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Partner Simon Bushell comments in The Times in relation to the collapse of construction group Carillion.
Simon’s comments were published in The Times on 25 January 2018, which can be found here.
“The collapse of the construction group Carillion is a tragedy — but it is also emblematic of the state of the nation’s public and private sectors (given that Carillion straddled both). Short-termism, big talk but modest achievements, and pensioners left in the lurch.
…Was there chronic delusion among board members or deliberate dissimulation? Perhaps some members genuinely did not believe they would be felled by the crisis. The big questions are over the upbeat statements about prospects for the company in the early part of 2017, followed by the first profit warnings shortly afterwards. “It is the proximity of these two events which has triggered the scrutiny of the FCA,” says Simon Bushell of Signature Litigation.
…It is vital that lessons are learnt from this sorry tale. Among them, says Bushell, should be an examination of the notion of “goodwill”. “One of Carillion’s key assets was £1.5 billion of goodwill, which would have had a significant impact on the balance sheet,” he says. “In the context of an infrastructure company, what does goodwill mean? In the end it was meaningless. When signing the accounts, the directors will have relied on advice from the company’s auditors.””
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