Former Carillion Chief Executive Faces Financial Penalty for Investor Misinformation
The Financial Conduct Authority has imposed a substantial fine of £237,700 on Richard Howson, the former chief executive of Carillion, for his involvement in misleading investors prior to the company's dramatic collapse eight years ago. This enforcement action comes after Howson withdrew his legal challenge against the regulator's initial punishment, resulting in a reduced penalty from the provisional £397,800 announced in 2022.
Regulator's Findings on Corporate Failures
The FCA determined that Howson was fully aware of significant financial difficulties within Carillion's construction division but deliberately failed to disclose this critical information through proper corporate channels. According to the watchdog's ruling, Howson neglected to reflect these serious troubles in company announcements and did not alert Carillion's board of directors or audit committee, leading to what the FCA described as "poor oversight" of the company's deteriorating financial position.
The regulatory body emphasized that while primary responsibility for communicating accurate financial information rested with the group finance director, Howson "acted recklessly" and was "knowingly concerned" in breaches of both market abuse regulations and listing rules. This misconduct contributed directly to the misinformation provided to investors who relied on Carillion's public statements.
Widespread Consequences of Carillion's Demise
Carillion's liquidation in January 2018 represented one of the most significant corporate failures in recent British history, with the government contractor collapsing under approximately £7 billion of debt. The aftermath was devastating, resulting in approximately 3,000 job losses and creating chaos across 450 ongoing projects and public-sector schemes throughout the United Kingdom.
The disruption affected critical infrastructure projects including schools, road networks, prison facilities, and even the expansion of Liverpool Football Club's stadium. Particularly impacted were two major hospital construction projects—the 646-bed Royal Liverpool Hospital and the 669-bed Midland Metropolitan Hospital in Sandwell—both of which experienced substantial delays and ultimately ran hundreds of millions of pounds over their original budgets.
Regulatory Accountability and Additional Penalties
Steve Smart, a director at the Financial Conduct Authority, stated: "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."
Howson's penalty follows similar enforcement actions against two other former Carillion executives last month. Richard Adam received a £232,800 fine while Zafar Khan was fined £138,900, with both individuals also withdrawing their appeals against the FCA's findings. These coordinated penalties demonstrate the regulator's comprehensive approach to addressing corporate governance failures at the highest levels of the collapsed company.
Broader Context of Corporate Misconduct
Only months before its ultimate collapse, Carillion shocked investors by announcing an £845 million writedown related to problems within its construction projects. Board minutes revealed that the company's former chair, Philip Green, had been working toward an "upbeat announcement" to investors just five days before the company disclosed this massive charge. The FCA investigation found that Carillion's previous trading update had provided no indication that such a significant writedown would be necessary.
In a related development from 2023, the accounting firm KPMG received a £21 million fine from the accountancy regulator for what was described as "exceptional" failures in its audits of Carillion between 2013 and 2017. This broader pattern of regulatory action highlights systemic problems within both corporate governance and professional oversight surrounding Carillion's operations during its final years.
Richard Howson has declined to comment on the FCA's fine, maintaining silence regarding the regulatory action that concludes a lengthy investigation into his conduct during Carillion's final period of operation before its historic collapse.
