60. Philip Green joined the Carillion board as Senior Independent NED in June 2011 and became Chairman in May 2014. He was an experienced member of corporate boards.220 He also had experience of failing companies: he was Managing Director of Coloroll before it went into receivership in June 1990, following which, in 1994, the Pensions Ombudsman made a finding of breach of trust and maladministration against him.221 In 2011 he was appointed as a corporate responsibility adviser to the then Prime Minister, a role he left in 2016.222
61. The UK Corporate Governance Code says that a company's Chairman is "responsible for leadership of the board and ensuring its effectiveness on all aspects of its role".223 In this position, Philip Green oversaw low levels of investment, declining cash flow, rising debt and a growing pension deficit. Yet his board agreed year-on-year dividend increases and a rise in remuneration for his executive board colleagues from £1.8 million to £3.0 million.224 Mr Green was still at the helm when the company crashed in January 2018.
62. Mr Green appears to have interpreted his role as Chairman as that of cheerleader-in-chief. His statement in the 2016 Annual Report and Accounts, signed on 1 March 2017, just four months before the profit warning, concluded:
Given the size and quality of our order book and pipeline of contract opportunities, our customer-focused culture and integrated business model, we have a good platform from which to develop the business in 2017.225
Even more remarkably, on Wednesday 5 July 2017, a few days before the Monday 10 July profit warning, Carillion board minutes recorded:
In conclusion, the Chairman noted that work continued toward a positive and upbeat announcement for Monday, focusing on the strength of the business as a compelling and attractive proposition [ ... ]226
The Monday announcement comprised a £845 million write-down. It is difficult to believe the Chairman of the company was not aware of the seriousness of its position, but equally difficult to comprehend his assessment if he was.
63. In his evidence to us, Philip Green accepted, as Chairman, "full and complete" responsibility for the collapse of the company.227 He clarified, however, that he did "not necessarily" accept culpability,228 and that it was not for him to say who was culpable.229 His company, however, assigned culpability in sacking Richard Howson, Zafar Khan, and "several other members of senior management".230 Subsequent market announcements and the group's January 2018 business plan referred optimistically to the "new leadership team", a "refreshed" executive team and a "bolstered" board. Indeed, in a letter to the Cabinet Office on 13 January 2018, Mr Green reassured the Government that "the previous senior management team have all exited the business".231 He, however, was to remain at the head of the proposed new board.232
64. Philip Green was Carillion's Chairman from 2014 until its liquidation. He interpreted his role as to be an unquestioning optimist, an outlook he maintained in a delusional, upbeat assessment of the company's prospects only days before it began its public decline. While the company's senior executives were fired, Mr Green continued to insist that he was the man to lead a turnaround of the company as head of a "new leadership team". Mr Green told us he accepted responsibility for the consequences of Carillion's collapse, but that it was not for him to assign culpability. As leader of the board he was both responsible and culpable.
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220 At the time of his appointment as Carillion's Chairman he was also Chairman of BakerCorp and Chairman Designate of Williams and Glyn Bank Limited and had previously been Chairman of Clarkson plc.
221 'Carillion boss Philip Green has previously been found guilty of a breach of trust over pensions', City A.M., 16 January 2018
222 City A.M., Carillion chairman Philip Green was a number 10 adviser , City A.M., 15 January 2018
223 Financial Reporting Council, UK Corporate Governance Code, para A.3
224 2014-2016. Executive directors were Richard Howson and Richard Adam. Total remuneration includes salary/ fees, benefits, bonus, long-term incentives and pension.
225 Carillion plc, Annual Report and Accounts 2016, p 7
226 Carillion plc, Minutes of a meeting of the Board of Directors, 5 July 2017
227 Q470 [Philip Green]
228 As above.
229 Letter from Philip Green to the Chairs, 20 February 2018
230 High Court of Justice, In the matter of Carillion plc and in the matter of the Insolvency Act 1986, Exhibit KC1: First Witness Statement of Keith Robertson Cochrane, dated: 15 January 2018 (Not published)
231 Letter from Philip Green to John Manzoni, 13 January 2018
232 Alison Horner, NED and Chair of the Remuneration Committee, was the only other proposed board member whose appointment pre-dated the July 2017 profit warning.