Ex-Carillion executives face £1m in fines over ‘market abuse’ claims

theguardian.com:

Three former Carillion executives have been accused of “market abuse” by the City regulator and could face combined fines worth nearly £1m for issuing misleading statements regarding the disgraced outsourcer’s financial health before it collapsed in 2018.

The Financial Conduct Authority (FCA) said that it found the executives had “acted recklessly” and had been aware the company was publishing “misleadingly positive” statements about its finances in 2016 and 2017, particularly in relation to the UK construction arm.

The watchdog said the former chief executive John Howson, and former finance directors Richard Adam and Zafar Khan “were each aware of the deteriorating expected financial performance within Carillion’s UK construction business and the increasing financial risks associated with it”.

“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.”

The FCA said it intended to issue fines against all three executives: £397,800 against Howson, £318,000 against Adam, and £154,000 against Khan as a result of the findings. However, the findings and fines are currently provisional, as all three are appealing against the decision at the regulator’s upper tribunal.

The FCA’s executive director of enforcement and market oversight, Mark Steward, 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.