Former Carillion FD ‘dumped’ shares before collapse

Written by Theo Andrew

The former financial director of Carillion, Richard Adams, "dumped" all of his shares in the outsourcing firm for £776,000, just a few months before its share price tanked, it has been revealed.

Adams retired from the firm on 31 December 2016 and sold his entire existing shareholding for £534,000 on 1 March 2017, equating to £2.10 per share. Carillion shares dropped from £1.92 per share to 55p per share in July, and are now worth 14p per share.

Furthermore, documents released by the Work and Pensions Committee show Adams sold his 2014 long-term incentive plan award on 8 May 2017, the day they vested, for £242,000.

Committee chair, Frank Field, said: “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’.”

Adam’s successor, Zafar Khan, was dismissed from his role on 8 September 2017 after just eight months in the role, having “spooked” the board by exposed the £845m contract write down in July 2017.

“What conclusions are we to draw from that? 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 news comes just a day after it emerged that Adams thought funding the firm’s pension schemes was a “waste of money … particularly in respect of deferred members who did not actively contribute towards the business”.

Documents released by the Committee show that Carillion trustee chair Robin Ellison said it was his understanding that Adam was more focused on the preservation of cash and considered the scheme funding to be a “waste of money”, “particularly in respect of deferred members who did not actively contribute towards the business”.

The trustees suggested a pension contribution linked to earnings or dividends, but the firm was not willing to consider such a method, instead wanting to target “aggressive investment returns” and a “degree of re-risking”.

It comes after the Carillion board said it could not afford to pay more than £23m a year in 2010, significantly below the £35m advised by the trustees, as negotiations failed to go further than £25m a year.

The outsourcing firm finally made a “take it or leave it” offer of £33.4m per year for 15 years in 2013, after the trustees proposed a £65m per year for 15 years strategy.

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