m.huffingtonpost.co.uk/entry/carillion-contracts-jusitce_uk_5a57ecbfe4b02cebbfda4956Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8578343158425987632.post-44933429644585201892018-01-16T11:03:02.734+00:002018-01-16T11:03:02.734+00:00In advance of tomorrow's PAC hearing, some wor...In advance of tomorrow's PAC hearing, some words from the March 2014 PAC hearing (& a link to the full transcript):<br /><br />Antonia Romeo: I was going to say that one other lesson to be learned about contract management, of course, is that those who were involved in designing the contracts also have skin in the game when it comes to managing those contracts. When the programme finishes, the person responsible, the programme director who has this commercial experience, will move over and become the director of contract management and rehabilitation services, working within NOMS, for Michael.<br /><br />...<br /><br />Michael Spurr: The first thing to say is that there will be and we have negotiated with trade unions and others a voluntary redundancy package for use where we have identified surplus staff and it would be available post-June when we have moved to the new arrangements of setting up the CRCs and the NPS, but I anticipate that that will be used primarily for corporate service and support staff; operational staff numbers, I think we will need largely to retain, because the aim is to expand the case load.<br /><br />...<br /><br />Q175 Chair: The Report also talks about an aggressive timetable, Dame Ursula. How long is the period for getting the contracts in, from invitation to tender? How long has that been?<br /><br />Dame Ursula Brennan: From the point of launching the invitation to tender to the point when we expect—<br /><br />Q176 Chair: To when you want to sign them off in October. How long is that?<br /><br />Dame Ursula Brennan: Between now and—<br /><br /> <br />Q177 Chair: How long is it? What have you given yourselves between invitation—<br /><br />Antonia Romeo: The invitation to tender will close in June this year.<br /><br />Chair: That process—<br /><br />Antonia Romeo: We have said that we will sign the contracts by the end of the year.<br /><br />Q178 Chair: By October?<br /><br />Antonia Romeo: By the end of the year.<br /><br />Q179 Chair: Has that slipped from October to the end of the year now?<br /><br />Antonia Romeo: No, there hasn’t been any slippage. I’m really aware that this is a programme that’s in flight, so if possible, I would prefer to commit to the overall commitment we have given for the programme, which is to roll out PBR by 2015... We plan to sign the contracts before the end of the year.<br /><br />http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/public-accounts-committee/probation-trust-landscape-review/oral/7395.html<br />______________________________________________<br /><br />And some of the PAC recommendations from 2015:<br /><br />* The Ministry is recruiting and training staff who can manage contractors and contracting over the long term. The Ministry maintained that appropriate weight will be placed on assessing the quality of the bids received and the organisations putting them forward. Contracts will be designed to prevent Community Rehabilitation Companies changing ownership without prior discussion with the Ministry and contingency arrangements are being considered to ensure that continuity of service will be maintained during the procurement and after the sale of the Community Rehabilitation Companies. The Ministry also plans to apply the lessons from past PAC reports and ensure that contracts have appropriate penalty clauses up to and including termination for non-performance.<br /><br />* The Ministry should set out how it intends to satisfy itself that the proposed payment mechanism is workable. As we recommended in our recent report on contracting out public services, the Ministry must include open book accounting arrangements and ensure that they are used effectively. We would also want the NAO to have full access to contractual information that is relevant to assuring Parliament that value for money is being served in these contracts.<br /><br />Lets hope these issues are revisited tomorrow by Meg Hillier & co, including questions as to whatever happened to the many 'report backs' expected to be delivered the PAC.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8578343158425987632.post-8680358020637627912018-01-16T10:39:52.606+00:002018-01-16T10:39:52.606+00:00Carillion: Not alone in hitting problems
Lightnin...Carillion: Not alone in hitting problems<br /><br />Lightning seems to strike the same place remarkably often in Britain's construction and support services sectors.<br /><br />For some, Carillion's demise will seem like a bolt from the blue. But look back 20 years and you find a surprising number of companies which struck similar problems, although not always with fatal consequences.<br /><br />Amey, Jarvis, Connaught, Rok, G4S, Balfour Beatty, Serco, Mitie - and many others - have had to own up to accounts that were, to use a euphemism, optimistic. Most lived to fight another day. Carillion did not.<br /><br />Talk to executives in the industry and they easily find the common thread. Companies that are built up quickly through acquisitions - as Carillion was from the combination of parts of Tarmac, Wimpey, Mowlem and Alfred McAlpine - have an extra struggle first to understand then to integrate their disparate activities.<br /><br />Industry experts spoken to by the BBC also think that Carillion overpaid for its acquisitions, leaving it with less financial fat to fall back on when the going got tough.<br /><br />All the companies above were hurt by what turned out to be aggressive accounting.<br /><br />When a construction company wins a contract, it cannot be precisely sure that it has bid the correct amount - there are always the vagaries of ground conditions, technical challenges, even weather.<br /><br />Bid too keenly and you wipe out your profits. And there is danger in taking profits as you progress - this football stadium, for example, is half-built, so why should my company not book half the estimated profit from the deal this year?<br /><br />A more prudent approach might be to wait for the final reckoning, and when the tricky final stages of the construction process have been sorted out. But shareholders and the board want results now, so waiting until the end of the contract might make you quite unpopular.<br /><br />Culture<br /><br />That same problem of revenue recognition, and the taking of profits too early, applies also to long-term services contracts.<br /><br />When you sign a 10-year-deal to run a prison, do you take all the profits up front? You might, and your auditor, might, in the past, have let you. But the underlying truth is that you will almost certainly lose money in the first few years, and make all the profit - if it comes to that - in the final years of the deal, well after executive team that won the contract have moved on.<br /><br />In a recent interview with the BBC, Leo Quinn, the chief executive of the construction and services group Balfour Beatty - brought in to sort out the mess after it had its own Carillion-style series of profit warnings and accounts restatements - said that in the end it all came down to culture.<br /><br />If staff were given incentives to achieve sales growth regardless of the long-term consequences, then problems would be stored up through bad acquisitions and contracts bid at the wrong price. As Mr Quinn put it, culture is "what does it take to get me noticed around here?"<br /><br />It will be interesting to see what investigators find out about what it took to get noticed at Carillion.Jim Brownhttps://www.blogger.com/profile/00258147767051200157noreply@blogger.comtag:blogger.com,1999:blog-8578343158425987632.post-23234011313083216242018-01-16T10:26:50.988+00:002018-01-16T10:26:50.988+00:00Interesting insight into outsourcing here on the B...Interesting insight into outsourcing here on the BBC.<br /><br />http://www.bbc.co.uk/news/business-42699020Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8578343158425987632.post-81322357560713962182018-01-16T10:10:41.736+00:002018-01-16T10:10:41.736+00:00Bankrupted Carillion = broken Tory policies of f...Bankrupted Carillion = broken Tory policies of financing public services through privatised dealings. Therefore CRC time to go as the public sector should and will demand its safety and support services back. Which by the way are cheaper better more efficient and effective watch words CRCS use but clearly don't deliver as these get in the way of the wheel barrows of cash they are siphoning out the back door. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8578343158425987632.post-8343534360712667212018-01-16T10:09:48.939+00:002018-01-16T10:09:48.939+00:00Just my personal opinion, but I think some of the ...Just my personal opinion, but I think some of the others will have already sent their begging letters, pointing out the tight profit margins they operate under, the continual struggle they face to pay creditors, it's challenging times for the outsourcing industry as the sad demise of Carillion demonstrates, we need a few more bob just to make sure we're running a stable ship.<br />Thankyou very much Mr. Minister.<br /><br />'Getafix Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8578343158425987632.post-23620835278073532802018-01-16T09:59:09.493+00:002018-01-16T09:59:09.493+00:00The claim of being misled on TR contracts has alre...The claim of being misled on TR contracts has already been called.<br />It needs to be picked up and examined.<br />If the Rt Honerable Minister is not screaming for a public apology for such an accusation then perhaps there's a bit of truth in it. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8578343158425987632.post-73325570299002104822018-01-16T09:46:20.881+00:002018-01-16T09:46:20.881+00:00I think getafix has hit a nail squarely on the hea...I think getafix has hit a nail squarely on the head when he highlights the likely MO of Grayling doing deals. Bully, chancer, spiv - but always with someone else's money.<br /><br />JSC & PAC ought to be forensically combing the indecently rushed CRC contracts for his trademark hidden clauses which were probably never formally approved, just added 'on instinct', e.g. the termination penalties to effectively prevent the contracts being undone should the election have had a different outcome.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8578343158425987632.post-85664781792495966002018-01-16T09:28:05.715+00:002018-01-16T09:28:05.715+00:00I am looking forward to our Chris explaining his i...I am looking forward to our Chris explaining his ideology to the PAC.Never needs evidence,does our Chris.Belief is enough for him.Bless......Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8578343158425987632.post-37185772566747326602018-01-16T09:27:37.608+00:002018-01-16T09:27:37.608+00:00I don't know if Carillion will be a watershed,...I don't know if Carillion will be a watershed, but it will cast a long shadow over the use of the private sector conglomerates delivering public services. We know private companies make excessive use of 'commercial confidentiality' until they have to go begging for bailouts. The bubble that private is best has now been burst and when the CRCs are questioned by the JSC they won't quite have the mystique they previously enjoyed. Maybe the political ground is shifting towards more public sector provision, because it carries less risk to the public finances. Whatever, I don't think it will be business as usual...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8578343158425987632.post-11602968705983008342018-01-16T09:12:00.302+00:002018-01-16T09:12:00.302+00:00I don't trust the government with my taxesI don't trust the government with my taxesAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-8578343158425987632.post-81197762697733301452018-01-16T08:39:10.071+00:002018-01-16T08:39:10.071+00:00Taxpayers won't pick up the cost?
It's goi...Taxpayers won't pick up the cost?<br />It's going to cost best part of three quarters of a billion pounds from taxpayers money to underwrite Carillions pension deficit to start with.<br />Haven't a clue how you start to calculate the social costs.<br />It will cost the taxpayer plenty. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8578343158425987632.post-71184409758766465292018-01-16T08:28:45.470+00:002018-01-16T08:28:45.470+00:00You mean my man Selous has misled me all this time...You mean my man Selous has misled me all this time?<br />NOOOOOO!!!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8578343158425987632.post-74863047723383808672018-01-16T08:27:24.489+00:002018-01-16T08:27:24.489+00:00On the one hand government spokesman saying that t...On the one hand government spokesman saying that taxpayers will not pick up the cost of this. On the other hand all privateers who took over CRCs were given additional millions of pounds out of public purse to prop them up. What exactly did they do with this money? I see no evidence of it being spent on staff or service users. I suspect it all went to shareholders. It's our money!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8578343158425987632.post-62937348019833153412018-01-16T08:26:41.761+00:002018-01-16T08:26:41.761+00:00No they're not part of Carillion.No they're not part of Carillion.Jim Brownhttps://www.blogger.com/profile/00258147767051200157noreply@blogger.comtag:blogger.com,1999:blog-8578343158425987632.post-55303926673225468382018-01-16T08:26:26.723+00:002018-01-16T08:26:26.723+00:00Amey are a 'partner' with Carillion provid...Amey are a 'partner' with Carillion providing lots of MoD stuff, not actually part of Carillion. So different to WL/Aurelius.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8578343158425987632.post-9264381888697936112018-01-16T08:21:53.983+00:002018-01-16T08:21:53.983+00:00It's crystal clear that the Carillion bosses w...It's crystal clear that the Carillion bosses were well aware that the firm was going to collapse months before it did. Why else would they change the terms under which bonuses could be clawed back. Covering their backs for when the inevitable collapse occurredAnonymousnoreply@blogger.com