Press release

Second Carillion director disqualified

Richard Adam, who served as the group finance director of Carillion Plc between 2007 and 2016, has been disqualified as a director for 12 and a half years.

From:
The Insolvency Service
Published
14 July 2023

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 Adam for 12 and a half years for his conduct as a director of Carillion Plc.

This follows the disqualification undertaking the Insolvency Service accepted from Zafar Khan on 29 June 2023.

As the litigation against the remaining directors is ongoing, with a trial set to commence the week of 16 October 2023, we are unable to comment any further.

Background information:

  • Further details will be available in the director disqualification register.

  1. Mr Adam caused Carillion plc to rely on false and misleading financial information for the preparation of its consolidated Financial Statements for 2015 and 2016 and the reporting, as regards both revenue and costs, of the performance of Carillion’s major construction contracts (specifically: (1) Royal Liverpool University Hospital; (2) Battersea Power Station; (3) Aberdeen Western Peripheral Route; (4) Midlands Metropolitan Hospital; and (5) Msheireb Phase 1(B), together the Major Contracts) which Financial Statements 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.

  2. Mr Adam 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) and caused Carillion plc to wrongly report and account for such payments as profits in the consolidated Financial Statements for 2013 in breach of International Accounting Standard (IAS) 18, IAS 32 and the International Financial Reporting Standards (IFRS) Conceptual Framework for Financial Reporting, resulting (in relation to the Ecopod Transaction) in an overstatement of profit by £39.0m and an understatement of net debt by £41.0m.

  3. Mr Adam 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) and caused Carillion plc to produce false financial information as regards these payments for the preparation of the consolidated Financial Statements for 2016 in breach of IAS 18, IAS 32, IAS 38 and the IFRS Conceptual Framework for Financial Reporting, resulting (in relation to the Geneva Transaction) in an overstatement of profit by £34.4m and understatement of net debt by £39.2m.

  4. In relation to the accounting periods ending 31 December 2013, 2015 and 2016, Mr Adam caused Carillion plc to conceal from its auditors material information relating to the Major Contracts and the Ecopod and Geneva Transactions referred to above.

  5. Mr Adam caused Carillion plc to rely on false and misleading financial information for the preparation and publication of consolidated Financial Statements for 2015 which Financial Statements 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 respect of the Major Contracts was £95.4m with the result that Carillion plc should have reported a profit of £65.3m rather than the £155.1m actually reported and net current assets of £(57.0m) rather than the £41.5m actually reported.

  6. Mr Adam caused Carillion plc to rely on false and misleading financial information for the preparation of consolidated Financial Statements for 2016 which Financial Statements 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 Conceptual 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 Carillion plc should have reported a loss of £(61.7m) rather than the profit of £146.7m actually reported and net current assets of £(232.5m) rather than the £52.4m actually reported.

  7. Mr Adam caused Carillion plc to make a market announcement on 07 December 2016 and enabled Carillion plc to make a market announcement on 01 March 2017 which were misleading as to the reality of Carillion’s financial performance, position and prospects and which were made in breach of Listing Rule 1.3.3R and Article 15 of the Market Abuse Regulation (Regulation (EU) No 596/2014).

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Updates to this page

Published 14 July 2023