‘Recklessness, hubris and greed’ – carillion slammed by mps business the guardian gas in babies that breastfeed

Directors “used aggressive accounting policies to present a rosy picture to the markets", the MPs found. This resulted in the company admitting in July 2017 that £729m in revenue it had previously recognised (money the firm assumed would be coming in) would no longer be obtainable.

• Peer review This involves independent assessment of whether managers are correctly calculating the value of contracts. A 2016 review of Carillion’s contract to build the Royal Liverpool Hospital – which remains delayed indefinitely – reported it was making a loss. Carillion’s management overrode it and insisted on a healthy profit margin being assumed, leading to a difference of £53m in assumptions.

• Traded not certified Carillion was in the habit of saying it had banked revenue that actually it could not be certain of receiving from clients. In December 2016 it had recognised £294m of traded not certified revenue, more than 10% of construction revenue.

• Early payment facility This scheme allowed Carillion’s suppliers to claim what they were owed by the company from a bank, receiving the money quickly in exchange for a small discount on the bill. The report found Carillion relied upon the EPF to delay paying out money, using it as a “credit card” and failing to account for it as borrowing. “The only cash supporting its profits was that banked by denying money to suppliers,” the report said.

The company’s failure also saddled the government’s Pension Protection Fund with an £800m liability, its largest ever, while 30,000 suppliers and subcontractors are waiting in vain for £2bn in bills owed by the company. Creditors have been told they are likely to get back less than 1p for every £1 they are owed.

Taxpayers face at least £150m in clean-up costs, while multimillion-pound hospital projects intended to alleviate pressure on NHS services – the Royal Liverpool University Hospital and the Midland Metropolitan Hospital in Birmingham – are on hold indefinitely.

The report by the two committees placed most of the blame on the company’s “myopic” board, and says the government’s Insolvency Service should consider recommending that they be banned from holding directorships in future. The committees singled out Carillion’s finance chief, Richard Adam, chief executive Richard Howson and chairman Philip Green for particular criticism.

The trio presented themselves as “self-pitying victims of a maelstrom of coincidental and unforeseeable mishaps” including contracts in the Middle East that went sour. In fact, the committees found, the company’s problems were far more deep-rooted.

Green, a boardroom veteran and former adviser to David Cameron on corporate responsibility, said he and the board had “always strived to act in the interests of the company and all its stakeholders”. “Whilst much of the commentary in today’s report fails to understand and accurately reflect the true, more complex picture of events, the committee has highlighted lessons which can be learned by the board, the government and the wider industry.”

The government also came in for criticism for failing to address failures in corporate governance rules that allowed Carillion to become a “giant and unsustainable corporate timebomb”. The report called for an “ambitious and wide-ranging set of reforms” to overhaul the UK’s system of corporate accountability.

Theresa May promised to “change the way big business is governed” in 2016 during the first major speech of her campaign to lead the Conservative party and the country after Cameron’s resignation. She has since been accused of watering down planned reforms to corporate governance.

It emerged after Carillion’s collapse that the government continued to award large contracts to the firm even after it knew it was in financial trouble. The Guardian revealed earlier this year that the government knew in December last year of a plan that could have retrieved £364m from the company but did not push directors to adopt it.

A government spokesperson said: “Our priority has been the continued, safe running of public services and to minimise the impact of Carillion’s insolvency. The plans we put in place have ensured this. The government wants to see a strong and varied supplier base where companies of all sizes benefit from long-term and stable government contracts.

MPs also lashed out at regulators the Financial Reporting Council and the Pensions Regulator, branding them “chronically passive”. They said the two bodies were “too timid to make effective use of the powers they have” and should be given greater power, although they warned that this would require significant cultural change.