From the Guardian: Labour has called on the Tory government to explain why it awarded contracts worth nearly £2bn to Carillion even after it became clear the company was in financial distress.
The construction and outsourcing group, which has just gone into liquidation, issued the first of three warnings about its financial health in July.
The shadow Cabinet Office minister, Jon Trickett, pointed to regulations showing Carillion could have been designated “high risk” at that point, and he called on the government to explain what measures it had taken to check the firm was ready for more taxpayer-funded work.
Trickett said: “Alarm bells have been ringing for over six months about the state of Carillion’s finances, so the government must come forward and answer questions on exactly what due diligence measures were undertaken before awarding contracts to Carillion worth billions of taxpayers’ money.”
Carillion issued its first profit warning on 10 July. A week later a joint venture between Carillion, its construction rival Kier and the French civil engineer Eiffage won a £1.4bn contract to work on the HS2 high-speed rail link.
The day after that, on 18 July, Carillion won a £158m contract from the Ministry of Defence to provide “catering, retail and leisure, together with hotel and mess services” at 233 military facilities.15
A second profit warning in September was followed five weeks later by the award from Network Rail of a contract to electrify the London-to-Corby rail line. A week afterwards the company put out a third profit warning, only to be awarded a £12m schools building contract three days later.
[Read full article on Guardian website…]