Carillion “wriggled” payments into its pension plans of companies that his troubles have increased, while carrying on the payment of dividends to shareholders and bosses ‘ bonuses, say the Mps.
The Work and Pensions select committee has questioned the manner in which the investments of retirement plans have been managed to the collapse of the outsourcing giant.
The schemes are in deficit.
But last year, contributions to the pension fund have been deferred until 2019, in support of the company finances.
The committee has published a letter from Robin Ellison, chairman of the board of directors of Carillion of the DB Pension Plan, giving an account of the last few years, and that suggests that they have been left with a funding gap of about Â£990m.
The letter shows that the trustees of the pension plan have been “kept in the dark” about the state of Carillion finance until the end of last year, the committee argues, and the dividends and bonuses have been paid to the burden of pension fund contributions.
The selection committee chairman, Frank Field, said: “It is clear that Carillion has been to try and evade its obligations to its retirees for the past 10 years.”
Mr. Ellison will be present in person to answer questions of the members of the committee later this week, the pressure increases on the people in question to explain why the pension fund shortfall has been licensed to a major expansion of the company, difficulties compounded. The Contributions in a hurry
Carillion, which manages a wide variety of public and private sector projects around the UK, from the reconstruction of Battersea Power Station cleaning, to the prisons, collapsed under a growing mountain of debt, two weeks ago.
The company was a conglomerate, incorporating parts of several companies, previously independent, including the tarmac, Wimpey, Mowlem and Alfred McAlpine. Following to its employees, former employees and retirees are members of more than a dozen different retirement plans.
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Mr. Ellison, who supervises six of its defined benefit pension plans, said in his letter to Mps that the company repeatedly cited the “constraints of” cash flow prior to 2017, as the reason why they could not make more pension contributions.
The letter indicates that, after Carillion has published its first profit warning in July, and its share price has begun to slide dramatically, the trustees of the pension plan is engaged with Carillion to understand that the result of warning meant for plans, and has also started regular and close dialogue with the pension regulator.”
In September 2017, the company has requested that the pension contributions to be carried over to the total. Mr. Ellison’s letter says the directors have agreed to a postponement, since this seemed to be a pre-condition for banks to commit more funds to the struggling company.’The bombing’
Chairman of the committee, Mr Field criticised the conduct of the administration and the regulatory body, noting that Carillion has continued to pay more than Â£70 million euros in annual dividends.
The firm also has been criticized for bonuses and severance payments, it was to pay for executives, while those that have been blocked in the wake of the farm of the disappearance.
“The so-called cash flow problems does of course not prevent the bombing of dividends and handsome pay packets for those at the top,” said Mr. Field.
“This has resulted in the negotiation deficit contributions exclusively last fall, in order to enable more borrowing.
“Remarkably, this system has been approved by the trustees and the Pensions Regulator.Play
However, pensions expert, Tom McPhail of Hargreaves Lansdown stockbrokers said that the trustees should not be judged too harshly for having accepted the report.
“They had to make a judgment call, the decision to continue to work with the employer, or, in fact, pull the plug and accept the consequences could be they would precipitate the collapse of the company,” he said.
“They have made the decision that they had to try to help and give [the leadership] more flexibility”
“The bet did not pay off, but they did what they believed was in the best interest of the pension plan members.”
A spokesman for the Pensions Regulator said that it had been “proactively” to protect the retirement benefits of a member for several years.
“The current regulatory framework that attempts to reconcile the needs of a system and its members with the needs of an employer to invest in their business,” the spokesman said.
The Pensions regulator, said the information available before July 2017 “did not show sufficient concern” to justify their progress.
A spokesman for David Chapman, the official receiver, responsible for the supervision of Carillion in the process of liquidation, said: “The official receiver will investigate the actions of the directors of the company before the liquidation in respect of all the affairs of the company.
“If there was inappropriate behavior then he has the possibility to request the continuation of the action.”