UK financial watchdog fines three former Carillion executives (updated)

Carillion

28/07/2022 11:20

(Recasts, adds detail)
    By Huw Jones
    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.
    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 https://www.fca.org.uk/publication/decision-notices/richard-john-howson-2022.pdf,
 397,800 pounds. Two former finance directors, Richard Adam https://www.fca.org.uk/publication/decision-notices/richard-adam-2022.pdf
 and Zafar Khan https://www.fca.org.uk/publication/decision-notices/zafar-khan-2022.pdf,
 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)

 (Reporting by Huw Jones
Editing by David Goodman and Bernadette Baum)
 ((huw.jones@thomsonreuters.com; +44 207 542 3326; Reuters
Messaging: huw.jones.thomsonreuters.com@reuters.net))