Three directors of defunct U.K. construction company Carillion plc. face being fined more than $1 million for publishing misleading accounts of the firm's financial condition in the two years before its collapse in January 2018. Carillion itself would have been fined $46 million if it had been solvent.

According to the U.K. Financial Conduct Authority, the company "recklessly published announcements" that "did not reflect significant deteriorations in the expected financial performance of [its] U.K. construction business and the increasing financial risks associated with it."

The authority also alleges that former CEO Richard Howson, as well as former finance directors Richard Adam and Zafar Khan "acted recklessly and were knowingly concerned in Carillion’s contraventions." The former directors are appealing their cases to a higher tribunal.

"Carillion failed to take reasonable steps to establish and maintain adequate procedures, systems and controls," says Mark Steward, authority executive director of enforcement and market oversight. "As a result its true financial position remained hidden over many months and the effects of its collapse were aggravated, causing substantial harm to shareholders and creditors." 

Earlier this year, the U.K. unit of Carillion auditor KPMG LLP was fined $17.5 million by the Financial Reporting Council for misleading a regulatory review into the quality of its audit of the contractor before the collapse. Five former senior auditors were also fined a total of $486,000 and faced lengthy suspensions from professional activities.