MPs have accused the accountancy firm tasked with salvaging money from Carillion on behalf of its creditors and pensioners of charging “superhuman” fees, after it racked up a bill for £20.4m in eight weeks.
Partners from PricewaterhouseCoopers told the Commons work and pensions committee on Wednesday that they had no idea how much they would ultimately charge, admitting it would be at least June before they could estimate overall costs.
MPs had earlier said PwC was attempting to “milk the Carillion cow dry” with roles at various stages throughout its decline and eventual collapse into liquidation in January owing about £2bn to its 30,000 suppliers.
Greg Clark, the business secretary, told the committee he intended to launch an independent inquiry into the operations of the Financial Reporting Council, the accountancy regulator, in the wake of Carillion’s failure. MPs have previously said the watchdog had been “useless” in its oversight of the company.
“There is a strong case for reviewing the operation of the FRC and that is something that I intend to require,” he said.
David Kelly, the special manager for PwC in Carillion’s liquidation, told the committee the accountancy firm was charging about £1.4m a week to employ 112 staff to keep the company running and to honour government contracts, while also trying to sell parts of the business and salvage funds for its creditors.
The Pension Protection Fund, a government-backed pensions lifeboat, is likely to pick up all but two of Carillion’s 13 pension schemes and has estimated the funding shortfall for them at about £900m.
Kelly, who said his personal rate was £865 an hour, said PwC’s costs would gradually fall as more parts of Carillion were sold and staff from the accounting firm stopped working on the project. He said the firm initially had 257 people working on Carillion, with a bill for about £3m for their services in the first week after its collapse.
He said that it was too early to say how much money would be recovered from the failure of the company, suggesting PwC would have a better idea in June.
Defending the fees, which are yet to be paid but will be settled before claims by other creditors who are owed money, Kelly said it was impossible to estimate the costs given the “sheer complexity of the situation we’re dealing with”.
“It depends on the asset realisation process, it depends on the pace at which we can migrate contracts,” he said.
Rachel Reeves, the Labour MP in charge of the business select committee, which is jointly investigating the collapse of Carillion alongside the work and pensions committee, said the charges were “superhuman”.
She said: “If I pay someone £20.4m working for eight weeks, I would expect them to have some grasp of how much it might cost.
“It’s the big four accountancy firms that make a killing advising struggling companies how to turn them round and the big four that make millions tidying up when that advice fails.”
A spokesperson for PwC said the firm had helped save more than 8,500 Carillion jobs so far and continued the provision of school dinners and road gritting. “We were appointed because of our ability to deliver the scale, skills and experience at the speed required to minimise the disruption caused by the collapse of Carillion,” the spokesperson said.