No oversized and greedy Frankenstein-corporation is in fact “too big to fail.” The sad demise of Carillion, beside being a disaster for its workers, is a perfect showcase.
The British construction giant entered the process of liquidation Monday after a last-minute attempt to keep it afloat failed. The proposed agreement, which provided for the transfer to the creditor banks of an amount of shares equivalent to the debt and thus expropriating the shareholders, was not accepted by HSBC, Barclays and Santander: The three banks wanted, in addition, the government’s cash-laden shoulder to cry on. But the government, fresh out of tears (money), said no.
Thus, under the weight of £900 million of debt and a pension fund deficit of £580 million, at least 20,000 workers throughout the U.K. are at serious risk of losing their jobs, as the company now finds itself under the watchful eye of the Financial Conduct Authority.
David Lidington, Theresa May’s current Cabinet Minister (after Damian Green was removed for using Her Majesty’s computer for sexual self-gratification), has defended the company’s top management (including the CEO who resigned last year and received an exit package of £600,000), underlining that the financial troubles of the group have come from some of its foreign operations.
Nonetheless, Monday’s outcome came as no surprise. From Friday on, the value of its shares continued its downward plunge: The loss of a further 29 percent brought the proportion of its total stock value lost by the company to 94 percent in just one year. It used to be worth £2 billion, while now it is worth just £61 million.
Lidington, who, despite his official position, is acting as a sort of informal PR representative for a company whose leadership has deep ties to the Conservative Party, has blamed this disaster on unpaid orders in Canada and the Middle East, especially in Qatar, Saudi Arabia and Egypt. He also gave guarantees that the public projects the company had been assigned will be taken up by the competition.
The Labour Party, through the voice of the Shadow Secretary of State for Business, Rebecca Long-Bailey, has called for an investigation, not only about the company but about the role of the government. The Shadow Secretary said there were “extreme concerns” about the way the government had handled the matter and reiterated that the company should be put under state control, in order to give its workers, suppliers and retirees a minimum of security.
With 43,000 employees, number two in its sector and second only to Betty Balfour, the Wolverhampton (Midlands) company was an avid Gargantua that bit off more than it could chew. It wasn’t active only in construction and infrastructure—it was swimming in contracts received from both Tory and Labour governments, all similarly dedicated to the privatization of the management of prisons, schools and hospitals.
Carillion had government contracts worth around £1.7 billion. In the past five months, top management raised alarms regarding the condition of its profits on at least three occasions. The very fact that the same gigantic construction company that was chosen to build the high-speed railway known as HS2 in the north of the country and to manage the maintenance of 50,000 housing units for the military could, or should, also be tasked with cooking and serving meals in public schools, or cleaning hospitals, appears surreal to the uninitiated. However, this has been the norm in this country for years.
Beside building the media center of the London Olympic complex, Terminal 5 of Heathrow Airport (for the exclusive use of British Airways) and the Birmingham library—to mention just three of its large-scale projects—Carillion is also managing 200 operating rooms and about 12,000 hospital beds, and is preparing more than 18,000 daily meals for patients in hospitals across the country, in addition to managing half of the nation’s prisons.
This shining example of public-private partnership—also called “quasi-public”—is referred to as “outsourcing,” another technocratic term which would fit wonderfully in any Jobs Act, spreadsheet or spending review, and which is used to signify the dismantling of what little remains of public employment and the public sector.