As the third anniversary of the collapse of Carillion approaches, business secretary Kwasi Kwarteng has begun legal proceedings which could see eight former executives banned from serving as directors for specified periods
A spokesman for the Insolvency Service said: ‘We can confirm that on January 12, 2020 the business secretary issued company director disqualification proceedings in the public interest against eight directors and former directors of Carillion.’
Those involved are believed to include Philip Green, who was Carillion chairman, two former CEOs (Richard Howson and Keith Cochrane), and former finance directors Richard Adam and Zafar Khan as well as three non-executive directors.
The executives could be banned for between two and 15 years from being the director of a company or from forming or promoting a company in the UK or with connections to the UK.
None of those named has issued a public comment on the proceedings.
Carillion’s collapse in January 2018 was one of the catalysts for demands for audit reform, with a lacerating report from a joint work and pensions and BEIS select committees’ inquiry on the failure of the Big Four firms to raise red flags over financial difficulties at the outsourcer, which was responsible for a clutch of high profile major government infrastructure projects.
As well as the Office Receiver’s investigation, Carillion is being investigated by the Financial Reporting Council (FRC), the Financial Conduct Authority (FCA), the Insolvency Service and The Pensions Regulator (TPR).
The FRC is examining KPMG’s auditing of Carillion for the years ended 31 December 2014, 2015 and 2016 and additional audit work carried out during 2017. In September last year, the regulator said it had completed its initial investigation report and would make a decision on any enforcement action once it had responses from the firm.
In November last year, the FCA gave Carillion and what the regulator described as ‘certain previous executive directors of Carillion’ a warning notice each, proposing to take action in respect of misleading financial information.
Its notice highlighted specific issues of concern where it maintained that Carillion and the relevant executive directors acted recklessly.
These relate to Carillion’s announcements on 7 December 2016, 1 March 2017 and 2 May 2017 which the FCA said were misleading and did not accurately or fully disclose the company’s true financial performance.