David Mundell urged to drop Carillion interim chief executive as Scotland Office adviser

The businessman, who spoke out against independence during the referendum, sits on a joint board with Mundell that considers constitutional issues like Brexit.

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SNP MP Tommy Sheppard said: “It is utterly disgraceful that at a time when thousands of Carillion employees don’t even know whether they will have a job to go each morning, the Scotland Office and David Mundell keep in place Keith Cochrane as an advisor - despite his role in the shoddy and shambolic running of Carillion.

“His role as an advisor to the Scotland Office is untenable, and a failure by David Mundell to remove him from his post would be a glaring insult to workers and taxpayers, and seriously call into question his judgement."

Carillion, which made huge profits from government contracts, went into liquidation this month after running up debts of around £900m and presiding over a pension deficit of £587m.

The collapse threatens up to 20,000 jobs in the UK and has raised questions about a range of government projects, such as the Aberdeen Western Peripheral Route.

READ MORE: No pay, no trust, no hope - life for Carillion workers

Although the firm’s difficulties were flagged up last year following three profit warnings in five months, Carillion continued to receive Government contracts as the debt mounted.

Any investigation into the company’s demise is likely to focus on Carillion’s actions in the years running up to the profit warnings.

Cochrane, a chartered accountant from Scotland who used to lead the Weir Group, was appointed interim chief executive in the summer of last year after Richard Howson stood down from the post.

Although his stewardship failed to halt the company’s decline, media reports suggested Cochrane would still be paid his £750,000 salary until the middle of this year. It is now unclear whether he will receive this sum.

However, Cochrane was not brought in as an troubleshooter from the outside, as he was already Carillion’s “senior independent non executive director” at the time he became interim CEO.

The role included serving as a member of Carillion’s audit, remuneration, nomination, sustainability and business integrity committees.

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According to official filings, covering the period until December 2016, Cochrane had a 100% record for attending board meetings.

He was also present at all four audit committee sessions in the same year and attended every business integrity meeting. Carillion literature explains the purpose of the latter: “High standards of ethics and business integrity are essential to achieving consistently high standards of corporate governance and service excellence. The Board has therefore implemented a formal ethics and business integrity policy to ensure that the Group conducts its business to the highest ethical standards.”

The accounts also reveal Cochrane attended seven meetings of the company’s remuneration committee in 2015 and 2016. Part of the scrutiny of Carillion has centred around the salaries paid to key executives, including Howson, whose remuneration package totalled £1.5m in 2016.

The Sunday Herald can now reveal that Cochrane also plays a prominent role in the Conservative Government.

In 2015, he was appointed as the lead "non-executive director” (NEDS) for the Scotland Office and Office of the Advocate General - a role for which he is paid.

Led by Mundell, a Tory Cabinet Minister, the Scotland Office is meant to act as the country’s voice in Whitehall.

According to the department’s 2016/17 annual report and accounts, the Carillion boss is an important figure in Mundell’s team: “Keith Cochrane has undertaken a significant programme of engagement with Lead NEDs from across UK Government departments. This direct engagement has supported and enhanced the work by the Secretary of State for Scotland and the Scotland Office Director, at Ministerial and Permanent Secretary level, to heighten awareness of devolution across Whitehall.”

The document added: “Since Keith Cochrane’s appointment the visibility of the Non-Executive Board Members have increased considerably, especially across Government.”

Cochrane sits on the Scotland Office joint management board and he even wrote a section of the department’s annual report. He receives a fee of £300 for each meeting he attends at the Scotland Office.

He is also listed as being part of a wider network of non-executive directors across the UK Government that discusses the priorities of Theresa May’s administration.

Cochrane, who is also the “chair of the committee” at the Glenalmond College private school, backed No in the 2014 Scottish independence referendum. He argued that independence would create "costs and uncertainties" for business, alongside "fewer, more uncertain benefits". He is also an advisory council member of ‘These Islands’, a pro-UK think tank.

READ MORE: No pay, no trust, no hope - life for Carillion workers

Labour MSP Jackie Baillie said: “This is deeply embarrassing for David Mundell and the Scottish Tories. Not only has Carillion’s interim boss been deeply involved with the company during its demise - but he’s also advising a senior member of Theresa May’s cabinet. This revelation shows the need for a real review of how our public services are delivered."

Carillion directed media enquiries to the UK Government. Asked whether Mundell retained confidence in Cochrane, given the businessman’s key role at Carillion, a UK Government spokesman said: "All UK Government departments have external NEDs to provide strategic advice to their management boards in accordance with the Government’s corporate governance code. The Scotland Office has no contracts with Carillion and has had no role in any decision-making in relation to other public sector contracts. Mr Cochrane continues in his role with the Scotland Office.”