As the dust continues to settle on the sudden collapse of the UK privatization giant Carillion, researchers and reporters are piecing together a clearer picture of the profiteering that made so much money for shareholders while doing so much damage to employees people who depended on the services it provided.
With each passing day, there are new revelations:
- Carillion UK often acted like a real estate speculator, flipping services like they were properties.
- Carillion executives rewarded themselves with huge bonuses and dividends even as the company foundered towards collapse
- Carillion UK "wriggled out" of pension contributions, and its plans are now hundreds of millions of pounds in debt
- Suppliers owed money by Carillion UK will likely get just pennies per pound they're owed
- In the days before its collapse, Carillion UK took tens of millions from its Canadian subsidiary
- Carillion Canada is now under creditor protection, and will likely try to selling off assets
According to the European Services Strategy Unit, Carillion UK made more than $1 billion not by providing good services, but by flipping public real estate.
As reported in The Independent, the corporation earned huge returns of more than 30 per cent by selling off its stake in some of its hospital buildings.
"Not only do we now know that PFI represents a bad deal for the taxpayer but the public purse loses out again when shares are sold offshore to companies who pay no UK corporation tax," said UK Shadow Chancellor John McDonnel.
"This is just another example of how private companies have made obscene profits from the public purse."
The UK parent of Carillion also showed itself willing to leave subsidiaries like Carillion Canada in the lurch.
"Although Carillion had been facing a financial crunch for months, the liquidation clearly caught the Canadian division off guard and left it financially stranded," reported The Globe and Mail last week.
In the immediate wake of the Carillion UK collapse, officials at the Canadian division insisted they were expecting "business-as-usual."
But it now turns out that just three days before its collapse, Carillion UK took nearly $30 from the Canadian division, leaving it strapped.
"The Canadian division was also immediately cut off from a $30-million operating line of credit that it had been able to access at HSBC under Carillion PLC's overall lending facilities. And to make matters worse, the Bank of Montreal and Bank of Nova Scotia froze Carillion Canada's corporate credit cards, leaving the company strapped."
Carillion Canada is now under creditor protection, and some financial analysts are predicting that the corporation's Canadian division will soon begin trying to sell off its assets to other privatizing giants such as Brookfield Asset Management.
In the UK, meanwhile, suppliers to the parent company aren't likely to get much more than pennies for every pound they're owed.
“This showed that the insolvency recovery for creditors in the event of a group-wide liquidation would be an average of between 0.8p in the pound and 6.6p in the pound,” reported The Evening Standard reported, which went on to quote accounting expert Peter Kubik as saying: “Any company affected by Carillion’s collapse should conduct a health check to make sure they are still a viable going concern.”
And now it's being revealed that Carillion UK "wriggled out" of pension contributions, leaving its pensions underfunded by hundreds of millions of pounds even as the corporation ramped up the dividends it was paying its shareholders.