In what may the last act against those at the helm when Carillion collapsed in 2018, regulators have fined two former finance directors a total of £282,000 for their part in the scandal.

The Financial Reporting Council announced the penalties against Richard Adam and Zafar Khan this week, saying they both acted “recklessly” while putting together the company’s financial statement.

Adam was fined £550,000, reduced to £222,000 after taking into account fines already imposed by the Financial Conduct Authority. Khan was penalised £225,000, reduced to £60,228 for the same reason.

Both were excluded from membership of their professional body, the ICAEW: Adam for 15 years and Khan for 10 years.

‘Sustained failure’

Penrose Foss, executive counsel for FRC investigations and enforcement, said there was “sustained failure” by Adam and Khan when serving as group finance directors of Carillion to “act with integrity and ensure the accuracy of financial information”.

Foss added that accurate information is a “fundamental requirement” for all companies.

“For a large publicly listed company, the consequences of failing to meet this requirement can be wide-ranging, affecting investors, suppliers, employees and the many communities served by an organisation across the UK and beyond.”

Carillion collapsed in 2018 after a battle to save the firm from bankruptcy. Its collapse helped to trigger widespread calls for regulatory reform. What followed was two parliamentary reviews and three public consultations that looked at audit reform and regulation and the role of audit committees overseeing audit.

The Adam and Khan disciplinary is not the only regulatory action taken as a result of the Carillion collapse.

Audit deficiencies

In 2023, KPMG was fined £21 million (reduced from £30m) for “deficiencies” in the audit of the company, while audit partners Peter Meehan and Darren Turner together faced total fines of £420,000 (reduced from £600,000).

At the time, the then executive counsel, Elizabeth Barrett, said: “The number range and seriousness of the deficiencies in the audits of Carillion during the period leading up to its failure was exceptional…”.

In another disciplinary, KPMG was fined £14.4 million (reduced from £20m) for the firm’s response to regulators examining its audit work at Carillion and another firm, Regeneris. The fine was imposed for providing watchdogs with misleading information while they carried out routine inspection work.