Responding to a Joint Committee report on the collapse of Carillion, Roger Barker, Head of Corporate Governance at the Institute of Directors, said:
“The Joint Committee report today confirms that far from being a natural market failure, the demise of Carillion came about as a result of individual failings by the company’s board and other actors in the governance chain. What makes this all the more painful is that many of those who bore the brunt of its collapse – its employees, suppliers and other stakeholders – were among those who helped keep company on its feet for as long as it did.
“The lack of regard to stakeholders and the apparent unwillingness of the directors to consider the company’s long term interest has raised questions around the adherence to company law in this case. The report suggests that Carillion’s directors seemed unfamiliar with their statutory duties and this underlines the need for the professional development of directors in large companies. All too often the directors of large listed companies feel they are the “finished article” in terms of knowledge and expertise. While there must be caution in rushing to implement further legislation, greater emphasis must be put on the importance of director training.
“Carillion’s collapse undermined the already low level of public trust in business. The majority of UK businesses and business leaders bear little relation to the companies we have seen fail due to poor corporate governance in recent years, yet unfortunately they are tarnished by the same brush.”