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Investigation into Carillion directors

Member: Nifa

The Financial Reporting Council (FRC) has started an investigation into the conduct of two former directors of the bankrupt construction firm, Carillion, in relation to the preparation and approval of the financial statements of the business.

Richard Adam and Zafar Khan, who had both been Group Finance Director of the collapsed firm, will be scrutinised for their financial activity for the years 2014, 2015 and 2016 and the six months to June 2017.

Both men were among senior Carillion figures questioned by MPs after the business collapsed, amongst claims that Carillion’s board had “aggressively managed” its balance sheet to make its accounts look better than they actually were. In addition, the Financial Conduct Authority (FCA) has been looking into the “timeliness and content” of market updates.

MPs accused Mr Adam of dumping his shares in the firm at the earliest possible moment, selling shares worth £776,000 in early 2017 as soon as he qualified for them, after leaving the firm in December 2016.

Meanwhile, Mr Khan had his contract terminated last September after eight months in the job, having 'spooked' Carillion's board with a financial update a few days earlier that showed there had been a further decline in the company's position since the 'shock' £845 million contract write-down in July 2017.

The Authority’s forensic investigation will examine the statements from the years and months in question and look into correspondence of all kinds to find out what was behind any moves the two men made. The investigation conducted by forensic accountants will be complex and exhaustive.

Author: Roger Isaacs 6 April 2018

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