Zafar Khan, the former finance chief of the collapsed construction company Carillion, has been banned from serving as a director for a duration of 11 years.
Carillion faced a debt of £7 billion and subsequently collapsed in January 2018, leaving several unfinished projects, including the Midland Metropolitan Hospital in Sandwell, and causing significant job losses.
The ban imposed on Mr. Khan, who held the finance director position in the Wolverhampton-based company for only eight months, is the first action taken against any former Carillion executive under the Company Director Disqualification Act.
The Insolvency Service stated Mr. Khan caused Carillion to rely on misleading financial information when preparing the company’s annual accounts for 2016, which breached accounting standards.
These actions led to the misrepresentation of profits concerning five major construction contracts, including the Smethwick Hospital, Royal Liverpool University Hospital, and Battersea Power Station.
The Insolvency Service said Mr. Khan made misleading market announcements in March and May 2017, distorting the true financial performance, position, and prospects of the listed company.
The service also stated that Mr. Khan authorized Carillion to pay a final dividend of £54.4 million in 2016, which was not justifiable based on the full-year results and was beyond the company’s reasonable affordability.
An Insolvency Service spokesperson said: “The Insolvency Service, acting on behalf of The Secretary of State for Business and Trade, has accepted a disqualification undertaking from Zafar Khan for 11 years for his conduct as a director of Carillion.
“As the litigation against the remaining directors is ongoing, with a trial set to commence the week of October 16, 2023, the Insolvency Service is unable to comment any further.”
In the previous year, Mr. Khan, along with chief executive Richard Howson and another finance director Richard Adam, were collectively fined nearly £1 million for issuing misleading statements about Carillion’s finances to investors.
Mr. Khan stated he decided it was in the best interest of his family to conclude the process and provide an undertaking not to act as a director.
He said: “I want to emphasise that, when I took on the role, I was aware the group faced significant commercial challenges and I devoted all my energies to overcoming these,”.
“I believe I acted at all times in the best interests of the company. I regret that I was not able to make a big enough difference in the short time I was in post.”