The former finance chief of Carillion is to be banned from holding firm directorships for greater than a decade.
Sky News can reveal that Zafar Khan, who served as Carillion’s finance director for lower than a yr previous to its implosion in early 2018, has been hit with an 11-year boardroom ban.
City sources stated the penalty – handed down by the federal government’s Insolvency Service – was prone to be disclosed early this week.
It would be the first such ban imposed underneath the Company Director Disqualification Act in opposition to any former Carillion govt.
Proceedings in opposition to a variety of others, together with former chief govt Richard Howson, stay ongoing.
In a letter to MPs despatched weeks after Carillion’s collapse, Mr Khan stated he had been at odds with the corporate’s board about disclosures referring to its monetary well being.
“Whilst I fully accept responsibility for my actions as a director of Carillion plc, I do genuinely believe that it was the level of debt which had been allowed to grow in previous years which was the principal contributing factor to the difficulties Carillion experienced in 2017 as trading conditions worsened,” Mr Khan wrote.
He added that his contract was terminated by the corporate 4 months earlier than it ceased buying and selling.
In whole, eight former Carillion administrators face bans following the launch of authorized proceedings authorised by Kwasi Kwarteng, the then enterprise secretary, in January 2021.
Last yr, Mr Khan, Mr Howson and Richard Adam, who additionally served as Carillion’s finance chief, had been fined a complete of near £1m for issuing deceptive statements to buyers in regards to the state of the corporate’s funds.
The trio had been reported to be interesting in opposition to the fines imposed by the Financial Conduct Authority.
Carillion’s demise was probably the most infamous failures of a significant British firm within the final decade.
The building group, which was concerned in constructing and sustaining hospitals and roads, and delivering tens of millions of college meals, went bust owing near £7bn.
Thousands of jobs had been misplaced because of this.
Its collapse additionally grew to become one of many principal catalysts for reform of the audit sector in Britain, with penalties together with the creation of a brand new watchdog, and a requirement for the large 4 accountancy corporations to ‘operationally separate’ their audit and consulting arms.
At the time of its collapse, Carillion held roughly 450 building and repair contracts throughout authorities.
It employed greater than 43,000 folks, together with 18,000 within the UK.
In a scathing report on the corporate’s company governance, the Commons enterprise choose committee stated: “As a large company and competitive bidder, Carillion was well-placed to win contracts.
“Its failings in subsequently managing them to generate revenue was masked for a very long time by a unbroken stream of recent work and… accounting practices that precluded an correct evaluation of the state of contracts.”
KPMG served as Carillion’s auditor for almost two decades, earning a total of £29m for its audit work.
A major probe led by the Financial Reporting Council into KPMG’s work on the company’s accounts is yet to be completed.
Greg Clark, the then business secretary, wrote to the Insolvency Service soon after Carillion’s liquidation to seek an accelerated probe into the conduct of its former directors.
“I might ask that the investigation by the Official Receiver seems, not solely on the conduct of the administrators on the level of its insolvency, but additionally of any people who had been beforehand administrators and whether or not their actions might have prompted detriment to its collectors – together with detriment to any staff who could also be owed cash,” Mr Clark wrote at the time.
“He also needs to think about whether or not any motion by administrators has prompted detriment to the pension schemes.
“I also ask that the Official Receiver expedites his investigation which will also specifically consider the extent to which the conduct of the directors of Carillion PLC led to its insolvency.”
The Insolvency Service has been contacted for remark, whereas Mr Khan couldn’t be reached for touch upon Monday morning.
Content Source: information.sky.com