FCA fines former Carillion directors: contract risk and reporting lessons for engineers
Reviewed by Tom Sullivan
First reported on The Construction Index
30 Second Briefing
The Financial Conduct Authority has fined former Carillion finance directors Richard Adam and Zafar Khan £232,800 and £138,900 respectively for reckless misconduct in financial reporting ahead of the contractor’s January 2018 collapse. The FCA found they knew of serious problems in Carillion’s UK construction contracts but failed to reflect these in market announcements or alert the board and audit committee, breaching Market Abuse Regulation and Listing Rules. The case reinforces regulatory expectations on robust contract accounting controls and transparent reporting of construction portfolio risk in listed infrastructure groups.
Technical Brief
- FCA concluded Carillion’s procedures, systems and controls for financial reporting were inadequate for UK construction contracts.
- Contract accounting judgements in the UK construction business were not reliably made, recorded or reported.
- Both finance directors were found “knowingly concerned” in Market Abuse Regulation and Listing Rules breaches.
- Poor escalation meant serious contract issues were not raised to the board or audit committee, weakening oversight.
- Adam’s fine was reduced from £318,000 to £232,800 after he withdrew his challenge and co‑operated.
- Khan’s fine similarly dropped from £154,400 to £138,900 following co‑operation with the FCA investigation.
- FCA enforcement director Steve Smart stressed directors’ duty to keep markets “accurately and adequately informed”.
Our Take
Within the 371 Infrastructure stories in our database, the Carillion collapse in the United Kingdom remains one of the few cases where post-failure regulatory action by the Financial Conduct Authority is still shaping expectations for board-level financial oversight years after the event.
For UK contractors and infrastructure operators, this FCA action against former Carillion finance directors is likely to reinforce more conservative revenue recognition and risk disclosure practices on long-term public works contracts, especially where safety and performance guarantees are material.
Among the 238 Safety and Standard/Guideline-tagged pieces, most focus on site-level practices, whereas this case underlines that governance failures at the top of companies like Carillion can now be treated as a safety and standards issue in their own right, with personal consequences for senior executives.
Prepared by collating external sources, AI-assisted tools, and Geomechanics.io’s proprietary mining database, then reviewed for technical accuracy & edited by our geotechnical team.
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