Former Carillion Chief Executive Fined by Financial Conduct Authority
The former chief executive of the collapsed construction giant Carillion has been fined by the UK's financial regulator for his involvement in misleading investors prior to the company's dramatic failure eight years ago. The Financial Conduct Authority (FCA) imposed a penalty of £237,700 on Richard Howson after he withdrew his legal challenge against the watchdog's initial punishment.
Regulator's Findings on Howson's Conduct
The FCA determined that Howson was fully aware of severe financial difficulties within Carillion's construction division but deliberately failed to disclose this critical information in company announcements. Furthermore, he neglected to alert the board of directors and the audit committee, resulting in what the regulator described as "poor oversight" and a breakdown in corporate governance.
Steve Smart, a director at the FCA, emphasized the broader impact of Carillion's collapse, stating: "Carillion's failure was significant. Jobs were lost, public sector projects put at risk and investors, who trusted the company to give them accurate information, suffered large scale losses. That's why the FCA worked diligently to hold the company and its senior leaders to account."
Context of Carillion's Collapse and Consequences
Carillion entered liquidation in January 2018 with staggering debts totaling £7 billion, triggering approximately 3,000 job losses and creating chaos across 450 projects and public-sector schemes. The disruption affected numerous critical infrastructure projects, including:
- The construction of two major hospitals – the 646-bed Royal Liverpool and 669-bed Midland Metropolitan in Sandwell – both delayed and running hundreds of millions of pounds over budget
- Public works such as schools, roads, and prisons
- The expansion of Liverpool Football Club's stadium
Just months before its collapse, Carillion shocked the market by announcing an £845 million writedown due to problems in its construction projects. Board minutes revealed that the company's former chair, Philip Green, was preparing an "upbeat announcement" to investors merely five days before this charge was disclosed. The FCA found that Carillion's previous trading updates had provided no indication that such a significant financial adjustment was necessary.
Broader Regulatory Actions and Related Penalties
Howson's fine follows recent penalties against two other former Carillion executives. Last month, the FCA fined Richard Adam £232,800 and Zafar Khan £138,900 after both individuals dropped their appeals against the regulator's findings. Howson had initially challenged his provisional fine of £397,800 announced in 2022 but withdrew his appeal before the court hearing.
In a related development from 2023, the accounting firm KPMG was fined £21 million by the accountancy regulator for "exceptional" failures in its audits of Carillion between 2013 and 2017. Howson has declined to comment on his fine, maintaining silence regarding the FCA's decision.
