Construction Enquirer News Financial watchdog planning action over misleading statements about state of construction business
Financial watchdogs have warned former Carillion directors that they are proposing to take action against them for acting “recklessly” and misleading shareholders about the state of the construction business.
The Financial Conduct Authority released a warning notice today its investigation continues following the collapse of Carillion in 2018.
The notice stated that some financial announcements in the two year’s prior to the collapse “were misleading and did not accurately or fully disclose the true financial performance of Carillion.
“They made misleadingly positive statements about Carillion’s financial performance generally and in relation to its UK construction business in particular, which did not reflect significant deteriorationsin the expected financial performance of that business and the increasing financial risks associated with it.”
It added: “Carillion’s systems, procedures and controls were not sufficiently robust to ensure that contract accounting judgments made in its UK construction business were appropriately made, recorded and reported internally to the Board and the Audit Committee.
“At material times, the relevant executive directors were each aware of the deteriorating expected financial performance within the UK construction business and the increasing financial risks associated with it.
“They failed to ensure that those Carillion announcements for which they were responsible accurately and fully reflected these matters.
“Despite their awareness of these deteriorations and increasing risks, they also failed to make the Board and the Audit Committee aware of them, resulting in a lack of proper oversight.”
“The FCA considers that Carillion and the relevant executive directors acted recklessly in relation to the above matters.”
Any action by the FCA will be in the form of a public censure rather than a financial penalty.
Unite assistant general secretary Gail Cartmail said: “It is astonishing that nearly three years after Carillion’s collapse no one has yet been charged let alone convicted over their actions.
“Without a doubt Carillion had been trading while insolvent for some time before its collapse.
“This was not a victimless white collar crime, thousands of workers lost their jobs. If executives and directors had reported honestly on Carillion’s financial predicament, many of those job losses could have been avoided.”