FCA fines former Carillion bosses over “reckless” statements

A trio of ex-Carillion bosses have been handed fines over “reckless” and “misleading” statements before the firms collapse in 2018.

The Financial Conduct Authority has fined former chief executive Richard Howson £397,800, and former finance directors Richard Adam and Zafar Khan £318,000 and £154,400 respectively.

The individuals are now appealing the decision to the Upper Tribunal where they will each present their case.

Any findings in the individuals’ decision notices are provisional and reflect the FCA’s belief as to what occurred and how it considers their behaviour should be characterised.

Carillion has not appealed the decision notice to the Upper Tribunal.

The FCA has imposed a public censure on Carillion, rather than a financial penalty, given the firm is insolvent and in liquidation.

Were it not for Carillion’s financial circumstances, the FCA said it would have imposed a financial penalty of £37.9m.

In a statement, the FCA said it, “considers that Carillion recklessly published announcements on 7 December 2016, 1 March 2017 and 3 May 2017 that were misleading and did not accurately or fully disclose the true financial performance of Carillion.

“Mr Howson, Mr Adam and Mr Khan were each aware of the deteriorating expected financial performance within Carillion’s UK construction business and the increasing financial risks associated with it.

“They failed to ensure that those Carillion announcements for which they were responsible accurately and fully reflected these matters.

“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”.

Carillion employed 18,000 people in the UK when it collapsed into liquidation in January 2018 with liabilities of almost £7bn.

It was building One Chamberlain Square in Birmingham when it collapsed.

This week, KPMG was been fined £14.4m for its audits of Carillion and Regenersis and then providing “false and misleading” information to the regulator.

The long-awaited judgement by the Financial Reporting Council is one of the largest fines handed down for audit failings.

Four individuals have been fined and banned from practicing, by excluding them from membership of the ICAEW, and a junior employee reprimanded.