Regulator’s ‘complex’ investigation into Carillion’s former finance directors continues

The Financial Reporting Council (FRC) has confirmed that it is investigating two former finance directors of Carillion as it looks to establish if any misconduct was involved in the collapse of the construction giant.

The FRC has made the announcement “in view of the significant public interest in this matter” and in the wake of it becoming public that KPMG had suspended staff over potential problems with information that the accountancy firm had supplied to the FRC’s investigation.

Wolverhampton-headquartered Carillion employed around 18,000 people when it failed in January 2018, with ultimately nearly 3,000 people being made redundant.

Its collapse has had a significant impact on major schemes in the region, especially the development of Midland Metropolitan Hospital which has been delayed and hit by huge additional costs.

The FRC is investigating KPMG’s audits of Carillion from 2014 to 2017 and the conduct of two former finance directors, Richard Adam and Zafar Khan.

Adam was Carillion’s group finance director for nearly 10 years, up to 2016. He was replaced by Khan, he was in post for a year, but had worked in senior finance roles at Carillion since 2011.

A statement by the FRC said it “continues to progress its original investigations” into the collapse of Carillion.

It said: “A key area of focus has been the financial performance of Carillion’s major contracts in both the construction and services divisions, and whether Carillion management and its auditors ensured that this was appropriately reported in its financial statements.

“The investigations are also considering conduct relating to pension liabilities, goodwill, cash disclosures and going concern.”

The FRC expects the “complex” investigation to continue “well into 2019”.