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Carillion: This time it’s personal

Zak Garner-Purkis

It’s not every day that a director’s decision to sell the rest of their shares upon retirement is criticised in a statement by MPs.

Sure, the credit crunch a decade ago made the public more aware of directors bonus payments and fat cat executive salaries, but they rarely get analysed on this level.

Then again, the situation with Carillion is an exceptional one. 

The man under the microscope is of course Richard Adam, Carillion’s finance director for 10 years.

Upon his retirement at the end of 2016 he cashed out entirely from the business. Mr Adam says he merely “sold the shares that I was eligible to sell when I was invited to do so by the company as I retired”.

He says he didn’t see storm clouds on the horizon when he sold his shares at the end of 2016, maintaining that the firm’s difficulties were manageable at that point.

The chair of the work and pensions select committee Frank Field saw it a little differently, however.

“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?” the MP asked.

In an industry where personal and professional finances are so often interlinked, it’s a particularly pointed question.

In the aftermath of Carillion’s collapse, we spoke to many small subcontractors forced to turn to their personal credit cards to avoid financial collapse as a result of unpaid invoices.

For them, the line Mr Adam draws between his work and personal finances just doesn’t exist.

The former FD’s decision to cut and run following his retirement may be unconnected to the problems that were beginning to simmer by the end of 2016 – only he knows.

Yet he took swift, decisive action when it came to selling his shares having overseen a 153 per cent increase in Carillion’s borrowing between 2010 and 2016.

Carillion was a business that relied on its supply chain to complete complex major projects and to prop up its finances more and more as its demise loomed.

They and the hundreds of thousands of others deserve better answers than ‘I didn’t see it coming’. 

Readers' comments (1)

  • Dear Carrilion,

    Whatever happened to your prevention principle to protect and understand the prevailing Liabilities. It would be best practice to maintain monthly Liability Sheets ~ Cost centre specific which comes with the Basic Training of every Quantity Surveyor. One would like to consider that this P&L discipline with fiscal / Cash exposure was not fully understood by the business and its Senior Managers concerned

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