Carillion bosses face a 15-year ban from managing firms as new Business Secretary Kwasi Kwarteng makes a bold move
- Carillion went bust in January 2018 after racking up heavy debts
- Those facing legal action include the former chairman and two chief executives
- The case could see them banned from managing firms between 2 and 15 years
New Business Secretary Kwasi Kwarteng has launched legal action against eight former Carillion directors three years after the construction firm collapsed.
Carillion went bust in January 2018 after racking up heavy debts while working on largescale public projects. Those facing legal action are the former chairman, two chief executives, two finance directors and three non-executives.
If the action is successful it could see them banned from managing businesses between two and 15 years.
New Business Secretary Kwasi Kwarteng has launched legal action against eight former Carillion directors three years after the construction firm collapsed
The most high-profile names listed in court documents are Philip Green – Carillion chairman from May 2014 until its liquidation – and Richard Howson, chief executive from 2011 to 2017. Keith Cochrane, a company director who took over from Howson, was also named.
The Insolvency Service said: ‘We can confirm that the Secretary of State issued company director disqualification proceedings in the public interest against eight directors and former directors of Carillion.’
The move comes after criticism this week about a lack of action against Carillion. In November the Financial Conduct Authority (FCA) found directors ‘acted recklessly’ and released ‘misleadingly positive’ updates in the year before it collapsed.
According to the watchdog probe, the directors were aware of the deterioration, but failed to make the market or its own board and audit committee, aware of this. The Carillion directors were not named by the FCA but received warning notices.
Kwasi Kwarteng was appointed Business Secretary last week
Thousands of jobs were lost following the collapse of the company, one of the biggest ever corporate failures in the UK. Carillion was one of many private companies to run public services in the UK but it had been fighting to survive after contract delays and a downturn prompted profit warnings.
It also comes just a day after Kwarteng announced proposals for a shake-up of audit firms. They have come under the spotlight for failing to raise red flags ahead of a litany of corporate failures such as cafe chain Patisserie Valerie as well as Carillion.
The legal action marks a bold move by Kwarteng, who was appointed Business Secretary last week with predecessor Alok Sharma now focusing full-time on his role as president of the UN COP26 global climate talks in Glasgow later this year.
Eton and Cambridge-educated Kwarteng, 45, was first elected in 2010 and is one of the authors of a controversial 2012 pamphlet Britannia Unchained, labelling Britons ‘among the worst idlers in the world’.