Five former Carillion executives banned by accountancy regulator

Carillion collapsed into compulsory liquidation in January 2018.

Photograph: Bloomberg/Getty Images View image in fullscreen Carillion collapsed into compulsory liquidation in January 2018.

Photograph: Bloomberg/Getty Images Five former Carillion executives banned by accountancy regulator Richard Adam, Zafar Khan and three others are also fined by Financial Reporting Council Business live – latest updates Five former executives at the collapsed government contractor Carillion have been banned by the UK’s accountancy regulator, effectively ending the career of its former finance chief, after they “acted recklessly”.

Before Carillion collapsed into compulsory liquidation in January 2018 – one of the biggest corporate failures in UK history – it was a large multinational construction and facilities management services company and employed 43,000 people around the world.

Richard Adam, a former finance director at Carillion and Zafar Khan, his successor in that role and previously Carillion’s financial controller, have already been fined £232,830 and £138,960 respectively by the Financial Conduct Authority for misleading investors.

The Financial Reporting Council (FRC) said on Tuesday that Adam, 69, would be excluded from the Institute of Chartered Accountants in England and Wales for 15 years, which amounts to a ban, and effectively spells the end of his career.

The FRC also imposed a financial sanction of £222,019, reduced from £550,000, to take into account the FCA’s fine and a settlement discount.

Khan, 58, has been banned for 10 years and received a financial sanction of £60,228 from the FRC, reduced from £225,000. Both received a severe reprimand.

The FRC said both men had accepted their misconduct in respect of several areas of Carillion’s business, including certain transactions, big UK construction contracts and a supply chain finance facility, that affected the company’s reported financial performance between 2013 and 2016 and the half year to 2017.

The regulator also secured admissions from three unnamed senior accountants, who it said had “acted recklessly and failed to act with integrity” when preparing information for Carillion’s financial statements.

The first was banned from working as an accountant for eight years and received a financial sanction of £45,000, while the second was banned for five years and the third for two years; the latter two received a £26,000 penalty. All three were also issued with a severe reprimand. The fines were reduced as part of settlements.

Penrose Foss, the FRC executive director of investigations and enforcement, said: “The substantial sanctions imposed on these five individuals reflect the gravity of their failure to discharge their respective obligations to act with integrity in preparing financial information in the context of a large, listed company.

“It is critical that any individual who is responsible for preparing accurate financial information, whatever their level of seniority, undertakes their duties with integrity. This is a fundamental requirement for every organisation.” Carillion collapsed with £7bn of debts, resulting in 3,000 job losses and causing chaos across 450 projects and public-sector schemes, including schools, roads, prisons and the expansion of Liverpool Football Club’s stadium. The construction of two new hospitals was also delayed, and projects ran hundreds of millions of pounds over budget.

In July 2017, Carillion issued a profit warning and announced an expected provision against its construction contracts of approximately £845m. In September 2017, Carillion announced a further provision of £200m and a first-half loss of £1.15bn. In November 2017, Carillion issued another profit warning and indicated it would breach its banking covenants the following month.

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