FCA Rebukes Carillion Over Misleading Financial Statements & Fines Former CEO

Key Takeaways

• Formal Censure and Hypothetical £37.91 Million Fine: The Financial Conduct Authority censured Carillion for breaches of the Market Abuse Regulation and Listing Rules, stating it would have imposed a £37.91 million fine had the company not been in liquidation.
• Misleading Financial Announcements: The FCA found that trading updates and 2016 results between December 2016 and May 2017 failed to reflect significant deterioration in major construction projects, giving false or misleading signals to the market.
• Aggressive Contract Accounting: Overly aggressive accounting judgments within Carillion Construction Services materially overstated revenues and profits and failed to comply with IAS 11 standards.
• Oversight and Control Failures: Critical internal risk information was not properly escalated to the Board or Audit Committee, breaching Listing Principles on systems, controls, and integrity.
• Senior Executives Held Accountable: Former CEO Richard Howson was fined £237,700, while former finance directors Richard Adam and Zafar Khan were fined in January 2026 for their roles in the breaches.

Deep Dive

Nearly a decade after Carillion collapsed in one of the UK’s most high-profile corporate failures, the Financial Conduct Authority has formally censured the company for misleading the market in the year before its liquidation and fined its former chief executive for his role in the affair.

In a Final Notice published today, the FCA said that between 1 July 2016 and 10 July 2017 Carillion breached the Market Abuse Regulation and multiple Listing Rules by disseminating information that gave false or misleading signals about the value of its shares.

Because Carillion is in liquidation, the regulator issued a public censure rather than a financial penalty. It said that, had the company been solvent, it would have imposed a fine of £37.91 million.

On the same day, the FCA fined former CEO Richard Howson £237,700 after he withdrew his challenge to the regulator’s decision. The watchdog found he acted recklessly and was knowingly concerned in the company’s breaches.

The Provision That Changed Everything

The turning point came on 10 July 2017. Carillion announced it would take an £845 million provision, including £375 million linked to its UK construction services business, following a review triggered by worsening cash flows across several major projects.

The scale of the write-down caught the market off guard. The company’s share price fell 39 percent in a single day and lost 70 percent of its value within three days. Six months later, on 15 January 2018, Carillion entered liquidation.

According to the FCA, that shock was not simply about the size of the provision. It was about the absence of warning.

In December 2016, Carillion told the market its performance was “meeting expectations” and spoke of strong revenue growth and increased operating profit. In March 2017, it reported underlying profit before tax of £178 million and described the business as having a “good platform” for 2017. In May 2017, it said trading conditions were “unchanged.”

Behind the scenes, the regulator found, the picture was markedly different.

Warning Signs Inside the Business

The FCA’s findings focus heavily on Carillion Construction Services, the division at the heart of the July 2017 provision.

Internal reports during the relevant period identified substantial “hard risks”, forecast amounts that management considered unlikely to be recovered. By late 2016 these were reported at around £172 million. By April 2017 they had risen to just over £310 million.

At the same time, internal reporting highlighted growing exposures on major projects, including the Royal Liverpool University Hospital and the redevelopment of Battersea Power Station. Project-level assessments showed widening gaps between what teams on the ground believed the financial outcome would be and what was reflected in budgeted forecasts and reported performance.

When Carillion eventually announced its July 2017 provision, £240 million of the £375 million construction services provision related to four major projects. The FCA said this was consistent with the scale of internal risks that had already been identified.

The regulator concluded that overly aggressive contract accounting judgments were used to maintain reported revenues and profitability. These judgments, it said, did not reflect the true financial position of the projects and failed to comply with IAS 11, the accounting standard governing revenue recognition for construction contracts.

A Breakdown in Oversight

Crucially, the FCA found that key information about mounting risks was not passed to the Board or the Audit Committee.

The Board received monthly and quarterly reports that painted a far more optimistic picture than internal construction division reporting. The regulator said this hampered the Board’s ability to exercise proper oversight and contributed to the publication of misleading announcements.

In regulatory terms, Carillion was found to have breached:

• Article 15 of the Market Abuse Regulation, which prohibits market manipulation
• Listing Rule 1.3.3R, requiring issuers to ensure information is not misleading
• Listing Principle 1, on adequate procedures, systems and controls
• Premium Listing Principle 2, requiring issuers to act with integrity toward shareholders

The FCA attributed the reckless state of mind of senior executives to the company. It said Howson, along with former finance directors Richard Adam and Zafar Khan, acted recklessly in relation to the misleading announcements. Adam and Khan were fined £232,800 and £138,900 respectively in January 2026.

Accountability, Years On

Commenting on the action, the FCA’s executive director of enforcement and market oversight said Carillion’s failure had been significant, with jobs lost, public sector projects put at risk and investors suffering large-scale losses.

The regulator’s decisions do not rewrite the history of Carillion’s collapse. But they do set out, in detail, how optimism in public statements diverged from internal realities and how failures in accounting judgments, disclosure and governance can compound financial stress into market-wide shock.

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