MPs slam Carillion chiefs for hatching “rotten” corporate culture
A hard-hitting Parliamentary report into the collapse of infrastructure giant Carillion has excoriated three of the firm’s most senior figures for enabling a “rotten” corporate culture at the firm. In the 105-page document – produced from a joint investigation by two select committees – Carillion’s former chairman Philip Nevill Green, former finance director Richard Adam and former CEO Richard Howson are blasted for reckless governance and improper handling of accounts. Indeed, the executive summary urges the Insolvency Service to consider whether the trio have breached their duties under the Companies Act.
Work and Pensions Committee chair Frank Field said that Carillion had shown “utter contempt” for suppliers, noting that it used them “as a line of credit to shore up its fragile balance sheet, then in another of its accounting tricks ‘reclassified’ this borrowing to hide the true extent of its massive debt.” Business, Energy and Industrial Strategy Committee chair Rachel Reeves added: “It’s a bitter irony that while Carillion were fully signed up to the government’s Prompt Payment Code, they were making their suppliers hang on for 120 days or more to be paid.” As such, the Committees say, they have no confidence in the current regulatory network, and have urged the government to review it.
However, in a response to the report, the CBI accused the Committees of peddling “knee-jerk soundbites” and hyperbole. In the view of its director-general Josh Hardie, “The language of the report suggests committee members think business in general is greedy and reckless. This is irresponsible and wholly inaccurate.” Hardie added that Carillion’s failure “should act as a catalyst for a level-headed discussion about how the public and private sectors work together to deliver value to society.”
GMB stages protest over “prison-like” working conditions at Amazon
The powerful GMB union held a protest outside Manchester’s Old Trafford stadium this week as Amazon executives gathered at the venue for a corporate event. Joined by representatives from some of its European allies, the union sought to raise awareness of working conditions at the ecommerce behemoth, following recent reports from undercover author James Bloodworth, who had worked as a picker in one of the firm’s UK warehouses.
According to Bloodworth, staff he had worked with during his undercover stint had been so rushed by Amazon’s productivity targets and so under-served with basic bathroom facilities that they had resorted to peeing in bottles rather than taking breaks, because they didn’t want to slip behind. The author also alleged that staff were penalised for taking sick days, and said: “It’s the sheer oppressiveness of [the] management regime there. It’s the most oppressive place I had ever worked, easily.”
In a statement ahead of the protest, GMB national officer Mick Rix said: “GMB, along with our sister unions from Europe, are here to give a voice to our members. Companies like Amazon should be treating staff with respect, not treating them like robots.” Manchester Gorton MP Afzal Khan added: “I am shocked and appalled by the stories of ‘prison-like’ working conditions in Amazon warehouses across the UK.”
Government slashes maximum stake on fixed-odds betting terminals by 98%
Leaders in the gambling industry have been faced with an innovation challenge following a government move to slash the maximum stake on fixed-odds betting terminals (FOBTs) from £100 to just £2. Announcing the step, sport and civil society minister Tracy Crouch highlighted problem gambling’s capacity to devastate lives and communities. She added: “We recognise the potential impact of this change for betting shops which depend on FOBT revenues – but also that this is an industry that is innovative and able to adapt to changes.”
William Hill CEO Philip Bowcock gave a cautious reaction to the decision, saying: “The government has handed us a tough challenge today and it will take some time for the full impact to be understood – for our business, the wider high street and key partners like horseracing. We will continue to evolve our retail business in order to adapt to this change, and we will support our colleagues as best we can.”
However, Paddy Power Betfair CEO Peter Jackson was altogether more upbeat. He said: “We have previously highlighted our concern that the wider gambling industry has suffered reputational damage as a result of the widespread unease over stake limits on gaming machines. We welcome, therefore, the significant intervention by the government … and believe this is a positive development for the long-term sustainability of the industry.”
East Coast Mainline goes back into government hands
Transport secretary Chris Grayling has announced that the East Coast Mainline franchise in its current form is to be terminated on 24 June, with the London to Edinburgh route going temporarily under the control of the ‘Operator of Last Resort’ – namely, the government. In a 16 May Commons statement, Grayling explained that franchise partners Stagecoach and Virgin Trains got their initial, joint bid wrong and “are now paying a price”. He noted: “They will have lost nearly £200 million meeting their contracted commitments.”
Experts have weighed in on the move, with The Independent’s Simon Calder saying, “Pity the poor shareholder: for every day that Virgin Trains East Coast has existed, the enterprise has lost somewhere in the region of £175,000.” Calder quoted Transport Select Committee chair Meg Hillier’s recent view that the franchise had suffered from inaccurate passenger growth forecasts. That sentiment was echoed in a tweet from seasoned rail author Christian Wolmar, who wrote: “The days of making private companies guess how many passengers there will be in three years’ time, let alone seven, has to end.”
Bank of England deputy governor in ‘menopause’ gaffe
Top figures from the worlds of management and employee relations have hit out at Bank of England deputy governor Ben Broadbent for describing the UK economy as “menopausal”. In a 16 May Telegraph interview, Broadbent explained his use of the word by saying that, in financial terms, it applied to economies that are “past their peak and no longer so potent”.
Condemnation arrived swiftly. TUC general secretary Frances O’Grady called Broadbent’s remarks “totally inappropriate” and said, “There’s no need to resort to lazy, sexist comments to describe problems in the economy.” CBI director general Carolyn Fairbairn noted: “This poor choice of words is very disappointing and distracts from the real issue at hand. Productivity has been the UK’s Achilles’ heel for far too long.”
Broadbent has since apologised – but many commentators have suggested he is now out of the running to replace B of E governor Mark Carney, who is due to leave his role next year.
Image of Carillion website graphics courtesy of chrisdorney, via Shutterstock