Ministers want the chairman of one of Britain’s biggest construction groups to spearhead a new corporate governance code for private companies – even as the sector draws intense scrutiny in the wake of Carillion’s liquidation.
Sky News has learnt that Greg Clark, the Business Secretary, has been asked to sign off the appointment of James Wates to lead the review.City sources said that Mr Wates, who has chaired Wates Group since 2013, was expected to have been named by the Department for Business, Energy and Industrial Strategy (BEIS) in the last few days.They said this weekend that an announcement had been delayed because of the collapse of Carillion, with ministers scrambling to contain the fallout from one of Britain’s most significant insolvencies for decades.Although Wates is one of the most widely respected private companies in the UK, it has a direct link to the crisis at the country’s second-largest construction company.Andrew Davies, who resigned as Wates Group’s chief executive last autumn, was due to become the new chief executive of Carillion on Monday.The company’s collapse has left him without a job to go to, and may place him among thousands of unsecured creditors set to claim money from PricewaterhouseCoopers, the accountancy firm overseeing its liquidation.Mr Wates said in a statement this week that Carillion’s collapse was “a sad day for the industry”.”It was evident that Carillion had been in difficulties for some time, but we at Wates were keen to do what was right to help safeguard the company’s future, as a key player in the construction industry.”This was behind our decision to offer to release Andrew Davies early from his contract.”Searching questions about boardroom governance at Carillion are now set to be posed as part of inquiries undertaken by the Insolvency Service, Financial Reporting Council and Financial Conduct Authority.Carillion went under owing billions of pounds to financial creditors as well as having a £2.6bn pension deficit on the basis of the cost to insure its retirement schemes’ full liabilities.The creation of a voluntary set of corporate governance principles for large companies which are not listed on the London Stock Exchange was unveiled last summer by Mr Clark as an integral component of efforts to improve corporate behaviour.It was triggered by public and political outrage over the collapse of BHS, where MPs raised concerns about corporate governance in the period before the department store chain was sold by Sir Philip Green to Dominic Chappell.Other elements of the Government’s corporate governance reforms included the creation of a public register of companies which suffer shareholder rebellions and moves to force listed businesses to justify the pay ratio between their chief executive and average UK worker.All companies of a so-far unquantified “significant size” will have to publicly explain how their boards take employees’ and investors’ interests into account, and to make their “responsible business” arrangements public.Mr Clark said in August that the package of measures would “ensure our largest companies are more transparent and accountable to their employees and shareholders”.
The private company code is to be supported by a working group comprising the Institute for Family Business, the Financial Reporting Council, the Institute of Directors and the CBI.
If he is appointed to lead the review, Mr Wates would bring an impressive pedigree to the role.He chairs Tomorrow’s Company, the thinktank, and the Princes Trust Corporate Advisory Group.He represents one of four generations of his family to have held senior roles within their company.Established in 1897, Wates Group employs more than 4000 people and is involved in a wide range of building and infrastructure projects.A Wates Group spokeswoman declined to comment as did a spokesman for BEIS.
Source: Sky