Corporate Governance & Ethics

Running Head: CORPORATE GOVERNANCE & ETHICS
Corporate Governance & Ethics
Student’s Name
University Name
Author’s Note

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CORPORATE GOVERNANCE & ETHICS
Table of Contents
Introduction......................................................................................................................................3
Background of the organisation.......................................................................................................3
Definition of corporate governance.................................................................................................4
Discussion of issues in the organisation..........................................................................................5
Public response................................................................................................................................8
Financial impacts and lessons learned.............................................................................................9
Aftermath.......................................................................................................................................10
Conclusion and recommendations.................................................................................................12
Reference List................................................................................................................................13

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CORPORATE GOVERNANCE & ETHICS
Introduction
In the course of this research report, the case of solvency of the Carillion, the high end
construction as well as customer service related company, will be considered. The corporate
governance on the part of the directors has been extremely weak and personal incentives
oriented. This is why the corporate governance of the organisation failed miserably which is why
they were forced to run in bad Debt and at one point the company became insolvent. Initially this
report researches the organisation history so that the basis of the fraudulence on the part of the
directors can be highlighted properly. Corporate governance happened well defined in the report
so that the report can set ideals against which the actions of the directors of the organisation can
be compared. In the next part of the discussion, the aspects that went wrong in terms of
governance of the organisation have been clearly identified and discussed in depth. Thereafter,
the public response to the crisis aroused in the market as an impact of this insolvency have been
discussed along with an in-depth analysis of the financial impact of this issue. The after maths of
the occurrence of this insolvency has been considered and their impact on individual stakeholder
groups has been discussed.
Background of the organisation
Carillion was established in the year 1999 after demerger from the Tarmac group. Tarmac group
was established in 1903. The forecast has been mainly on the business of core heavy building
materials. On the contrary, Carolyn emphasized on the contract business of the group and also on
the Tarmac professional Services Group of businesses. At the time of merging of the two
companies, Sir Neville Simms had been selected as chairman of the organisation. He returned his
executive responsibilities till the year 2001, but he held on the chair of non executive chairperson
and till the year 2005 and after that Philip Rogerson replaced him in that pollution (Patten and

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CORPORATE GOVERNANCE & ETHICS
Saunders 2018). The name of the business Italian was specifically provided in order to give a
cutting edge definition to the construction businesses and create a separate identity by distancing
the company from its parent organisation.
At the time when the CEO of the organisation was John McDonough, Carillion included
Facilities Management into their business domain also. in the year 2001 acquired 51% of the GT
rail maintenance and there upon developed the branch name of Carillion rail (Jackson and
Masons 2019). They also carried out the words like structure universe on the rail networks as
well as contract works for the Rail Network. In the following year Citex Management Services
was purchased by the company for 11.5 million pounds. 2005, the plant maintenance group was
purchased for organisation for 40 million euro (Rogers 2018). Thereafter, the organisation also
went on to acquire two support services organisations of UK, namely. The companies are
Mowlem, purchased for 470 million pounds in the year 2006 and Alfred McAlpine which was
purchased for 572 million pounds in 2008 (Bhaskar and Flower 2019).
Definition of corporate governance
The primary directorial in any organisation is the board of directors who influences corporate
governance. The shareholders elect the directors. Open directors are elected by other Board
members also. The board of directors accomplishes the tasks like making important decisions
including corporate office appointment, compensation and executive as well as development of
dividend policy. In some instances, the applications of the board extend up to financial
Optimisation when the group of shareholders demand specific social or environmental concerns
to be emphasised upon. The boards are often consisted of internal and independent members.
The insiders in the organisation are the major shareholders, founders as well as executives
(Loxley 2018). The independent directors have no ties with the insiders; however they are