If Carillion was as efficient at digging tunnels as it is reputational holes, it’s hard to see how the company would now be on the brink of collapse.
Crisis talks with its lenders on Wednesday failed to shed light on the future of a critical government delivery partner which, by under-pricing a string of major contracts, only has itself to blame.
And time is running out – fast.
People who have seen the presentation made by Carillion this week say it needs about £300m of short-term funding as soon as the end of this month. It’s not hard to see why banks, acting commercially, would struggle to justify making additional credit available – and not without considerable pain being shared by the government and other customers and stakeholders.
Today, the Pensions Regulator will meet other stakeholders in Carillion’s collection of retirement schemes to work out how to safeguard the interests of 28,500 members.
Recent crises at other stricken companies mean the watchdog will be determined to ensure that it is perceived to be acting robustly – which may, perversely, make finding a commercial solution harder.
Should the government step in to provide the funding?
It’s not obvious why it should bail out a private company, other than perhaps through a bridging loan to facilitate an orderly transfer of contracts to rival providers.
And if they do so, ministers would surely decide to test the appetite of Carillion’s former chief executive, Richard Howson, for a public fight by halting his remaining severance payments.
The company’s problems are not Howson’s fault alone, but the principle of accountability – so often the word used to legitimise public company chiefs’ multimillion pound pay deals – dictates that he may be required to pay with more than just his job.
Flint for BP chair?
Theresa May isn’t the only one with tricky reshuffles on her mind. A proposal from the accounting watchdog to limit the length of time a public company chairman can serve before being deemed non-independent is exercising boards up and down the land.
Nowhere is this new conundrum likely to be wrestled with more aggressively than in St James’s Square, home to BP.
Succession planning should have been on the mind of Britain’s second-biggest oil company since soon after Carl-Henric Svanberg and Bob Dudley were installed in their roles as BP’s chairman and chief executive within weeks of one another in 2010.
Now, Svanberg’s departure as chairman will pave the way for fresh thinking on its future in an industry where it is no longer among the very biggest players.
Among the candidates to replace Svanberg is Douglas Flint, the former HSBC chairman – but a decision to appoint him suddenly looks more complicated.
Under the Financial Reporting Council’s proposed overhaul of the UK corporate governance code, Flint might only be able to serve three years as BP’s chairman before no longer being judged independent. That’s because he was on the oil company’s board for six years, before stepping down in 2011 to take on the full-time HSBC chairmanship.
It’s arguable that being away from the company for seven years should allow boards to reset a director’s clock, meaning that Flint would be able to serve a much longer term as chairman.
That’s not how the FRC code might see it, though, meaning that BP would be risking a new punch-up with investors in 2021 over its failure to comply with the code.
Similarly, recruiting a successor to Svanberg who will be timed out after a single term makes little sense, so it will be a question of whether BP’s board has the stomach for the second part of the FRC’s “comply or explain” mantra.
No Diamond in Fort Knox
The search for new money is a perennial one for startups, particularly fintech businesses which have yet to prove themselves to a sceptical investor.
For Tandem Finance, the aspiring bank led by Ricky Knox which lost its banking licence and now has it back through the takeover of Harrods Bank, that search continues.
I’m informed that talks with Atlas Merchant Capital, the investment vehicle established by former Barclays chief Bob Diamond, have stalled over Tandem’s valuation. Diamond’s return to the British retail banking scene will have to wait.