Reports that ‘big four’ accountancy firm KPMG is facing a £250m negligence lawsuit over its role in Carillion’s meltdown shows the need for government to address the UK’s ‘rotten system of bandit capitalism’, Unite, the UK and Ireland’s largest union, said today (Wednesday 13 May).
Commenting on reports that the official receiver is preparing a lawsuit against KPMG for declaring Carillion ‘profitable and sustainable’ in 2016, Unite assistant general secretary Gail Cartmail said:
“It is for the courts to decide if there are any legal implications for KPMG over its role in the Carillion meltdown in 2018. It is obvious, however, that something was clearly very wrong with KPMG’s audit of Carillion. The firm’s collapse was caused by runaway greed and mismanagement at the highest levels and the UK’s auditing and accounting system was powerless to stop it.
“The result was hospitals laying half built, thousands of jobs lost and a bill of a least £150 million to the taxpayer. The case of Carillion, and other high-profile corporate failures where financial blackholes appeared in supposedly healthy firms, exposed the UK’s rotten system of bandit capitalism for what it is.
“Unfortunately, the government has done nothing to address it. Without the meaningful reform of company law to prevent similar collapses and the establishment of regulators with the power to curb grossly avaricious corporate behaviour, it is just a matter of time before we see another Carillion.”