Two former finance directors at Carillion have been found and barred from the accounting profession after UK regulators concluded they acted recklessly while preparing financial information before the outsourcing group collapsed.
The sanctions, announced Tuesday by the Financial Reporting Councilare the latest enforcement action linked to the failure of Carillion, which entered liquidation in January 2018 after years of mounting debt, weakening cash flow and growing pressure across several large contracts.
According to the regulator, former group finance director Richard Adam and his successor Zafar Khan accepted misconduct findings tied to accounting information connected to major construction contracts, specific transactions and Carillion’s supply chain finance arrangements.
The FRC said those areas were material to the company’s reported financial performance.
Adam, who served as finance director from 2007 until late 2016, was fined £222,019 after reductions linked to penalties already imposed earlier this year by the Financial Conduct Authority. Khan, who held the role for part of 2017 after previously serving as financial controller, was fined £60,228.
The regulator also banned Adam from membership of the Institute of Chartered Accountants in England and Wales for 15 years. Khan received a 10-year ban.
Three additional former senior accountants at Carillion, who were not named publicly by the regulator, were also sanctioned and banned for varying periods.
Before its collapse, Carillion was one of the UK’s largest government contractors, employing roughly 43,000 staff globally and working across construction, facilities management and public infrastructure projects.
Several parliamentary and regulatory reviews carried out after the liquidation examined how revenue and contract assumptions were handled internally as financial conditions inside the business deteriorated.
Those investigations focused in part on long-term construction contracts and the way expected future performance continued feeding into reported results despite increasing strain across parts of the business.
The FRC said Adam and Khan failed to act with integrity in relation to accounting information used in the company’s financial statements.
Khan said in a statement that he agreed to settle after years of proceedings and because he no longer had the financial resources to continue contesting the allegations.
“I felt I had no choice,” he said.
Khan also said the length of the case had affected both him and his family and maintained that he believed he acted in the company’s best interests during his time there.
The enforcement process linked to Carillion has stretched across regulators, auditors and former executives for years after the company’s liquidation.
In 2023, the FRC imposed a £21 million fine on KPMG over its audits of Carillion, one of the largest penalties issued by the regulator.
The collapse left ministers scrambling to maintain public services tied to Carillion contracts while suppliers, subcontractors and pension schemes dealt with the financial fallout.
Parliamentary committees examining the failure previously accused Carillion’s leadership of presenting an increasingly optimistic picture of the company’s finances as debt levels rose and cash pressures worsened.
Penrose Foss, enforcement director at the FRC, said the sanctions reflected “a sustained failure” by senior finance staff to ensure the accuracy of financial information.
Some former executives connected to the collapse have spent years dealing with investigations without criminal convictions being secured.
Several people involved in earlier proceedings have also complained privately about the cost and length of defending cases that continued years after Carillion disappeared.
One former industry executive familiar with the fallout said finance teams inside large contractors still discuss the company when reviewing contract reporting assumptions and internal controls.
“People still mention Carillion,” the executive said. “Particularly around contracts where the numbers can move around over time.”
The executive said documentation around internal assumptions had become more detailed in some finance departments after the collapse.
But several former staff connected to the wider aftermath of Carillion said the pace of enforcement remained a source of frustration long after the liquidation itself.
“The system took years to catch up with what people inside the business already knew was going wrong,” one former employee said.
