Ministers launch legal bid to ban Carillion bosses

Eight former Carillion bosses could be banned from serving as directors for up to 15 years after ministers launched legal action over the contractor’s collapse in 2018.

The outsourcer’s former chairman, two chief executives, two finance directors and three non-executives could be disqualified under proceedings brought by Kwasi Kwarteng, Business ­Secretary.

It comes almost three years after the firm went bust with debts of nearly £7bn, destroying at least 3,000 jobs plus many more at suppliers. Executives were paid millions of pounds in the ­run-up to the failure.

The legal action began on Tuesday, just 72 hours before a deadline to bring civil proceedings against the Carillion directors.

Philip Green, 67 – Carillion chairman from May 2014 until its demise and a former adviser to David Cameron on corporate responsibility – is listed as a defendant in court filings alongside Richard Howson, chief executive until 2017, and his successor Keith Cochrane.

Others named include former finance directors Richard Adam and Zafar Khan. Non-executives Andrew Dougal, Alison Horner and Ceri Powell have all also been targeted.

The legal action was taken following a report by the Government’s Official Receiver to the Department for Business. Ministers decided it was in the public interest to seek a court order to disqualify the directors on the grounds that they were unfit to manage a company.

Carillion’s collapse on Jan 15 2018 sent shockwaves through the construction and outsourcing sectors. It also raised questions over the independence of the so-called Big Four auditors Deloitte, PwC, KPMG and EY – all of which worked for Carillion in various roles without raising any red flags.

Carillion’s directors were defiant in the face of criticism in the weeks that followed its collapse. Mr Cochrane told MPs on the public accounts committee that he was “perplexed” that taxpayers did not step in to rescue the business.

As a strategic supplier to the Government, it was “economically logical” for taxpayers to step in, said Mr Cochrane, the former chief of Weir Group.

Mr Adam faced scrutiny over his decision to cash in hundreds of thousands of pounds in stock options months before Carillion issued a profit warning in the summer of 2017 that plunged the business into a death spiral.

Speaking to a parliamentary committee in the aftermath of the failure, he said: “I sold the shares on these dates because they were the days that I was invited to do so by the company.”

Mr Howson said: “The reasons for ­Carillion’s demise are mixed and varied (and are yet, I believe, to be fully ­understood).

“Yes, debt was too high but for my part I was absolutely committed to working through to conclude our challenging contracts and reducing it.”

The directors’ handling of Carillion’s pension scheme was also criticised at the time.

A spokesman for the Insolvency Service said: “We can confirm that on January 12 2021 the Secretary of State issued company director disqualification proceedings in the public interest against eight directors and former directors of Carillion.”

The eight former Carillion directors were either not available or did not respond to a request for comment.

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