Kiltearn Partners, which held 10% of Carillion's shares in February and May last year, told the joint Parliamentary enquiry it would have "considered participation in civil legal action against Carillion with a view to recovering a proportion of its clients' crystalised losses."
It added they believe "there are clear grounds for an investigation into whether Carillion's management knew, or should have known, about the need for a £845 million provision due to receivables on its construction business earlier than July 2017".
Following the announcement of the £845 million provision last year, Kiltearn began selling its share in the business as it said the revelation "effectively destroyed" Carillion's capital base.
-- Advertisement --
"Kiltearn believed 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," the firm wrote to MPs.
"Further, Carillion's published information, including its historic annual reports, could no longer be considered reliable and consequently no effective assessment of its finances could be made."
Chair of the Work and Pensions Committee, Frank Field, said while Carillion's directors and auditors KPMG maintained all was well, investors were "fleeing for the hills".
"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," he said,
Rachel Reeves, Chair of the Business, Energy and Industrial Strategy (BEIS) Committee, said investors could spot that Carillion was heading for disaster and subsequently fled.
"The company had unsustainably high levels of debt, weak cash-generation and was saddled with a widening pensions deficit," she said.
"It's a tragedy for those who have lost their jobs and the suppliers left struggling for survival that Carillion directors ignored these issues.
"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."
(LM)
