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(Sharecast News) - The former chief executive of construction firm Carillion has been fined more than 230,000 for his part in misleading statements before the company's spectacular collapse in 2018 that saw 3,000 people lose their jobs.
Britain's Financial Conduct Authority slapped Richard Howson with a 237,700 fine he failed to reveal Carillion's serious financial troubles in company announcements or alert its board and audit committee.
The FCA found that Howson "acted recklessly and was knowingly concerned in breaches by Carillion of the Market Abuse Regulation and the Listing Rules".
'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," said Steve Smart, executive director of enforcement and market oversight at the FCA.
Last month, the FCA fined two former Carillion finance directors Richard Adam and Zafar Khan 232,800 and 138,900 respectively for misleading investors before Carillion entered liquidation with 7bn of debts having issued three profit warnings in five months during 2017, including writing down more than 1bn from the value of its contracts.
The collapse of the government contractor caused chaos across at least 450 projects and public-sector schemes, including schools, roads, prisons and the expansion of Liverpool Football Club's stadium. The then Conservative government was reportedly forced into maintaining an unofficial 'watch list' of the sector to make sure no other firms were at risk.
The disruption delayed the construction of two new hospitals - the 646-bed Royal Liverpool and 669-bed Midland Metropolitan in Sandwell - which were due to open in 2017 and 2018, respectively, with both projects running hundreds of millions of pounds over budget.
It was also reported at the time that the government knew of a plan that could have retrieved more than 360m from Carillion, limiting the cost of its collapse to taxpayers and sparing pension scheme members from cuts to their retirement payouts, but did not encourage directors to pursue it.
Multiple sources told the Guardian in 2018 that the Cabinet Office, responsible for oversight of government contractors, did not apply any pressure on Carillion's directors to adopt the proposals, presented by accounting firm EY in mid-December 2017.
EY's plan would have involved breaking up the company, selling the profitable parts and placing the rest into liquidation, avoiding an involuntary collapse.
The accounting firm believed this would generate 364m, of which 218m could be injected into the firm's 13 pension schemes, estimated to have a deficit of close to 1bn.
Howson in October 2023 was banned from being a director for eight years, while Khan was barred for 11 years and Adam for 12 in the summer.
The Insolvency Service launched legal action in January 2001 seeking the disqualification of eight former Carillion directors. As well as Howson, Adam and Khan, former chair Philip Green and director Keith Cochrane - who replaced Howson in the months preceding Carillion's collapse - were also named.
Reporting by Frank Prenesti for Sharecast.com