Carillion “aggressively managed” its balance sheet to make accounts look better, a previously unpublished report commissioned by the collapsed construction firm’s board in 2017 said.
The report was intended to be presented to would-be lenders but never used.
However, it has now been published by a committee of MPs, whose chairman, Frank Field, said it showed “gross failings”.
Carillion, the UK’s second-largest construction company, collapsed under a debt pile of £1.5bn on 15 January.
It had employed 43,000 people, including about 20,000 in the UK.
MPs have now released a review – commissioned by Carillion in September 2017 and carried out by FTI Consulting – that was originally intended to be presented to would-be lenders.
The draft independent business review said that income had been brought forward and payments postponed in order to flatter the company’s accounts last year.
To help with cashflow, Carillion quadrupled payment terms on its subcontractors from 30 days to four months.
Some of those subcontractors now face bankruptcy.
The review also highlighted another Carillion practice – compensating for its failure to turn reported profits into cash by taking on further debt.
It said: “Rather than addressing the underlying challenges facing the group in respect of problem contracts and the strength of the balance sheet, transactions were entered into, and accounting treatments and assumptions made, to enhance the reported profitability and net debt position of the group.”
The report was unpublished until now, because Carillion bosses deemed its findings as “too harsh”.
Veteran Labour MP Mr Field said the report showed the “gross failings of corporate governance and accounting” at Carillion.
A total of 1,371 Carillion workers have been made redundant since the company went into liquidation in January.
Since then the work and pensions and business, energy and industrial strategy committees have been examining how and why the firm collapsed.
Last week, MPs launched a fresh attack on Carillion’s management, saying there was a “wholly deficient” corporate culture at the collapsed construction giant.
The work and pensions and business, energy and industrial strategy committees said new evidence submitted to their joint inquiry into the spectacular demise of the firm revealed “pervasive institutional failings”.
The committees published extracts from a presentation made to Carillion’s board last August, which included comments such as a lack of professionalism and expertise and a culture of non-compliance.
Rachel Reeves, who chairs the business committee, said: “Directors didn’t just drop the ball once, they made a habit of it.”