Carillion bosses ‘knowingly concerned’ in breaches
The Financial Conduct Authority intends to take further action against failed outsourcer Carillion for “misleading” shareholders with false information.
In a warning notice the watchdog said that a number of senior executives were “knowingly concerned” in numerous breaches of market rules, and had acted “recklessly”.
These include “disseminating information that gave false or misleading signals as to the value of its shares” and “failing to act with integrity” towards its shareholders.
Carillion, which had its headquarters in Wolverhampton, collapsed into administration in 2018 with liabilities of almost £7 billion.
The firm was one of the UK’s largest construction companies – employing around 43,000 staff globally including 20,000 in Britain – and was known for having worked on the Royal Opera House, the Channel Tunnel, Tate Modern, and the famous doughnut building of the UK’s Government Communications Headquarters (GCHQ) in Cheltenham.
It also offered many outsourcing services for the public sector, with contracts to provide school dinners, maintain and operate buildings and estates, security and housekeeping, as well as cleaning and catering at NHS hospitals.
'Relentless dash for cash'
An inquiry into the collapse carried out by MPs described the collapse as “a story of recklessness, hubris and greed”, and said that the firm’s business model was “a relentless dash for cash”.
The FCA said that it had now found that Carillion’s announcements on December 7, 2016; March 1, 2017, and May 3, 2017, did not “accurately or fully disclose the true financial performance” of the firm.
It also found that the company’s systems and procedures “were not sufficiently robust” to ensure that accounting judgements made in relation to its UK construction business were appropriately made and reported to the audit committee.
Finally, it said that the “relevant executive directors were each aware of the deteriorating expected financial performance” but “failed” to make sure that announcements “accurately and fully reflected” these matters.
The warning notice does not constitute a final decision, but if it does decide to take action against the company and directors, the FCA is proposing public censure rather than a financial penalty. The use of a public censure is regarded as an important regulatory tool and is used to detail misconduct to raise public awareness of regulatory standards.
