UK government steps in as Carillion forced into compulsory liquidation

Carillion officials made a final rescue appeal to its lending banks on Sunday night after the government refused to rescue the struggling construction and services company. (Reuters)
Updated 15 January 2018
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UK government steps in as Carillion forced into compulsory liquidation

LONDON: Britain’s Carillion collapsed on Monday after its banks lost faith in the construction and services company, throwing hundreds of major projects into doubt and forcing the government to step in to guarantee vital public services.
Carillion was forced into compulsory liquidation after costly contract delays and a slump in new business left it at the mercy of its lenders and battling a ballooning debt pile.
The demise of the 200-year-old business poses a major headache for Theresa May’s government which has employed Carillion to work on 450 projects including the building and maintenance of hospitals prisons, defense sites and the country’s new superfast rail line.
“In recent days we have been unable to secure the funding to support our business plan and it is therefore with the deepest regret that we have arrived at this decision,” Chairman Philip Green said.
“This is a very sad day for Carillion, for our colleagues, suppliers and customers that we have been proud to serve over many years.”
Employing 43,000 people around the world, including 20,000 in Britain, Carillion has been fighting for survival since July when it revealed it was losing cash on several projects and had written down the value of its contract book by £845 million.
With banks refusing to accept the group’s latest attempt to restructure, May’s senior ministers met around the clock in recent days, under pressure from the opposition Labour Party and unions not to use taxpayer money to prop up the failing company.
Carillion has debt and liabilities of £1.5 billion with creditors that include banks RBS, Santander UK, HSBC and others. It has a pension deficit, included within that figure, of £580 million.
David Lidington, the minister in charge of the Cabinet Office which oversees the running of government, said his first priority was to ensure that public services continued. He urged the company’s staff to continue to work and said the government would pay their salaries.
Some contracts handled by Carillion would go to alternative providers, he added.
The company’s collapse comes at a difficult time for the government as it negotiates its exit from the European Union.
“It is regrettable that Carillion has not been able to find suitable financing options with its lenders but taxpayers cannot be expected to bail out a private sector company,” Lidington said in a statement.
“For clarity, all employees should keep coming to work, you will continue to get paid. Staff that are engaged on public sector contracts still have important work to do.”
Labour’s business spokeswoman Rebecca Long-Bailey called for a full investigation as to why the government continued to award Carillion contracts when it was clear it was in trouble.
“This company issued three profit warnings in the last six months yet despite those profit warnings the government continued to award government contracts to this company,” she told BBC TV.
“We’re ... asking for a full investigation into the government conduct of this matter.”
Spun out of Tarmac nearly 20 years ago and having bought Alfred McAlpine in 2008, Carillion has worked on key construction projects including London’s Royal Opera House, the Suez Canal road tunnel and Toronto’s Union Station.
In July last year it won contracts to build Britain’s new High Speed 2 rail line, a major project that will better connect London with the north of England.


US, China in feisty clash on trade, influence at APEC

Updated 17 November 2018
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US, China in feisty clash on trade, influence at APEC

  • The world’s top two economies have been embroiled in a spiralling trade war, imposing tit-for-tat tariffs on each other’s goods
  • The APEC summit of leaders from 21 countries across the region has developed into a tussle for influence between an increasingly assertive China and a more withdrawn US

PORT MORESBY: China and the United States traded heated barbs Saturday ahead of an APEC summit, lashing out at each other over protectionism, trade tariffs and “chequebook diplomacy” in the region.
In duelling back-to-back speeches at a pre-APEC business forum, China’s President Xi Jinping and US Vice President Mike Pence pulled few punches, laying out sharply contrasting visions for the region of 21 countries.
Xi lashed out at “America First” trade protectionism and in a thinly veiled swipe at Washington stressed that global trade rules should not be applied “with double standards or selfish agendas.”
The world’s top two economies have been embroiled in a spiralling trade war, imposing tit-for-tat tariffs on each other’s goods in a confrontation that experts warn could torpedo the global economy.
Xi urged the world to “say no to protectionism and unilateralism,” warning it was a “short-sighted approach and it is doomed to failure.”
For his part, a combative Pence warned that US tariffs would remain in place unless Beijing “changes its ways.”
“We’ve put tariffs on $250 billion in Chinese goods and that number could more than double,” he told CEOs from around the region.
“We hope for better, but the United States will not change course until China changes its ways.”
President Donald Trump decided to skip the summit in Papua New Guinea, leaving the door open for Xi who arrived two days earlier for a state visit and has been the undoubted star of the show.
The APEC summit of leaders from 21 countries across the region has developed into a tussle for influence between an increasingly assertive China and a more withdrawn US.
In contrast to Trump, Xi arrived before the summit, opening a new road and a school in Port Moresby and holding talks with Pacific Island leaders.
Papua New Guinea rolled out the red carpet for the Chinese leader, with dozens of people from various tribes serenading him sporting parrot feathers, possum pelts and seashell necklaces.
In his speech, Pence lashed out in unusually strong terms at China’s Belt-and-Road initiative that sees China offering loans to poorer countries in the region to improve infrastructure.
The vice president encouraged Pacific nations to embrace the United States, which, he said, did not offer a “constricting belt or a one-way road.”
He said the terms of China’s loans were “opaque at best” and “too often, they come with strings attached and lead to staggering debt.”
As if pre-empting the criticism, Xi defended the plan amid attacks that it is akin to “chequebook diplomacy” to further Chinese interests in the region.
He denied there was a “hidden geopolitical agenda... nor is it a trap as some people have labelled it.”
And the Chinese leader warned that no one would gain from heightened tensions between the US and his emerging superpower.
“History has shown that confrontation — whether in the form of a cold war, hot war or trade war — will produce no winners,” he said.
Pence too stressed that Washington wanted a “better relationship” with Beijing.
“China has an honored place in our vision of a free and open Indo-Pacific, if it chooses to respect its neighbors’ sovereignty, embrace free, fair, and reciprocal trade, and uphold human rights and religious freedom,” he said.
He added that the United States would join forces with Australia in the development of a new naval base to be built in PNG’s Lombrum Naval Base on Manus island, in what is seen as a move to curb China’s influence in the Pacific.
Officially, the 21 leaders will discuss improving regional economic cooperation under the theme of “embracing the digital future” but the punchy speeches laid the ground for a tense gathering.
Foreign ministers meeting ahead of the summit were unable to publish a joint statement, apparently due to differences over language on World Trade Organization reform.
In the absence of Trump and Russian President Vladimir Putin, the summit itself has been relatively low-key and the focus has turned to the venue Port Moresby.
The capital of Papua New Guinea has been ranked as one of the least liveable cities for expatriates, with a high level of crime, often perpetrated by feared street gangs known as “raskols.”
Delegates have been advised not to venture out alone — especially after dark — and officials and journalists have been hosted on massive cruise ships moored in the harbor due to safety issues and a dearth of hotel rooms.
The run-up to the summit was also overshadowed by the purchase of 40 luxury Maserati cars that sparked anger in the poverty-hit country, which suffers from chronic health care and social problems.