Carillion collapse latest: Probe into contractor's liquidation should be extended, Business Secretary demands

Greg Clark writes to Financial Reporting Council and Insolvency Service pledging, 'Any evidence of misconduct will be taken very seriously'

Business Secretary Greg Clark has written to two independent bodies asking them to probe more deeply into the collapse of Carillion.

The Cabinet minister wrote to the appointed "official receiver" to ensure former directors’ actions are taken into account, with questions being asked about bonuses and top executives who had left the firm when it went bust.

He also penned a letter to the corporate governance watchdog, the Financial Reporting Council (FRC), asking it to launch an investigation into the affair.

Mr Clark said: “It is important we quickly get the full picture of the events which caused Carillion to enter liquidation, which is why I have asked the Insolvency Service to fast-track and broaden the scope of the Official Receiver’s investigation.

“In particular, I have asked that the investigation looks not only at the conduct of the directors at the point of its insolvency, but also of any individuals who were previously directors.

“Any evidence of misconduct will be taken very seriously.”

In his letter to FRC chairman Sir Win Bischoff, he asked him to conduct an investigation into the preparation of Carillion’s accounts past and present, as well as the company’s auditors, KPMG.

In his letter, Mr Clark said: “I ask that any investigation you undertake examines not only the conduct of the directors, past and present, in the preparation of the accounts, but also the conduct and practice of the auditors of those accounts.”

The City watchdog, the Financial Conduct Authority, has already announced it will probe Carillion’s collapse, while in Parliament, the Public Administration will investigate Government outsourcing practices and other committees are also considering action.

The Business Secretary also chaired a meeting on Monday with leading business and construction trade bodies, representing Carillion’s sub-contractors.

On Tuesday he will meet the General Secretaries of the TUC and Unite, Frances O’Grady and Len McCluskey, to discuss the impact on employees affected by Carillion’s insolvency.

On Monday the Government warned directors of Carillion, which handled hundreds of public contracts, that they would be hit with “severe penalties” if found guilty of misconduct in securing some £4m of bonuses last year before the firm failed.

The firm was involved in providing school dinners and cleaning services to almost 900 schools; delivering maintenance and facility management services to hospitals, including 200 operating theatres, covering almost 12,000 beds and catering for 19,000 meals a day; construction work on rail projects including HS2 and Crossrail; maintaining 50,000 Army base homes; £200m of prison contracts and other major construction projects.

The firm’s share price has plunged more than 70 per cent in the past six months after making a string of profit warnings and breaching its financial covenants.

But Downing Street accepted that eight contracts had been signed since a July 2017 profit warning, including a deal last Monday not yet signed with Leeds City Council to provide a new orbital road.

Of the others, two were deals with the Ministry of Defence, two related to HS2 and two were Network Rail contracts with a joint venture attached, plus a further one without, worth £62m.