Britain’s big four accountancy firms have been savaged by MPs who have accused them of “feasting on the carcase” of collapsed construction giant Carillion and collecting more than £70 million in the process.
MPs from the business and pensions committees, who are conducting a joint inquiry into Carillion’s demise, have published a breakdown of fees collected by KPMG, PwC, Deloitte and EY.
It shows that the professional services firms have pocketed a total of £71.6m in Carillion-related work since 2008, including on its pension schemes.
Veteran Labour MP Frank Field, head of the work and pensions committee, said: “The image of these companies feasting on what was soon to become a carcase will not be lost on decent citizens.
“The former directors of Carillion are, unlike their pensioners, suppliers and employees, all right. These figures show that, as ever, the Big Four are alright too. All of them did extensive – and expensive – work for Carillion.”
PwC, which is handling the liquidation process, comes in for particular criticism, with Mr Field accusing the bean counter of playing “all three sides”.
He said: “PwC managed to play all three sides – the company, pension schemes and the government – to the tune of £21m and are now being paid to preside over the carcase of the company as special managers. It was perhaps telling that, with their three fellow oligarchs conflicted, PwC were appointed to this lucrative position without any competition.”
According to information published by the committees, KPMG has banked £20.2m in fees since 2008, PwC £21.1m, Deloitte £12m and EY £18.3m.
Carillion’s liquidation last month left in its wake a £900m debt pile, a £590m pension deficit, and hundreds of millions of pounds in unfinished public contracts.
A total of 989 jobs have been lost since, with 6,668 saved out of the previous directly-employed workforce of 18,000.
The role of auditors has come under the spotlight, with questions asked about why problems at the firm were not spotted sooner.
The accountancy watchdog has gone as far as to open an investigation into KPMG over its audits of Carillion under the Audit Enforcement Procedure. The probe will cover the years ended 2014, 2015 and 2016, and additional audit work carried out during 2017.
Business committee head Rachel Reeves MP, who co-chairs the inquiry, said: “KPMG has serious questions to answer about the collapse of Carillion.
“Either KPMG failed to spot the warning signs, or its judgment was clouded by its cosy relationship with the company and the multimillion-pound fees it received.
“For the sake of all those who lost their jobs at Carillion and in the interests of better corporate governance, KPMG should, as a bare minimum, review its processes and explain what went wrong.”
For its part, KPMG chairman Bill Michael wrote a lengthy riposte to the MPs’ claims.
In an 18-page letter, he said the audit work KPMG carried out was “appropriate and responsible”, but admitted that lessons must be learned from Carillion’s collapse.
Representatives from KPMG will appear before MPs next week to answer questions over its role.
Last week former Carillion executives were branded “delusional” and accused of playing the blame game by the MPs.