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Carillion: Behind the Headlines

by | Thursday, 18th January 2018
With the recent bombshell news that Carillion was going into voluntary liquidation there are growing fears that other firms such as G4S could also be at risk. News has also surfaced that KPMG is under increasing pressure and risks being investigated for giving Carillion's financial statements its seal of approval only 10 months ago.

CCH Daily recently reported that, in respect of Carillion, "the official receiver will make an application to the High Court for PricewaterhouseCoopers (PwC) to be appointed as special managers, to act on behalf of the official receiver, and we further anticipate that an order will be granted to that effect."

It has also emerged that the government had awarded "contracts worth £2bn to the firm even after it had issued profit warnings." When challenged on this issue a senior government minister replied that "contracts awarded after the profit warnings were only won as part of joint ventures (JVs) where the other JV partners would guarantee the provision of services."

Carillion had originally been formed from the construction divisions of Tarmac, Wimpey, Alfred McAlpine and Mowlem in 1999. Interrogation of the CPExposed database of Common Purpose graduates reveals that several Carillion senior leaders were Common Purpose trained, including Adrian Bull, managing director of Carillion Health, and, Dean Smith who until recently was Carillion training director.

Its involvement in public-private partnerships spans many sectors including transport, health, secure accommodation and defence. Shortly following its collapse, the National Audit Office released a report concluding that there is a lack of evidence that Private Finance Initiatives (PFIs) offer value for money for taxpayers. The dangers of Public-Private partnerships is best understood by reference to the video embedded within Plundering State Assets With Public Private Partnerships. No doubt there will be much public debate on this topic over the coming months.

Within the UK Column News on 16 January 2018 we were able to reveal that Keith Cochrane, Interim CEO of Carillion, was the former chief executive of the Weir Group plc. While occupying that role Cochrane appeared in a promotional video for CSC leaders. Within the video he claimed that CSC Leaders is a "fantastic tool for management development and helping managers to open their eyes to many of the challenges that are out their in the real world ... Its' about that broadening of mind, that broadening of experience that ... helps make the difference between a good manager and an outstanding manager."

During his time with Carillion, Cochrane was a selection group member for CSC Leaders. CSC leaders is a partnership between HRH The Duke of Edinburgh's Commonwealth Study Conferences (UK Fund) and Common Purpose. Sponsors of CSC Leaders are Weir Group plc, a FTSE 100 company founded in 1871 and headquartered in Glasgow; Price Waterhouse Cooper (PwC UK), and, Anglo American, a global diversified mining business. Weir Group plc are partners and sponsors of Common Purpose. Melvin Poon, Financial Services Partner, PwC, is a member of the Common Purpose Asia Pacific Board. Boon holds his board position alongside Dr Robert Care, Arup Principal, ACT and Strategic Geographies Leader, Australasia, Arup. Dr Care had been appointed as chair of the Common Purpose Charitable Trust in 2013.

In relation to Carillion Auditors, KPMG, it emerged that partner Kru Desai, Head of Government and Infrastructure is leading the organisations Reimagine Government Programme. In 2016 the programme imagined new ways for government to achieve public policy objectives. The Re-imagine Challenge 2017 was jointly led by KPMG and the Cabinet Office with teams drawn from "Senior Civil Servants, grade 6, and grade 7 staff and fast streamers."

In 2010 we published documentary evidence which proved that David Cameron's Cabinet Office had been in a "secretive dialogue with Julia Middleton, CEO, Common Purpose, to achieve a culture change in the Top 200 Civil Servants using the Common Purpose Model." We can also reveal that PwC, potential special managers of Carillon are also Common Purpose partners and sponsors.

Robert Care quote

Our initial discovery of Common Purpose connections between both public and private sector organisations in this developing story led us to ask: Is there anything other than cronyism linking the above organisations together? To discover a potential answer to that question we need to shift the focus of our attention towards the global level and at the United Nations in particular.

The UN Global Compact

The UN Global Compact's mission is to "mobilize a global movement of sustainable companies and stakeholders to create the world we want." To achieve these objectives it is expected that participant organisations will "align their strategies and operations with Ten Principles on human rights, labour, environment and anti-corruption",

We found it unbelievable that Carillion was perceived to be a suitable participant in the Global Compact following it's past history. In 2009 it was revealed that it was one of a number of construction companies who were subscribers to an illegal blacklisting body ~ the Consulting Association. In 2014 eight construction companies including Carillion launched the Construction Workers Compensation scheme. Despite this past move the Unite Union announced in December 2017 that it had issued proceedings in the High Court against major contractors including Carillion.

The second strand of the Compact's mission is to require participating organisations to take "strategic actions to advance broader societal goals, such as the UN Sustainable Development Goals, with an emphasis on collaboration and innovation."

At the UN Global Compact Leaders Summit 2017 we noted the attendance of Lord Dr. Michael Hastings and three other senior officers from KPMG, and five participants from PriceWaterhouseCooper. In 2016 Lord Hastings was listed as one of the event speakers - From Global Goals to Business Action. Reference to a Common Purpose 2020 course brochure reveals that Hastings was listed as a past speaker.

The UN Global Compact website boasts "over 12,000 signatories in over 160 countries." Global Compact members are encouraged to "engage in partnerships that advance the UN Global Compact’s principles and support broader UN goals, such as the UN Sustainable Development Goals (SDGs)."

The sustainable development goals are found within the United Nations Agenda 2030. UN Agenda 2030 Goal 17.17 requires that Governments are required to "encourage and promote effective public, public-private and civil society partnerships, building on the experience and resourcing strategies of partnerships." We have long been aware that Goal 17 - Partnership for the SDG goals is the focal point of Common Purpose indoctrination through their leadership training programmes and have previously warned how such partnerships can lead to a blurring of the boundaries between the state and public corporations in our article series the Common Purpose Effect.

The UK Network of the UN Global Compact

The UK network of the UN Global Compact was established in 2003. Among the Global Compact Network UK's board members we discovered Nigel Lockood of G4S. The UK network has 380 participants. The following organisations are listed as participants of the UK network

Carillion plc

KPMG International

PwC

G4S plc

Ove Arup & Partners International Ltd

We also noted the name of Pearson plc amongst the UK participants.

Sir David Bell was listed as a director of Common Purpose from 1998 until his resignation in September 2012. He was involved as a member of the UN Global Compact advisory council at the same time.

The Global Compact Network UK strategic partners includes:

Cynnal Cymru - Sustain Wales which is "the leading organisation for Sustainable Development in Wales." whose mission is "to make Wales a low carbon, resource efficient, healthy, just and prosperous society."

Trade Union Congress (TUC) which "represents over six and a half million workers in 66 unions."

The Department for International Development (DFID) whose mission would be perceived by many as being the channelling of UK taxpayers money on a variety of schemes (packaged as UK Aid) to expand the influence of British 'soft power' on a global scale.

The United Nations Association (UNA) UK, whose mission is to "make the case for an effective UN to British policy-makers and the public."

The United Nations Conference on Trade and Development (UNCTAD)

The United Nations Conference on Trade and Development (UNCTAD), together with other UN departments and agencies, "measure progress towards the Sustainable Development Goals, as set out in Agenda 2030."

The UNCTAD Panel of Eminent Persons was reconvened in 2011 to advise the UNCTAD Secretary-General on "how to meet the key and emerging economic development challenges of today, and provide concrete ideas for international initiatives on how to deal with them, and how to strategically position UNCTAD in this context."

Amongst the 10 strong panel we discovered Lord Malloch-Brown, former United Nations Deputy Secretary-General and a "former Minister of State in the Foreign and Commonwealth Office of the British Government with responsibility for Africa, Asia and the United Nations." In addition, Malloch-Brown is also a member of the Open Society Global Board (George Soros), Chair of the Business and Sustainable Development Commission, and, Vice-Chairman, World Economic Forum (2010-2014).

Carillion’s Sustainability 2020 Strategy was presented to the Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR) in Geneva in October 2016 by David Picton, Chief Sustainability Officer.

The summary of UNCTAD Case Study 2016 – Sustainability Reporting states that "Carillion will continue to place sustainability and responsible operations at the heart of its business model, corporate strategy and programmes for employee engagement ... For a long-term commercial business case to succeed, however, it will be crucial for such authentic reporting to be recognised in contract awards and measurable community impacts."

On the Carillion website David Picton is quoted as saying that “Businesses without visionary engagement, inspiring stories, responsible compliance or public trust are businesses without competitive futures. For Carillion, sustainability is how we shape our competitive future, how we add value and how our people create even more inspiring stories for a better tomorrow.”

How tragically ironic David Picton's own words now sound.

Public Procurement Rules May Have Contributed to the Problem

There have already been calls for reform of the public procurement system following Carillion's collapse. David Howell, East Anglia lead at the Federation of Small Businesses said that "there is a wider lesson to learn about the concentration of public contracts in the hands of a small number of very big businesses."

The Construction Enquirer is also of the opinion that the Carillion legacy must be pay and public reform when pointing out that "opening up public contracts to a wider pool of firms is an obvious move." They add that "Civil servants are also culpable for lazily handing out work to familiar names while a whole tier of of suppliers are chomping at the bit to win government work and show what they can do."

At UK Column we couldn't agree more. We have also critically examined the International Public Procurement Rules, and their effects, and published our findings in November, 2016. We discovered that the policies and regulations governing public sector procurement in the UK had been shaped and influenced at the International and regional levels. We traced the origins of the current regulatory regime back to the United Nations Commission on Trade Law (UNCITRAL) Model Law on Public Procurement, published in January 2014.

UNICITRAL is the "core legal body of the United Nations system in the field of international trade law". UNCITRAL helpfully provides 69 pages of guidance on how the "enacting States will promulgate procurement regulations to fulfil the objectives and to implement the provisions of the Model  Law".

Directives, regulations, policies and guidance relating to the procurement of supplies, services and works for the public sector in England and Wales were published by Crown Commercial Service on behalf of HM Government in October 2015. These Global Public Procurement rules were brought into British law by the, common purpose inspired, former Cabinet Office Minister, Francis Maude.

Examination of the public procurement rules reveals that they  "prevent 'buy national' policies and promote the free movement of goods and services". This opening up of the competitive tendering process to regional and global competitors might have acted to encourage organisations, like Carillion, to factor in 'paper-thin profit margins during their bidding process. We suspect that his might have been another contributory factor in Carillion's financial collapse.

Conclusions and Recommendations

At UK Column we have no doubt that the public will be subjected to the usual government platitudes that the issues brought into the focus by Carilion's collapse could not possibly have been foreseen although 'lessons will be learned'. The past scandals that occurred within Mid Staffordshire NHS Trust and the Rotherham child exploitation scandal where public figures turned a 'bind eye' has demonstrated the complete opposite. In neither of those cases has any public official suffered penalty for breach of the duty of care that was owed to the vulnerable hospital patients in the Mid Staffordshire Hospital case nor to the innocent young children who were the victims in  Rotherham.

Unfortunately, there has been a long-standing culture within the public sector of senior officials wielding considerable power in the absence of public accountability for their action when things go wrong. In the private sector we witnessed the very same abuses of power and arrogance of senior officials in the aftermath of the banking scandal of 2008.

In the Rotherham child exploitations scandal UK Column researchers were able to identify that many senior public figures, who should have protected those children from harm, were in fact Common Purpose graduates. Eyes down for a full-house because that list included the Chief Constable, South Yorkshire Police, Chief Executive, Rotherham Metropolitan Borough Council, the former strategic director of children and young people’s services at Rotherham MBC, and, the Manager for the Rotherham Local Strategic Partnership. The local Member of Parliament was also Common Purpose trained!

The discovery of so many Common Purpose trained operatives operating within, and in close proximity to, Carillion cannot possibly be shrugged off as just a simple possible coincidence. If the leadership training provided by Common Purpose" made the "difference between a good manager and an outstanding manager," as claimed by Keith Cochrane, Carillion's Interim CEO, why did Carillion collapse so spectacularly? Furthermore, what positive influence did Common Purpose Leadership training have in the Rotherham case?

In our view these are serious questions which demand full and detailed answers.

This report adds to previous research evidence that should now trigger a full public inquiry into the activities of Common Purpose trained operatives found holding senior positions in Government, public sector and private sector bodies. Such an inquiry should itself be free of Common Purpose influence and should bear no relationship to the Leveson model. A strict condition of any public inquiry of this type being that common purpose graduates should be barred from holding any positions of influence in Government nor public or private sector organisations during the course of the inquiry.

We won't hold our breath.

 

 

 

 

 

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