Corporate Governance and Insolvency

Vince Cable Excerpts

Tuesday 20th March 2018 Commons Chamber

[Andrew Griffiths]

My hon. Friend has hit the nail well and truly on the head. I commend the work that his Select Committee has been doing in shining a light on the realities of the way in which Carillion operated. In the very early days of the Carillion collapse, when the Government were looking to protect those vital services that were being delivered and to protect the 18,500 people employed by the company, it became clear that it was a hellishly complicated business with a hellishly over-complicated structure. It is still proving a difficult job to untangle the web of the Carillion business structure. If it is difficult for the Insolvency Agency to do that, so many weeks on, how much more difficult must it have been to run the business? We need clear, accountable business structures in our businesses today.

[Sir Vince Cable (Twickenham) (LD)]

I welcome this sensible set of proposals, particularly those relating to value extraction through complex arrangements. What can the Minister currently do, and what will he be able to do in the future, in respect of companies such as Toys R Us? It had a management team, led by a man called Frank Muzika, which was able to loot the company over a long period of time and load it up with debt using complex instruments and tax havens, leaving behind a legacy of a £580 million pension fund and 3,000 redundancies. What can the Minister do?

[Andrew Griffiths]

I thank the right hon. Gentleman for his question. He clearly has a vast amount of experience as a former Secretary of State in our Department. He is right to identify the value extraction element in this document. When a business is taken over, we often see the directors of the purchasing company put in place complicated measures to protect their own backs, to ensure that, whatever happens to the business, they will not be impacted. The powers proposed in this consultation would allow us to recoup and recover the amount of money involved, not just for shareholders and directors but for contractors and creditors in the supply chain. In relation to Toys R Us, he will recognise that some businesses will always fail. However, the Government are clear that this set of measures will put an emphasis on the responsibilities not just of directors but of shareholders. It is an important point that shareholders—particularly institutional shareholders—should have a voice in the way in which these businesses are run.