A group of MPs has written to a prominent government minister questioning how the government carried out risk assessments on huge public contracts awarded to Carillion prior to its collapse.
The letter from the chairs of the joint Carillion inquiry to David Lidington, minister for the Cabinet Office, expressed concerns that the risk assessments carried out were based on out-of-date accounts.
In its recent report into the demise of Carillion, the joint inquiry concluded that the crown representative system, which should have managed the relationship between Carillion and the government, was "semi-professional and part-time".
It provided little warning of the risks in a key strategic supplier and should be reviewed immediately, the inquiry said.
In their letter to Lidington, the chairs of the inquiry, Frank Field and Rachel Reeves, said: "The assignment of a crown representative to Carillion served no noticeable purpose in alerting the government to potential issues in advance of company’s July 2017 profit warning.
"The absence of one between August and November 2017 cannot have increased the government’s ability to keep itself informed of the direction of the company during a critical period before its collapse."
On the issue of the Carillion accounts used for the government’s risk assessments, it said: "The financial data used in these risk assessments appears to be out-of-date.
"The September 2016 assessment is still quoting Carillion’s total revenue figure from the 2014 accounts despite the 2015 accounts having been published back in March 2016.
They asked: "Is this an isolated case or are all strategic supplier risk assessments based on out-of-date financial data?"
Carillion reported in its 2016 accounts revenue from the UK government of £1.7bn but according to the letter, the risk assessments referred to annual revenue from central government of a much lower figure of £377m.
It added that key contracts such as the £235m Royal Liverpool Hospital contract were not factored into the assessments because the government isn’t a direct participant.
