Carillion’s former chairman Philip Green has been accused by MPs of showing either a “woeful lack of leadership” or having “no grip on reality” as it emerged that he was planning an upbeat financial announcement just five days before the company made £845m of writedowns last July.

Minutes from a Carillion board meeting on July 5 were made public on Thursday by the joint business and pensions select committee as part of their investigation into Carillion. They showed that Mr Green believed that “work continued toward a positive and upbeat announcement for Monday [July 10], focusing on the strength of the business as a compelling and attractive proposition”.

On July 10, Carillion announced that it needed to write down £845m which was mostly related to four contracts where costs had badly overrun.

The profit warning was the first in a string of financial shocks which eventually led to the company being placed into liquidation on January 15.

MP Rachel Reeves, chair of the business, energy and industrial strategy committee, said: “The Carillion board, when faced with difficult answers, declined to face up to facts and did nothing to address the causes of the company’s decline. Its chairman Philip Green’s assessment of Carillion as 'a compelling and attractive proposition' shows either a woeful lack of leadership or no grip on reality.”

Carillion timeline

The minutes also showed that Morgan Stanley, along with brokering firm Stifel, had withdrawn as sponsors from a proposed rights issue which Carillion’s management team was exploring saying the investment case for the business had fallen “materially short”.

A letter from Morgan Stanley to the select committee which was also published on Thursday said that the bank was “increasingly of the view that Carillion’s senior management could neither produce nor deliver an investment proposition that would convince shareholders and new investors to support the potential rights issue”.

Explainer | Whos who in the Carillion saga?

After Morgan Stanley and Stifel withdrew as sponsors of the rights issue, Carillion’s board turned instead to HSBC who were appointed as joint corporate broker from July 14. Neither the rights issue nor a subsequent planned debt for equity swap ever materialised.  

Frank Field, chair of the work and pensions committee, said: “It is difficult to believe the chairman of the company was unaware of its position, but equally difficult to comprehend his assessment if he was.”