𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

Two former finance directors of collapsed firm Carillion have been fined by the City watchdog after acting “recklessly” and playing a part in misleading statements issued by the outsourcing giant before its high-profile demise eight years ago.

The Financial Conduct Authority (FCA) said Richard Adam and Zafar Khan were “both aware of serious financial troubles in Carillion’s UK construction business but failed to reflect this in company announcements or alert the board and audit committee”.

The regulator said it had fined Mr Adam and Mr Khan £232,800 and £138,900 respectively, after the pair withdrew their challenges to the FCA’s findings.

It comes eight years since the outsourcing giant, which employed about 43,000 people including some 19,000 in the UK, collapsed in January 2018 with massive debts.

Before its failure, Carillion had been one of the UK’s biggest construction and facilities management companies, with several major government contracts.

The FCA said it found the ex-finance directors at Carillion “acted recklessly and were knowingly concerned in breaches by Carillion of the Market Abuse Regulation and the Listing Rules”.

Mr Adam was Carillion’s group finance director from April 2007 to the end of 2016 and was succeeded by Mr Khan, who acted in the role from January 2017 until September of that year.

The FCA said the pair had responsibility for Carillion’s procedures, systems and controls relating to financial reporting.

“These were not sufficient to ensure that contract accounting judgments made in its UK construction business were made, recorded and reported appropriately,” it added.

Steve Smart, joint executive director of enforcement and market oversight at the FCA, said: “Those in positions of responsibility have a duty to keep the market accurately and adequately informed.

“With Carillion, we have seen the serious impact it can have when they don’t.

“The action taken against Mr Adam and Mr Khan demonstrates our commitment to preventing market abuse and upholding the standards we expect.”

Mr Khan said he settled with the FCA to bring the matter to an end after lengthy proceedings.

He said: “I was finance director of Carillion for just eight months, before leaving in September 2017, some five months before Carillion went into liquidation in January 2018.

“Almost eight years later, the FCA‘s proceedings against me are still continuing.

“However, I no longer have the financial resources to enable me to continue to defend these allegations and the extremely drawn-out nature of these proceedings has had a considerable impact on me and my family.

“Therefore, I have decided to agree a settlement with the FCA to bring this matter to an end.”

He added: “I continue to believe I acted at all times with integrity and in the best interests of the company.”

Former Carillion chief executive Richard Howson was also handed a decision notice by the FCA in 2022, but is disputing the regulator’s findings, with a tribunal hearing set for February 16.

In October 2023, KPMG was handed a record £21 million fine by the Financial Reporting Council over its audits of Carillion.