Richard Adam, former Finance Director at Carillion, has responded to the joint committee’s report on Carillion, which included analysis of his ten year tenure at the helm of Carillion’s finances, and the Committee’s previously reported take on his attitude to long-term obligations like the company’s pension schemes, which were carrying a £2.6bn liability when the company collapsed a year after his voluntary departure.
The Committees cannot of course assert that Mr Adam said those precise words in 2013, but have accepted the characterisation in the contemporaneous note by the trustees’ lawyer. That attitude was reflected again in his evidence in Parliament on 6 February 2018, and further supported by analysis by the scheme’s covenant assessors, Gazelle Finance.
These, taken alongside his actions as Finance Director throughout, led the Committees to the inescapable conclusion that he considered funding the Carillion pension schemes to be a waste of money. He consistently and resolutely resisted pleas from the trustees for more adequate deficit contributions. This was entirely in keeping with the Carillion board’s short-termist, cash-chasing, dividend-plumping approach.
The relevant excerpt from the report, and the original reference to the main pension schemes’ Trustee’s description of Mr Adam’s words, are below:
31. Richard Adam, as Finance Director, argued the company could not afford such high contributions. Gazelle was sceptical of this: his pessimistic corporate projections presented to the Trustee were certainly at odds with the upbeat assessments offered to the City to attract investment.137 In retrospect, the gloomy outlook may have been more accurate. But if that was so, Carillion should not have been paying such generous dividends. Gazelle concluded that Richard Adam had an “aversion to pension scheme deficit repair funding”.138 The scheme actuary, Edwin Topper from Mercer, said Carillion’s “primary objective was to minimise the cash payments to the schemes”.139 Robin Ellison, Chair of the Trustee, observed at the time that Richard Adam viewed funding pension schemes as a “waste of money”.140