FCA Finalizes Penalties Against Former Carillion Finance Directors

The Financial Conduct Authority (FCA) has officially closed its enforcement action against two former finance directors of Carillion, following their decision to drop legal appeals. Richard Adam and Zafar Khan have been issued significant fines for their roles in the lead-up to the construction giant’s 2018 collapse.

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The Penalties

The fines were reduced by 10% after both men withdrew their challenges before the Upper Tribunal:

• Richard Adam (Former FD): Fined £232,800. The FCA found he was aware of “serious financial troubles” as early as 2016 but continued to endorse misleadingly positive financial statements.
• Zafar Khan (Former FD): Fined £138,900. The watchdog ruled that Khan failed to ensure the market was accurately informed about the company’s true financial risks during his tenure in 2017.

Key Findings: Recklessness and Market Abuse

The FCA’s investigation concluded that both directors acted recklessly. By failing to disclose the deteriorating health of Carillion’s UK construction business, they effectively committed market abuse by:

1. Providing false or misleading signals regarding the value of Carillion shares.
2. Allowing the company to publish financial results that did not reflect massive underlying losses.

“The directors were aware of the reality of the situation, yet the market was told a very different story,” stated the FCA’s enforcement division.

Context of the Collapse

This ruling marks one of the final chapters in the fallout of the UK’s largest-ever corporate failure. When Carillion collapsed in January 2018, it left behind:

• £7 billion in debt.
• Thousands of lost jobs.
• Hundreds of stalled public infrastructure projects, including hospitals and rail lines.

Both Adam and Khan are already serving lengthy bans (12.5 and 11 years, respectively) from acting as company directors, issued by the Insolvency Service last year.