ICSM BUSINESS NEWS: Finally, after four and a half years since its collapse owing billions, former Carillion directors are fined
It was the corporate collapse that shocked the nation and rocked confidence in the construction industry. When Carillion went down after months of speculation that the mega organisation was in trouble in 2018 the company left debts of more than three billion pounds. Scores of contractors and small businesses were forced to close or shut up shop when they were left without payment – often on credit terms that meant they did not get paid for 120 days.
Now the Financial Conduct Authority (FCA) have imposed massive fines on three of Carillion’s directors censoring them for their part in the scandal. The former chief executive Richard Howson £397,800 and ex-finance directors Richard Adam and Zafar Khan received penalties of £318,000 and £154,400 respectively.
The FCA said: “The FCA also considers that Mr Howson, Mr Adam and Mr Khan acted recklessly and were knowingly concerned in Carillion’s contraventions. In the FCA’s view, 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.”
Before the collapse Carillion splashed out millions in consultancy fees, salaries and dividends despite widespread questions being asked about their financial stability. ICSM was aware of concerns amongst contractors and suppliers that payment of invoices were often late.
Mark Steward, Executive Director of Enforcement and Market Oversight, said:
'Carillion failed to take reasonable steps to establish and maintain adequate procedures, systems and controls to enable it to comply with its obligations under the Listing Rules. As a result its true financial position remained hidden over many months and the effects of its collapse were aggravated, causing substantial harm to shareholders and creditors. This is market abuse, and as damaging to market integrity as insider dealing and manipulation, though not often described in this way.
Accountant KPMG and four auditors were also fined over the collapse further underlining the disaster for all those concerned including 3,000 staff who lost their jobs and the many half-finished contracts such as hospitals and hotels left unfinished.
About ICSM Credit
ICSM Credit has more than four decades of experience as a credit intelligence group whose members gain inside information about firms in trouble allowing them to avoid bad debts and rogue traders. To join costs less than a tank of fuel - while at the moment there's a special free temporary membership offer during the Covid-19 crisis which gives access to free legal letters. ICSM also has an effective debt collecting service which has a global reach - ask for details from Paul.
For details about ICSM Credit call 0844 854 1850 or visit the website www.icsmcredit.com or email Ian at Ian.carrotte@icsmcredit.com on how to subscribe and to join the UK’s credit intelligence network to avoid bad debts and late payers. Follow ICSM Credit on FaceBook, Twitter and YouTube and Ian Carrotte on LinkedIn.
To keep up to date subscribe to the FREE ICSM Credit Newsletter to hear all the latest insolvency news and to see who has gone out of business click on the orange panel on the top left of the home page of the website www.icsmcredit.com or send an email to Ian.carrotte@icsmcredit.com
For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk