Two former finance directors of Carillion, the collapsed construction giant, have been fined and banned by the accounting industry watchdog, marking the end of an eight-year regulatory probe into one of the UK's most notorious corporate failures.
FRC Ruling on Richard Adam and Zafar Khan
Richard Adam, who served as Carillion's finance director for nine years until 2016, and his successor Zafar Khan were found by the Financial Reporting Council (FRC) to have acted recklessly and without integrity when preparing the company's financial updates. The FRC banned Adam from the audit industry for 15 years and fined him over £500,000, while Khan received a 10-year ban and a £225,000 fine. Both fines were reduced to £222,019 and £138,960 respectively, as the directors had already faced significant penalties from the Financial Conduct Authority (FCA).
Background of Carillion's Collapse
Carillion, once a favored contractor for the UK government, collapsed in 2018 under nearly £7bn of debt, leading to over 3,000 job losses and widespread financial damage to suppliers and taxpayers. The company was involved in major projects such as the Royal Liverpool University Hospital redevelopment and the Battersea Power Station revamp, as well as contracts for the 2022 World Cup in Qatar.
Details of Misconduct
The FRC judged that Adam and Khan gave an unrealistic view of Carillion's financial position and performance, though neither was found to have acted dishonestly or deliberately. Penrose Foss, FRC executive director of enforcement, stated: "It is critical that any individual who is responsible for preparing accurate financial information, whatever their level of seniority, undertakes their duties with integrity."
Additional Sanctions
As part of the same probe, three unnamed senior accountants were also found to have acted recklessly, receiving fines of £40,000 and bans ranging from two to eight years. This ruling concludes the last active investigation into malpractice at Carillion, which had already led to fines and bans for other directors and raised questions about the role of the Big Four accountancy firms.
