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'Cracks were visible' for Carillion well before 'directors or auditors admit'

26 February 2018

Issues within the Carillion PFI contract at Royal Liverpool Hospital have been highlighted by MPs in the ongoing investigation by Parliament into the company's failure.

These included an £845m write down due to cracked beams discovered in November 2016 and the incident is seen as bringing the company's financial problems to light, according to a letter published by MPs last week, SHP magazine reported.

They had previously questioned former Carillion chief executive Richard Howson about the contract and "the lack of challenge and preparation for a potentially disastrous scenario".

Mr Howson told MPs that the cracked beams incident had resulted in more than £20m being added to its costs.

"I am illustrating how the cost projection changed in Q2 of that year," he said.

However, the company had stated that it had been necessary to create an exclusion zone above and below the area concerned until "temporary beams could be installed".

This was not removed below the area until late January 2017 and remained in place for the area above the cracked beams until late March 2017, which meant that no work was permitted to take place during these times.

The incident was discussed by MPs at last week's inquiry session, where Frank Field said: "These famous beams are becoming an ever more perfect parable for the whole company: the cracks were visible long before the directors or auditors admit, and while they were dutifully added to the litany of factors and organisations to blame for Carillion's spectacular demise - anyone and anything but the people running it - they were only ever holding up one part of Carillion's thousands of projects."

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