Carillion’s Qatari arm was chasing £250m when it went bust
June 18, 2018 – Number is 25% higher than the one former chief executive Richard Howson told MPs in February
Carillion’s Qatar business was chasing claims of £250m from developer Msheireb Properties when it finally went bust last week.
According to accountant PwC, who is acting as Special Managers for the liquidation in the UK, the liquidator in Qatar will now be responsible for pursuing this claim.
Ahmed Tawfik Nassim, a partner at the Doha office of the Paris-based accountant Mazars, is handling the liquidation of the contractor’s Middle Eastern business, which is being managed independently from the main liquidation.
PwC said the £250m figure was to recover progress certified invoices, progress uncertified invoices, scope change, variations, change cost, time extension costs and claims.
It said the proceeds would be used to settle the creditor claims in the company which relate to subcontractors and suppliers who were involved on the Doha project.
Disputes around payment for the work Carillion was carrying out for Msheireb redeveloping downtown Doha ahead of the 2022 World Cup first emerged at the parliamentary inquiry into the Carillion’s collapse in February.
Appearing in front of the inquiry led by Labour MPs Rachel Reeves and Frank Field, former Carillion chief executive Richard Howson said the contract remained unpaid for 18 months with Carillion owed £200m at the time of its collapse in January.
Howson said: “The customer changed the architect three times. They issued 40,000 new drawings within eight months. It’s been a very difficult contract.”
Howson said he visited the project in Qatar at least 60 times in the past six years in order to collect cash. He said the appointment of a new Msheireb chief executive in 2014 briefly saw an increase in cash flow but that ended in 2016.
Interim chief executive Keith Cochrane, who took over from Howson in July 2017 after the firm announced a £845m writedown, said his predecessor had told the board at a meeting held in Manchester in April last year that the bills were going to be paid but it never happened.
A Msheireb spokesperson later disputed the claims.
The spokesperson said: “Despite ongoing project delay, Msheireb Properties continued to pay Carillion; however, Carillion did not pass these funds on to its supply chain, leaving over 40 subcontractors unpaid.
“This resulted in Msheireb Properties absorbing significant additional costs as we were forced to pay Carillion’s supply chain directly and engage a third-party contractor to ensure that Carillion’s original project was delivered.”
Msheireb then sent a letter to the inquiry, which showed the depth of the dispute, saying Carillion actually owed it “a similar amount of money”.