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Carillion’s former chief executive has dropped a legal challenge against the UK’s financial watchdog, which had fined him for making misleading statements about problems at its British construction business that triggered the group’s collapse.
The move by Richard Howson ends the long-running regulatory proceedings against those responsible for Carillion’s collapse more than eight years after it went bust in one of the biggest corporate failures in British history.
The Financial Conduct Authority said on Monday it had reduced the size of its fine on Howson from £397,800 to £237,700 to reflect his co-operation and a reduction in its estimate of how much he earned in his final year at the company, which fell into liquidation in January 2018.
The watchdog said Howson, who quit as Carillion’s boss in July 2017, had “acted recklessly and was knowingly concerned in breaches by Carillion of the market abuse regulation and the listing rules” by not telling investors or the board of problems he knew about at its UK arm.
It said that while Carillion’s finance director had “primary responsibility” for the group’s disclosures to investors, Howson “played an important role as the board member with the most experience on construction and contracting matters”.
Carillion, which had 43,000 employees worldwide including 19,000 in the UK, entered liquidation with £7bn in liabilities and only £29mn in cash.
The UK government was forced to step in to maintain key services including school meals and cleaning of hospitals at taxpayers’ expense.
The scandal led to calls for an overhaul of UK audit and corporate governance rules, though ministers last month dropped long-awaited legislation to implement many of the reforms.
Howson’s decision came on the day his case against the FCA was due to start at the Upper Tribunal in London.
It followed a similar move by two former Carillion finance directors, Richard Adam and Zafar Khan, who last month dropped legal challenges against their FCA fines for failing to properly disclose the problems that led to the outsourcing group’s collapse.
The FCA fined Adam and Khan £232,800 and £138,900 respectively.
“Carillion’s failure was significant,” said Steve Smart, executive director of enforcement and market oversight at the FCA. “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.”
In 2023, the insolvency service banned Adam, Khan and Howson from serving as directors of a UK company for 12, 11 and eight years respectively.
In the same year, the accounting watchdog fined KPMG a record £21mn for “textbook” failures in its auditing of Carillion.