The UK’s FCA has fined the former chief executive of collapsed construction business Carillion UK £237,700 ($324,150) for poor oversight and a failure to report the company’s financial troubles to relevant stakeholders.
Charges against Richard Howson also include playing a part in misleading statements being issued by Carillion plc. And he failed to alert the firm’s board and audit committee about its financial disarray, the FCA said in a press release.
Last month, the FCA fined two of Carillion’s former finance directors, Richard Adam and Zafar Khan, in the same case. They were fined £232,800 ($314,285) and £138,900 ($187,524) respectively.
Carillion was a construction, project finance, and support services business that operated in the UK, Canada, and Middle East until it went into liquidation in January 2018.
In July 2017, it made an unexpected announcement about a provision of £845m (over $1.1 billion) on its balance sheets, leading to a rapid fall in its share price and its ultimate collapse.
Howson, who served as Chief Executive of Carillion from January 1, 2012, to July 10, 2017, was originally given an initial Decision Notice by the FCA in June 2022 and fined £397,800 ($536,856). But he disputed most of the charges at the time.
The final penalties were imposed after all three individuals withdrew their challenges to the FCA’s decision.
Failure to act
Howson, along with a former finance director, was one of only two executive directors on the firm’s board, meaning that he was better positioned to know about its financial health.
“Primary responsibility for ensuring the financial information disseminated to the market was accurate and not misleading lay with the group finance director. However, Mr Howson played an important role as the Board member with the most expertise on construction and contracting matters,” the FCA argued.
The major charge against Howson relates to a failure to take action or alert others when it mattered the most. “The FCA found that Mr Howson acted recklessly and was knowingly concerned in breaches by Carillion of the Market Abuse Regulation and the Listing Rules,” the regulator said.
Steve Smart, executive director of enforcement and market oversight at the FCA, said: “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.”
Formal charges against Carillion include breaches of:
- “Article 15 of MAR (prohibition of market manipulation) by disseminating information that gave false or misleading signals as to the value of its shares in circumstances where it ought to have known that the information was false or misleading.”
- “Listing Rule 1.3.3R (misleading information must not be published) by failing to take reasonable care to ensure that its announcements were not misleading, false or deceptive and did not omit anything likely to affect the import of the information.”
- “Listing Principle 1 (procedures, systems and controls) by failing to take reasonable steps to establish and maintain adequate procedures, systems and controls to enable it to comply with its obligations under the Listing Rules.”
- “Premium Listing Principle 2 (acting with integrity) by failing to act with integrity towards its holders and potential holders of its premium listed shares.”