Accountancy watchdog launches probe into former Carillion finance directors
Britain's accountancy watchdog has started an investigation into the handling of financial statements by two former finance directors at collapsed construction giant Carillion.
The Financial Reporting Council (FRC) will probe former group finance directors Richard Adam and Zafar Khan over statements made between 2014 and 2017.
The inquiry will cover 2014, 2015 and 2016, the six-month period to June 30, 2017, and the preparation and reporting of other financial information between 2014-2017.
The FRC announced a separate investigation earlier this year into how accountancy giant KPMG audited the accounts of the Wolverhampton-based construction and services giant which plunged into liquidation in January.
The firm's demise left in its wake a £900 million debt pile, a £590 million pension deficit and hundreds of millions of pounds in unfinished public contracts.
Hundreds of suppliers and sub-contractors have been left with unpaid bills, while nearly 1,600 Carillion workers have lost their jobs so far.
Yesterday the Insolvency Service said another 46 were being made redundant, with 71 transferring to new suppliers. In total so far 8,592 jobs have been saved as contracts are taken over by new companies but around 7,000 jobs remain in the balance, including those of around 400 staff at the company's city centre headquarters in Wolverhampton.
City banks, law firms and accountancy giants have been sharply rebuked by MPs over Carillion's fall, with former bosses coming under fire for the pay awards they received as the company struggled.
An influential group of MPs claimed in February that Mr Adam "dumped" his last shares in Carillion – worth hundreds of thousands of pounds – at the first possible moment.
Mr Adam retired at the end of December 2016. On March 1, 2017 he sold his entire existing shareholding for £534,000, including performance awards for 2013-2015 of £277,000 which vested on his retirement.
He then sold his long-term incentive plan awards for 2014 on May 8, 2017, the day they vested, for £242,000.
In total, in March and May 2017 he sold shares worth £776,000, the Work and Pensions and Business Select Committees revealed last month.
Mr Khan had his contract terminated last September after eight months in the job, having "spooked" Carillion's board with a financial update a few days earlier that showed there had been a further decline in the company's position since the 'shock' £845 million contract write down in July 2017, said the committees.
The problem contracts included the delayed £350m Midland Metropolitan Hospital project at Smethwick, where work has remained at a standstill since Carillion's collapse. The last Carillion workers at the site were made redundant last week as negotiations with a potential replacement contractor – thought to be Skanska – continued.
