Richard Howson, who was the Chief Executive Officer of Carillion Plc until 10 July 2017, has been disqualified as a director for 8 years, the UK Insolvency Service has reported
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 8 years for his conduct as a director of Carillion Plc.
As the litigation against the remaining directors is ongoing, with a trial set to commence the week of 16 October 2023, the Insolvency Service was unable to comment any further.
The Insolvency Service reported that Mr 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 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.
Projects involved and impacted included: Royal Liverpool University Hospital; Battersea Power Station; Aberdeen Western Peripheral Route; Midlands Metropolitan Hospital; and Msheireb Phase 1(B) together, the Major Contracts.
Mr 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.The Insolvency Service
Howson was reported to have 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, Mr 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,” said the government statement.
Carillion was, until it went into liquidation in January 2018, a leading international construction, project finance and support services business operating in the UK, Canada and the Middle East. Were it not for Carillion’s financial circumstances, the Financial Conduct Authority would have imposed a financial penalty of £37,910,000, the FCA reported in June 2022.
Moore Stephens reported that 2,764 construction companies entered insolvency in 2017/18, up 6% in from 2,608 in 2016/17.
“The significant rise in insolvencies follows Carillion’s liquidation in January 2018, which caused knock-on effects for the whole construction supply chain surrounding what was the UK’s second-biggest construction company,” said the firm.