'Recklessness, hubris and greed' behind collapse James Butler Campaigns Officer 16th May 2018 Carillion’s rise and spectacular fall was a story of recklessness, hubris and greed. Its business model was a relentless dash for cash, driven by acquisitions, rising debt, expansion into new markets and exploitation of suppliers. It presented accounts that misrepresented the reality of the business, and increased its dividend every year, come what may. Long term obligations, such as adequately funding its pension schemes, were treated with contempt. Even as the company very publicly began to unravel, the board was concerned with increasing and protecting generous executive bonuses. – Summary, Joint Work and Pensioners and BEIS Committees report on the collapse of Carillion. The report catalogues the comprehensive failure of the business model and way of operating. Too numerous to list in their entirety, the criticisms included using “aggressive accounting policies to present a rosy picture to the markets”. It found that directors “rewarded themselves and other shareholders by choosing to pay out more in dividends than the company generated in cash, despite increased borrowing, low levels of investment and a growing pension deficit”, and had treated suppliers “with contempt”, with a Board which was “either negligently ignorant of the rotten culture at Carillion or complicit in it”. MPs also noted that the remuneration committee “paid substantially higher salaries and bonuses to senior staff while financial performance declined. It was the opposite of payment by results.” The damning report shows that we that we need to ‘hard-wire’ co-operative values into the DNA of the wider economy. We want to see purposeful, values-driven and productive companies creating growth and jobs, where the fruits of this labour are fairly shared and with markets that are shaped in the interest of the consumer and employees, not shareholders. The Co-operative movement shows that there is a better way of doing business and providing services. It offers vital lessons for how we can shape our country and its destiny together, more united and sharing power for common purpose. We believe that a new and more co-operative Britain would not just be fairer, but it would be more productive and more resilient too, by drawing on the wisdom, strength and commitment of the many. Our 2017 Policy Platform addressed many of the problems the report identified: The need to shake up Britain’s boardroom and strengthen board governance To introduce a new duty of stewardship To embed profit sharing To protect private pensions. Read our 2017 policy platform, A Co-operative Plan for Britain where wealth and power are shared. To help shape our policies visit our policy hub.