At the end of January, the work and pensions and business, energy and industrial strategy (BEIS) committees wrote to major shareholders in Carillion, with questions on their interaction with the company and the timing and motivation of their share selloffs.

The responses have now been published, with Frank Field, chair of the work and pensions committee, suggesting that they reveal a ‘disconnect’ between the company’s public reporting and the views of institutional shareholders.

‘On one hand, the Carillion directors told us all was sunny until a bolt of Qatari lightning hit them out of the blue. Their stewardship had, they proudly told us, been adjudged "best in class" by their friends at KPMG.

‘On the other hand, investors were fleeing for the hills, and it appears those who looked closest ran fastest. We will be taking evidence from the auditors and the investors - as well as demanding more company papers - to get to the bottom of who knew what and, most importantly, when,’ Field said.

The response from Kiltearn Partners - who held 10% of Carillion's shares in February and May 2017 – stated that  they believe ‘there are clear grounds for an investigation into whether Carillion's management knew, or should have known, about the need for a £845m provision due to receivables on its construction business earlier than July 2017’ and that if Carillion had not gone into liquidation, they would have ‘considered participation in civil legal action against Carillion with a view to recovering a proportion of its clients' crystalised losses.’

Kiltearn claimed in the letter that ‘the £845m provision effectively destroyed Carillion’s capital base’ that the company had become ‘impossible to value as it was not clear what future cash flows would be as there was no concrete information on critical factors’ and further that Carillion's published information, including historic annual reports, could ‘no longer be considered reliable and consequently no effective assessment of its finances could be made.’

Kiltearn began selling shares in August 2017. At a meeting with Carillion in October, they state former interim CE Keith Cochrane could only provide ‘limited and vague’ responses to ‘fundamental’ questions and consequently Kiltearn sold all shares by 4 January 2018.

Rachel Reeves, chair of the BEIS committee, said: ‘Carillion's annual reports were worthless as a guide to the true financial health of the company. The fact that it was impossible to get a true sense of the assets, liabilities and cash generation of the business raises serious questions about Carillion's corporate governance. KMPG will have to explain why they signed-off on accounts which appeared to bear so little relation to reality.’

The joint committee’s next evidence session is timetabled for 9:15am on Thursday, 22 February. Witnesses include Lesley Titcomb, chief executive, The Pensions Regulator and other senior TPR executives, plus Michael Jones, internal audit partner, Deloitte; Michelle Hinchliffe, head of audit, KPMG; and Peter Meehan, partner, audit, KPMG, who has been the lead partner on the Carillion audit since 2014.

Shareholders letters to the joint committee are here.

Report by Pat Sweet