Carillion’s former finance director “dumped” shares in the company worth £776,000 in the months leading up to the construction giant’s collapse, it has emerged.
Richard Adam, who retired on 31 December 2016, sold his shares in the company in March and May last year, according to evidence published by a joint parliamentary inquiry.
Adams sold his shares for £534,000 in March last year and sold his long-term incentive plan awards for 2014 for a total of £242,234 in May. The company announced a £845M write down in July and was in compulsory liquidation by January this year.
Work and pensions committee chairman Frank Field MP said: “Mr Adam presided over Carillion’s finances for a decade. He, more than anyone else, ought to know the merits of Carillion shares as a long-term investment in the light of his lengthy and lucrative tenure.
“His assessment? Dumping the last of his shares at the first possible moment because he is – with his own money at least – ‘risk averse’. What conclusions are we to draw from that?”
In a letter to the joint work and pensions and business committee inquiry Adams said he sold on those dates as that was when he was invited to do so by the company.
Adams considered funding the pension scheme a “waste of money”, it was revealed in evidence published by the inquiry last week.
Meanwhile, Adams’ successor Zafar Khan, who was sacked after eight months in the job, admitted that the company’s debt pile was the main cause of its failure, apperently contradicting his former boss.
In response to questions from the inquiry, Khan admitted that the problem contracts outlined by former chief executive Richard Howson earlier this month were not the catalyst for liquidation.
In a letter to the inquiry Khan said: “I would not want to suggest that these contracts were the principal cause of Carillion’s problems. My belief is that the level of Carillion’s debt which had been allowed to grow in previous years was the principal contributing factor to the difficulties Carillion experienced in 2017 as trading conditions worsened.”
He added that the board were “spooked” by a financial update in September last year that showed there had been a further decline in the company’s position following the July write down. It “should have been apparent to the board by then that the company was struggling to improve both its net debt and profit positions” he said.
Field added: “The other directors appear keen to set up the hapless Zafar Khan as the fall guy for the collapse. It is not lost on us, however, that he inherited Carillion’s mountain of debt.”
The evidence was published as the Official Receiver announced a further 230 employees have been made redundant, bringing the total number of jobs lost to 1,371. A total of 8,066 jobs have been saved, after employment was confirmed for 456 workers today.