Accounting watchdog launches investigation into two former Carillion executives

The Financial Reporting Council (FRC) announced on Monday that it has begun an investigation into Carillion's former group finance directors Richard Adam and Zafar Khan.

The widely expected investigation will focus on the preparation and approval of financial statements from the company for the years ending 31 December 2014, 2015 and 2016 as well as the six months ended 30 June 2017 and all other financial information during the period.

The FRC, which is already investigating the auditing of the company’s financial statements by accountants KPMG, is liaising with the Official Receiver, the Financial Conduct Authority, the Insolvency Service and The Pensions Regulator in its investigation against the former executives.

Adam was Carillion’s finance director between April 2007 and December 2016, after which Khan held the position for just over eight months.

Khan and Adam were amongst a group of former Carillion directors who faced a parliamentary select committee in February following the firm’s liquidation, being described as "delusional characters" by MPs and adjudged as desperate to "point fingers in another direction".

Adam faced particular ire from the committee for abruptly selling off £775,921 worth of Carillion shares just months before the company issued a profit warning.

Adam said: "I sold the shares that I was eligible to sell when I was invited to do so by the company as I retired. More than half of the shares in the company that I had an interest in at retirement have been lost as a result of the company entering liquidation."

Carillion entered liquidation in January, leaving a slew of public sector contracts unfinished, such as the HS2 high speed rail link project, and registering pension liabilities and debts which each exceeded £1bn.