UK financial watchdog fines three former Carillion executives

Financial Conduct Authority’s (FCA) logo is seen at their head offices in London, Britain March 10, 2022. REUTERS/Toby Melville

Register now for FREE unlimited access to

LONDON, July 28 (Reuters) – Britain’s financial watchdog said on Thursday it has fined three former executives of Carillion for “recklessly” publishing misleading financial statements before the builder collapsed in 2018.

The Financial Conduct Authority said it would have fined the company itself 37.8 million pounds ($46 million), had it not gone bust.

Carillion employed 43,000 people to provide services in defence, education, health and transport before it collapsed in January 2018, Britain’s biggest bankruptcy in a decade, after banks halted funding.

Register now for FREE unlimited access to

The FCA said Carillion recklessly published announcements in December 2016, March 2017 and May 2017.

“Those announcements made misleadingly positive statements about Carillion’s financial performance generally and in relation to its UK construction business in particular,” the FCA said.

“The announcements did not reflect significant deteriorations in the expected financial performance of Carillion’s UK construction business and the increasing financial risks associated with it,” the regulator said.

The watchdog said it had decided to fine Carillion’s former CEO, Richard Howson, 397,800 pounds. Two former finance directors, Richard Adam and Zafar Khan, were fined 318,000 pounds and 154,400 pounds, respectively.

“The FCA also considers that Mr Howson, Mr Adam and Mr Khan acted recklessly and were knowingly concerned in Carillion’s contraventions,” the FCA said.

“Despite their awareness of these deteriorations and increasing risks, they also failed to make the Board and the Audit Committee aware of them, resulting in a lack of proper oversight.”

All three of the former executives, who could not be immediately reached for comment, were appealing against the decision in the Upper Tribunal court, which can either uphold the FCA’s fines and other actions or dismiss them, the watchdog said.

Separately, the Financial Reporting Council is investigating KPMG’s auditing of Carillion, the outcome of which may be nearer given the FCA has now published the findings of its own investigation.

The collapse of Carillion triggered reviews of auditing which set out reforms to improve standards, some of which have yet to be introduced.

($1 = 0.8214 pounds)

Register now for FREE unlimited access to

Reporting by Huw Jones
Editing by David Goodman and Bernadette Baum

Our Standards: The Thomson Reuters Trust Principles.

Read More

Leave a Reply

Your email address will not be published. Required fields are marked *