Former Carillion CEO banned for eight years

Grant Prior 1 year ago
Share

Former Carillion Chief Executive Officer Richard Howson has been disqualified as a director for eight years.

An Insolvency Service spokesperson said: “The Insolvency Service, acting on behalf of the Secretary of State for Business and Trade, has accepted a disqualification undertaking from Richard Howson for eight years for his conduct as a director of Carillion Plc.”

Howson, 55, was the CEO of Carillion from 2011 until 2017.

His ban follows an 11-year disqualification for former Carillion finance director Zafar Khan in June and a 12.5 year ban for former group finance director Richard Adam in July.

Background details released by the Insolvency Service show:

  • Howson caused PLC to account for and report in its consolidated Financial Statements for the years ending 31 December 2015 and 2016, and as regards both revenue and costs, the performance of Carillion’s major construction contracts (namely, Royal Liverpool University Hospital; Battersea Power Station; Aberdeen Western Peripheral Route; Midlands Metropolitan Hospital; and Msheireb Phase 1(B) together, the Major Contracts) in a way which he ought to have known falsified and concealed the reality of the deterioration of the Major Contracts which in fact became loss-making, and Carillion’s consequent grave and deteriorating financial position.
  • Howson caused Carillion to procure payments from Wipro in 2013 totalling £39.0m (comprising £25.0m in respect of Ecopod on the signing of an IP Assignment Agreement dated 06 December 2013 and £14.0m in respect of termination charges purportedly payable by Carillion pursuant to a Master Services Agreement dated 06 December 2013) and in 2014 totalling £2.0m (comprising the balance due under the IP Assignment Agreement). PLC wrongly reported and accounted for such payments as profits in the FY2013 Financial Statements, in breach of International Accounting Standard (IAS) 18, IAS 32 and the IFRS Conceptual Framework for Financial Reporting, resulting in an overstatement of profit by £39.0m and an understatement of net debt by £41.0m. Howson ought to have known of the false accounting, of the profit overstatement and of the net debt understatement and of the concealment from the auditors of the true picture regarding Carillion’s obligation to make repayments to Wipro.
  • Howson caused Carillion to procure payments from Wipro in 2016 totalling £40.0m (comprising £20.0m in respect of Geneva, £10.0m in total in respect of certain intellectual property, in each case pursuant to “IP Assignment & Licence” agreements dated 09 December 2016; and £10.0m in respect of mobilisation costs, pursuant to Change Control Notes dated 09 December 2016). PLC wrongly reported and accounted for such payments as profit in the 2016 Financial Statements, in breach of IAS 18, IAS 32, IAS 38 and the IFRS Framework for Financial Reporting, resulting in the overstatement of profit by £34.4m (in relation to the Geneva Transaction) and understatement of net debt by £39.2m. Howson ought to have known of the false accounting, of the profit overstatement and of the net debt understatement, and of the concealment from the auditors of the true picture regarding Carillion’s obligation to make repayments to Wipro.
  • In relation to the accounting periods ending 31 December 2013, 2015 and 2016, Howson ought to have known that Carillion had failed to disclose to its auditors information relating to the Major Contracts and the Ecopod and Geneva Transactions referred to above, which information he ought to have known was material.
  • Howson caused PLC to prepare and publish Financial Statements for 2015 which Financial Statements he ought to have known did not give a true and fair view within the meaning of section 393 of the Companies Act 2006 and did not comply with IAS 11. The quantum of the misstatement for 2015 in the respect of the Major Contracts was £95.4m with the result that PLC’s profits should have been £65.3m rather than the £155.1m reported in the 2015 Financial Statements, and its net current assets £(57.0m) rather than the £41.5m reported in the 2015 Financial Statements.
  • Howson caused PLC to prepare and publish Financial Statements for 2016 which Financial Statements he ought to have known did not give a true and fair view within the meaning of section 393 of the Companies Act 2006 and did not comply with IAS 11, IAS 18, IAS 32, IAS 38 and the IFRS Framework for Financial Reporting.The quantum of the misstatement for 2016 in respect of the Major Contracts was £179.2m and in respect of the Ecopod and Geneva Transactions was £29.3m with the result that PLC should have reported a loss of £(61.7m) rather than the profit of £146.7m actually reported in the 2016 Financial Statements, and net current assets of £(232.5m) rather than the £52.4m actually reported.
  • Howson caused PLC to make Market Announcements on 07 December 2016, 01 March 2017 and 03 May 2017 which he ought to have known were misleading as to the reality of Carillion’s financial performance, position and prospects, and were in breach of Listing Rule 1.3.3R and Article 15 of the Market Abuse Regulation.
  • Howson caused PLC to make a 2016 final dividend payment of £54.4m, which was paid on 09 June 2017, which payment he ought to have known, could not be justified by reference to the FY2016 Financial Statements because those Financial Statements were not properly prepared in accordance with the requirements of the Companies Act 2006 and did not give a true and fair view. Furthermore, Howson ought to have known that the 2016 final dividend payment was not in the interests of PLC, its members or its creditors and was not one that PLC could reasonably afford to make in view of its true financial performance.

Latest news

Watchdog MPs raise alarm over HS2 Euston station plan

Public spending watchdog red flags 'no plan or timescale' for London Terminus
1 day ago

Network Rail fined £3.41m after Surbiton track worker death

30-year-old track worker Tyler Byrne was struck by a passenger train in Surbiton
2 days ago

Government picks 43 consultants for Net Zero programmes

Jacobs, Mace, Mott MacDonald and Costain feature across multiple lots
1 day ago

£2.2bn Gatwick second runway decision delayed

Government 'minded to approve' expansion but puts back decision to October
2 days ago

Avant Homes gets green light for £68m Scottish site

Construction set to start in July
1 day ago

Funding deal for £237m Tide Construction student tower

48-storey project will be first major student scheme on Canary Wharf
2 days ago

McLaren wins £29m south east London industrial job

Crayford urban logistics hub starts construction
2 days ago

Government to license principal contractors after Grenfell

Seven firms criticised in Inquiry to face ban from government contracts
3 days ago

Taylor Wimpey fire safey retrofit costs rise by £88m

Cost inflation pushes up expected remediation costs
2 days ago

Green light for £100m A47 road junction upgrade

Long-awaited A47/A11 Thickthorn junction will support over 40,000 homes
2 days ago

Sisk starts remediation work for 1,600-home Birkenhead scheme

Wirral council has secured £52m for Hind Street Urban Village infrastructure
2 days ago

CITB set to spend £2m with advertising agency

Training body goes out to tender for media planning and buying contract
2 days ago

Plans unveiled for 50-storey plus Liverpool tower

Planning submission later this year for £1bn King Edward project
3 days ago

Overbury profits lift Morgan Sindall to another record year

Construction margin hits 3% as group daily cash soars to £374m
3 days ago

Galliford Try wins £45m high security prison fire safety retrofit

HMP Wakefield provides upgrade challenges in secure environments
3 days ago

Over 120 firms win £660m retrofit and decarb framework

LHC national framework covers capabilities from consultancy to retrofit works
4 days ago

Costain signs PM and engineering resources deal for Sizewell C

10-year framework will cover project managers and engineers, cost controllers and risk managers
4 days ago

Lovell Partnerships to build 2,260 South Wales homes

Cardiff and Vale of Glamorgan councils partnership to deliver homes over 10 years
4 days ago

HS2 Euston tunnel work put on hold

Supply chain told of delays in shock announcement
4 days ago

Gateway 2 approval delay pushes back Bristol student scheme

Student developer warns fire design approvals will push projects back 6 months
4 days ago

Axa submits plan for 46-storey London city tower

176m office block plan submitted after 22 Bishopsgate space fully let
5 days ago

Winners named for NHS building safety and fire compliance deal

66 specialists and consultants lined up to deliver compliance backlog
4 days ago

Durkan launches specialist housing upgrade business

Regeneration arm to deliver housing maintenance, retrofit and fire remediation works
5 days ago

Grants extended to switch van fleets to electric

Need for extra training for zero emission van drivers abolished
4 days ago

Sweeping changes to public procurement come into force

Procurement Act 2023 brings greater duty to report on contract performance
5 days ago

£3bn London councils general works deal out to bid

Five-year London Construction Programme framework up for renewal
5 days ago

Didcot demolition disaster probe enters tenth year

Thames Valley Police "moving towards the latter stages of enquiries"
6 days ago

Hunt for development partner for £4bn Bristol Temple Quarter

130 ha masterplan could deliver 10,000 new homes
5 days ago

Sovereign starts hunt for £750m framework builders

Housing association looking for contractors across West, South, London and East
5 days ago

Bromford sets 11,000 new homes target across West of England

Housing association on land-buying spree to scale-up construction work
5 days ago

Contractor services