EY to administrate Carillion as construction outsourcer collapses

Collapsed British firm Carillion, which has come under political fire for paying dividends while racking up big debts and a pension deficit, has handed more than $1 billion to shareholders since it was created 19 years ago, a Reuters analysis shows.

The collpase of major construction firm Carlillion into liquidation this morning has far-reaching implications for how the Government awards jobs to major contractors, say the Fedeation of Master Builders, the National Federation of Builders and the Federtion for Small Business.

Carillion, which has a variety of private and public service contracts in britain and employs 43,000 staff worldwide, announced its immediate liquidation Monday after the heavily-indebted company failed to secure a last-ditch financial rescue from the government and banks.

Bernard Jenkin, the Conservative Party chairman of the House of Commons Public Administration Committee, said, “This really shakes public confidence in the ability of the private sector to deliver public services and infrastructure”.

Construction giant Carillion – which has a base near Chesterfield – has entered compulsory liquidation. “We as the government will continue to pay the wages and salaries of employees working on those public sector contracts”.

The British government has agreed to carry on paying public sector employees until the status of the contracts is established, and new contracts have been found to provide the services or they are taken “in-house” by the state, Cabinet Office minister David Lidington said.

“Government ministers seem to have colluded in a strategy where, even when they know the company was in trouble [.] [they] still drip-fed this company with public contracts”, Labour shadow chancellor, John McDonnell, told Sky News on Tuesday afternoon.

The sudden collapse of the firm, confirmed this morning after urgent talks with bank lenders failed to deliver a lifeline, puts thousands of jobs in the United Kingdom and overseas at risk.

The company said in a statement: “Kier notes today’s announcement relating to Carillion“.

The CEK joint venture – made up of Carillion, Eiffage and Kier – was commissioned to design and build a 50-mile section of the high speed railway roughly between Aylesbury and Royal Leamington Spa.

Reports suggest up to 30,000 small firms are owed as much as £1 billion (€1.1 billion, $1.4 billion) by Carillion.

Lancashire County Council leader Geoff Driver said an agreement in 2013 with Carillion saw it assist in disposing of surplus property but there were no other contracts.

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Unions have their work cut out to reassure staff, and to bargain on their behalf to ensure they remain in employment.