The report from the Work and Pensions and Business, Energy & Industrial Strategy (BEIS) Committees found Carillion’s board were both “responsible and culpable for the company’s failure”.

They presided over a “rotten corporate culture” that led to the company’s devastating and hugely costly failure, it said. Despite clear accountability, the directors presented themselves in Parliament as “self-pitying victims of a maelstrom of coincidental and unforeseeable mishaps”, the MPs said.

As such, the report calls on The Insolvency Service should “carefully consider” whether Carillion’s former directors breached their duties under the Companies Act and should be recommended to the secretary of state for disqualification.

In particular, it highlighted “a relentless dash for cash, driven by acquisitions, rising debt and exploitation of suppliers” with at best questionable accounting practices that “misrepresented the reality of the business”.

It singled out former finance director Richard Adam as the “architect of Carillion’s aggressive accounting policies”. The sale of all his shares, as soon as possible after his voluntary departure a year before its collapse, were “the actions of a man who knew where the company was heading”.

Earlier in the week, MPs highlighted that the collapsed outsourcer Carillion used suppliers as a line of credit to “prop up its failing business model” and the report attacked the company for its attitude to paying suppliers.

Despite being signatories of the Prompt Payment Code, Carillion were “notorious late payers”, MPs said, and forced standard payment terms of 120 days on its suppliers.

Carillion had a target of 100% cash conversion: for cash inflows from operating activities to at least equal underlying profit from operations. It consistently reported that it was meeting this target. It could do this because its early payment facility classification allowed it, in cashflow statements, to present bank borrowing as cash inflow from operations, rather than as yet another loan.

The early payment facility – also known as “reverse factoring” and “supply chain financing” – allowed suppliers to be paid earlier, with the caveat of taking a discounted payment.

On Monday, it emerged that two credit ratings agencies, Moody’s and Standard & Poor’s, claimed that Carillion’s accounting for its early payment facility concealed its true level of borrowing from financial creditors. They argue the structure meant Carillion had a financial liability to the banks that should have been presented in the annual account as “borrowing”. Instead Carillion chose to present them as liabilities to “other creditors”. Moody’s claims that as much as £498m was misclassified as a result.

By doing this, Carillion was able to keep cash owed to suppliers on its books. In classifying the debt as cash “owed to creditors” on its balance sheet rather than borrowings, it did not negatively affect its debt-to-equity ratio and could continue to pay dividends, Moody’s and Standard & Poor’s said.

Carillion collapsed in January with just £29m in reserve and owing around £5bn in debt.

The joint report argues that Carillion’s practices and its subsequent collapse illustrate that measures the government has taken to improve the business environment, such as the Prompt Payment Code, have proved wholly ineffective and need revisiting.

“Carillion relied on its suppliers to provide materials, services and support across its contracts, but treated them with contempt,” the MPs said.

Rachel Reeves MP, chair of the BEIS Committee, said: “The collapse of Carillion exposed terrible failures of regulation. The Government needs to stop dithering and act to ensure regulators are up to the job of intervening before companies fail, rather than trying to pick up the pieces when it is too late.”

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