The stain of Carillion continues to spread – and smell. As desperate efforts are made to salvage the contracts and jobs of the bankrupt firm, the focus now turns on its pensioners, and on the “defined-benefits” schemes under the company’s umbrella. They cover 28,000 past and present workers.

Last year the directors, with the agreement of the pension trustees, “wriggled out”, as MPs put it, of paying into their pension scheme, though it was already in debt by about £900m. They hoped this would save the company. Fat chance. Yet its pensions regime was so inadequate that its directors went on handsomely rewarding their shareholders and themselves. Quite apart from the ethics of so doing, where were the trustees, the auditors and the official Pensions Regulator?

The answer, which Frank Field’s Commons work and pensions committee will try to elicit this week, is that the trustees saw trouble coming and warned their board – which did next to nothing. They warned the Pensions Regulator, which “expressed concern”. The fund had apparently been in trouble for 10 years. Yet the auditors KPMG continued to give Carillion’s accounts a clean bill of health.

This was for a firm £5bn in debt, owing almost £1bn to its pensioners, and with just £29m in the bank. These are the same accountants as were criticised in reports following the Co-operative bank scandal. What on earth was the Financial Reporting Council doing? The council will now investigate KPMG to see whether any rules were broken during the audit. KPMG has said it will cooperate with the investigation, but has defended its role.

The trouble with Carillion remains size. It grew too big to be called to account. Its debts became so awesome, its directors so greedy, its Whitehall contacts so close, that no one dared admit it was bust. No company, least of all one supplying public services, should ever get into that position.

Field knows the trouble with pensions is that they are boring, until you need one. The population is ageing. Defined pensions, fixed at what the worker earned not what the company can afford, have become inordinate liabilities. They are gradually being phased out in favour of defined contributions. Bankrupt schemes are being deposited with the state Pension Protection Fund (PPF), so pensioners can get at least something. But the PPF’s liabilities across all defined benefit schemes it covers now exceed its assets, by a huge £103bn. This, too, is surely unstable.

The private sector has delivered public services since the dawn of time. There is nothing inherently wrong in that. But there is something wrong when warnings are not heard, accountability collapses and regulation fails. That is Carillion. Over to Field, but what has he been doing all this time?

• Simon Jenkins is a Guardian columnist