A Ponzi scheme is where the operators take money from new investors to pay out existing investors. The scheme works so long as the money coming in exceeds the money going out and money going out includes both moneys paid to investors and whatever the operator takes out of the scheme. One of the most long-running Ponzi schemes in the history of the world is the UK's state pension scheme which only worked so long as the working population both grew and received increasing income because the scheme was funded by a levy on income paid by both employees and employers. Declining population meant that the pension pot diminished, fell onto general taxation and amongst other schemes, the UK government has ordered that, regardless of retirement age, pensions will not commence until recipients are significantly older than they had been promised all their working lives.

Carillion needed to grow both its population (in the sense of the numbers of contracts) and their income (in the sense of the profit on those contracts) in order to survive. Already in deep trouble because of a massive (approx GBP500 million) shortfall in its employee's pension scheme, its directors took substantial bonuses to capitalise on its relatively profitable 2016.

To continue to meet its contractual obligations, it was obvious that Carillion needed more contracts to provide the revenue. It took on more and more contracts which the UK government seemed more than happy to hand over. The theory was simple: the money from new contracts paid regularly and in relatively short periods would support the existing long-term contracts which were running behind time and over-budget, usually due to factors outside Carillion's control but not entirely out of the blue and, perhaps, there was insufficient attention to contingency and insurance requirements.

Whatever the result, the UK government kept putting money into the company which, to be fair, seemed to be meeting its obligations under those contracts and those entered into previously. But it was doing so at the expense of contractors of all kinds which were watching their unpaid bills increasing and relying on promises that moneys would soon be available.

That's the classic Ponzi lie: we can't pay you out right now for administrative reasons but when we can deal with withdrawals, you'll get everything owed to you. That's what various investment schemes termed "hedge funds" (although almost none of them were in fact hedge funds) told those who had put money in and found, in the early days of the global financial crisis that their money was (as they were told) locked in but the locks would be released soon. Meanwhile, ever more money was solicited and taken out by the fund's managers or paid, in dribs and drabs, to appease demanding investors.

If Carillion has done that, then it may well fall under the "preferring creditors" provisions of the UK's insolvency laws. Directors may have to pay back at least bonuses and perhaps increases in salary they have had (if any). And those same directors may face disqualification or, even, prosecution.

Those are the same penalties that face operators of Ponzi schemes.

Again, there is nothing to establish such a scheme in the case of Carillion but there are enough commonalities to provide an indication of what to look for in other cases.