Former Carillion Chief Executive Hit with £237,700 Fine for Reckless Market Misconduct
The former chief executive of collapsed construction giant Carillion, Richard Howson, has been fined £237,700 by the Financial Conduct Authority (FCA) for his role in misleading market statements prior to the company's dramatic failure eight years ago. The City regulator described Howson's handling of communications with the market as "reckless" behavior that significantly undermined investor trust and contributed to widespread financial damage.
Regulator Cites Failure to Disclose Critical Financial Troubles
According to the FCA, Howson was fully aware of severe financial difficulties within Carillion's UK construction business but deliberately failed to reflect these critical issues in official company announcements. He also neglected to alert the board of directors and the audit committee, resulting in what the regulator termed "poor oversight" and a breach of regulatory standards. This omission left investors and staff without honest information about the company's precarious financial position.
Carillion's Collapse: A Catastrophic Impact on Jobs and Public Projects
Carillion's collapse in 2018 was one of the most significant corporate failures in recent UK history, leading to:
- Thousands of job losses across the company and its supply chain
- Chaos and delays in dozens of critical public sector building projects
- Financial losses for investors who relied on inaccurate company disclosures
The company, which was heavily involved in constructing and maintaining hospitals, roads, and other public infrastructure, owed close to £7 billion at the time of its insolvency. The fallout extended far beyond the corporate sphere, disrupting essential services and eroding public confidence in large-scale government contractors.
FCA Enforcement Action and Previous Penalties
The fine against Howson was imposed after he withdrew an appeal against the FCA's originally planned penalty. This decision follows similar enforcement actions against other former Carillion executives. Last month, the FCA revealed fines for two former finance chiefs:
- Richard Adam: £232,800
- Zafar Khan: £138,900
Steve Smart, the FCA's executive director of enforcement and market oversight, emphasized the gravity of the case: "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."
Broader Implications for Corporate Governance and Market Integrity
The FCA's action underscores its commitment to enforcing Market Abuse Regulation and Listing Rules, particularly in cases involving senior executives who knowingly engage in misconduct. Howson was found to have been "knowingly concerned" in Carillion's breaches, highlighting the personal accountability of corporate leaders for transparent and accurate financial reporting. This case serves as a stark reminder of the consequences when corporate governance fails and market integrity is compromised, with lasting effects on employees, investors, and public services.
