The financial conduct watchdog has said that Carillion and some of its executive directors “recklessly misled” markets and investors over its financial performance before the company collapsed two years ago.
The “warning notice” for Carillion and certain previous executive directors was published by the Financial Conduct Authority (FCA) last week. Action would be taken against the company in the form of “public censure” but “not a financial penalty”, it said.
The FCA stated that the company’s announcements on 7 December 2016 and 1 March 2017 were “misleading and did not accurately or fully disclose the true financial performance of Carillion”.
It also said that Carillion’s “systems, procedure 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”.
It added that “relevant executive directors were each made aware of the deteriorating expected financial performance within the UK construction business and the increasing financial risks associated with it” but that “they failed to ensure those Carillion announcements for which they were responsible accurately and fully reflected these matters”.
Lucy Jeynes, consultant at Larch Consulting, told Facilitate that she welcomed the latest findings of the FCA investigation because “people in our industry were so negatively impacted” by Carillion’s collapse and “it’s important it’s not forgotten about” because two years on “there will be repercussions”. She says people were quick to say “no one is to blame but people are to blame” such as the directors involved and “we don’t want to see them leading any company” in the future.
Jeynes added: “I am encouraged to know these people won’t get off the hook.” She said there were benefits to looking at the mammoth collapse two years ago “with hindsight and to find out exactly how it went as wrong as it did” and there needs to be “independent and corporate accountability so it does not happen again”.