Carillion in the Press
Updated: Nov 10, 2021
The UK government has launched a legal bid to ban eight former Carillion Directors from holding senior boardroom positions, almost three years on from the collapse of the outsourcing business.
The Insolvency Service, which handles corporate collapses, said it was seeking to disqualify the directors “in the public interest”, in a move that could result in them being banned from acting as UK company directors or in senior management for between two and 15 years each.
The legal action, launched by the new business secretary, Kwasi Kwarteng, comes within days of the three-year anniversary of the company’s collapse, when more than 3,000 jobs were lost and 450 public sector projects including hospitals, schools and prisons were plunged into crisis.
The court proceedings name eight individuals. The former chairman Philip Green – who was once an adviser to David Cameron on corporate responsibility – is among those listed as a defendant, alongside the former chief executives Richard Howson – who left after six years in charge in 2017, months before the company’s collapse – and Keith Cochrane, a company director since 2015 who took over in its final months before failure in January 2018.
Some Carillion directors “acted recklessly” and released “misleadingly positive” market updates in the year before it collapsed, the financial watchdog has said.
Three updates were singled out by the Financial Conduct Authority (FCA) for not disclosing the company’s true financial state, as it announced it had sent out warning notices. The updates, issued on 7 December 2016, 1 March 2017 and 3 May 2017, were found to be misleadingly positive, particularly with regards to its UK construction business.
According to the watchdog, Carillion’s directors were aware of the company’s deteriorating financial state, but failed to make the market, or the company’s own board and audit committee, aware of this. The FCA said the company also lacked “robust” procedures and systems to ensure contract accounting judgements were appropriate and reported to internal oversight groups, such as its audit committee.