Richard Adam

Richard Adam (born November 1957)[1] is an English chartered accountant and businessman particularly associated with the financial management of media, construction and property-related companies. He was a board director of construction and services business Carillion from April 2007 to December 2016. After the company went into liquidation in January 2018, Adam was criticised by a Parliamentary select committees report, and the Financial Reporting Council and other regulators started investigations into his conduct.

Richard Adam
Born
Richard Adam

November 1957
NationalityBritish
EducationUniversity of Reading
OccupationChartered Accountant
TitleDirector

Early life

Adam earned a bachelor's degree in mathematics from the University of Reading.[2]

Career

After graduation, Adam became a chartered accountant (he is a fellow of the Institute of Chartered Accountants in England and Wales), and joined KPMG Audit in 1982,[2] later becoming finance director of International Family Entertainment UK (1993-1996)[3] then holding the same roles at Hodder Headline plc (1996-1999)[3] and Associated British Ports (1999-February 2007).[3]

Carillion

As finance director, Adam served as a board director of construction and services business Carillion from 2 April 2007 to 31 December 2016.[1] He was succeeded by ex-ABP colleague Zafar Khan.[4]

Adam was one of several former Carillion directors who appeared before Parliamentary select committees in early February 2018, and subsequently described as "delusional characters".[5] As further information about pension issues emerged, directors were described as "contemptuous" of their obligations,[6] with Adam said to have "particular questions to answer,"[7] particularly after MPs heard he had allegedly described pension payments as a "waste of money".[8][9] On 26 February 2018, it was reported that Adam had sold £775,921 worth of Carillion shares in March and May 2017 - the latter sale just three months before a Carillion profit warning.[10][11]

On 17 March 2018, it was reported that the Financial Reporting Council's conduct committee would announce an investigation into the conduct of Richard Adam and Zafar Khan.[12] The investigation, confirmed on 19 March 2018, would focus on the preparation and approval of Carillion's financial reports for 2014, 2015 and 2016, and the six months to 30 June 2017, as well as provision of other financial information from 2014 to 2017.[13] In June 2018, a Financial Conduct Authority investigation (announced on 3 January 2018) was extended to allegations of insider trading in Carillion shares prior to its trading update on 10 July 2017.[14]

In the final report of the Parliamentary inquiry into the collapse of Carillion, published on 16 May 2018, Adam was severely criticised, described as "the architect of Carillion’s aggressive accounting policies".[15] The report continued:

"He, more than anyone else, would have been aware of the unsustainability of the company’s approach. His voluntary departure at the end of 2016 was, for him, perfectly timed. He then sold all his Carillion shares for £776,000 just before the wheels began very publicly coming off and their value plummeted. These were the actions of a man who knew exactly where the company was heading once it was no longer propped up by his accounting tricks."[15]

The report also recommended that the Insolvency Service should consider whether the former Carillion directors, including Adam, could be disqualified from acting as a director.[16] On 6 August 2018, at the end of "the largest ever trading liquidation in the UK", the Official Receiver said investigations into the cause of the company's failure, including the conduct of its directors, continued.[17]

Adam disputed the select committees' assertion that he considered that payments into Carillion's pension schemes were a "waste of money".[18] The committees' response said the presented evidence led them to this "inescapable conclusion", which was "entirely in keeping with the Carillion board’s short-termist, cash-chasing, dividend-plumping approach."[19]

In a Channel 4 Dispatches programme aired on 22 August 2018, Adam was criticised by former Carillion head of recruitment Jon Hull for creating "a culture of fear and confusion" and described as "very aloof ... very controlling". In the same programme, financial analyst Stephen Rawlinson described Adam's approach to the company's internal financial reporting: "When the numbers didn’t come to where he wanted them to be he would simply say to the management ‘Go back and do the numbers again.’" Responding to the documentary, Adam said he did not recognise these views, and told the documentary makers that throughout his time at Carillion all of its accounts were approved by the board and audited.[20]

The parliamentary process and findings have been questioned by former Carillion executives as lacking in objectivity and thoroughness, treating a highly complex situation in an incomplete manner. Former Carillion CEO Richard Howson (whose letters were published by the select committees on 12 July 2018),[21] contends that Carillion was a victim of its public sector clients and that "any analysis as to the causes of the failure of Carillion is not complete without looking at the way in which government and the wider public sector procured services from Carillion and failed to administer payments."[22]

In November 2020, the Financial Conduct Authority said some Carillion directors had "acted recklessly" and released "misleadingly positive" market updates before it collapsed. As a result, the FCA said it had sent notices to some (unnamed) former Carillion directors warning of possible enforcement action (possible sanctions include public censure, fines and suspensions from holding certain positions).[23] In January 2021, the Insolvency Service said it would seek to ban eight former Carillion directors, including Adam, from holding senior boardroom positions.[24][25]

Other directorships

Adam was a non-executive director of SSL International plc from November 2003 to October 2010, of Zattikka plc from April 2012 to August 2013, and of Wincanton plc from June[26] to September 2014.[3]

He was also a non-executive director of Countrywide plc from June 2014[27] to October 2017[28] and of Countryside Properties plc from April 2015[2] to October 2017.[29]

He was appointed a director of FirstGroup plc in February 2017.[1] After 22.7% of FirstGroup investors voted against appointing Adam as a non-executive director in July 2017,[30] he resigned from the board in September 2017.[31]

References
  1. "Richard ADAM". Companies House. Retrieved 13 February 2018.
  2. "13 April 2015: Countryside appoints Richard Adam as non-executive director and chair of the audit committee". Countryside. Retrieved 19 January 2018.
  3. "Richard John Adam". Bloomberg. Retrieved 19 January 2018.
  4. Irvine, Julia (24 August 2016). "Carillion appoints new group finance director". Economia. Retrieved 19 January 2018.
  5. Davies, Rob (6 February 2018). "Former Carillion directors branded 'delusional' at MPs' Q&A". Guardian. Retrieved 7 February 2018.
  6. Davies, Rob (20 February 2018). "Carillion directors ignored pleas to plug pensions gap, letters reveal". Guardian. Retrieved 20 February 2018.
  7. McCulloch, Adam (20 February 2018). "Pensions Regulator failed to press Carillion on deficits". Personnel Today. Retrieved 21 February 2018.
  8. Davies, Rob (22 February 2018). "Carillion's ex-director considered pensions 'waste of money', MPs say". Guardian. Retrieved 22 February 2018.
  9. "Carillion Finance Director: funding pension obligations was 'waste of money'". Parliament.uk: Work and Pensions select committee. Retrieved 23 February 2018.
  10. Davies, Rob (26 February 2018). "Ex-Carillion CFO sold £800,000 in shares after retirement". Guardian. Retrieved 26 February 2018.
  11. "Former Carillion Finance Director 'dumped last of shares at first possible moment'". Parliament.uk: Work and Pensions select committee. Retrieved 26 February 2018.
  12. Boffey, Daniel; Davies, Rob (17 March 2018). "Former Carillion finance directors expected to face investigation". Guardian. Retrieved 19 March 2018.
  13. Morby, Aaron (19 March 2018). "FRC launches probe into Carillion finance directors". Construction Enquirer. Retrieved 19 March 2018.
  14. Prior, Grant (28 June 2018). "Watchdog probes Carillion insider trading allegations". Construction Enquirer. Retrieved 28 June 2018.
  15. Carillion: Second Joint report from the Business, Energy and Industrial Strategy and Work and Pensions Committees of Session 2017–19 (PDF). London: House of Commons. 2018. p. 90. Retrieved 16 May 2018.
  16. Carillion: Second Joint report from the Business, Energy and Industrial Strategy and Work and Pensions Committees of Session 2017–19 (PDF). London: House of Commons. 2018. p. 93. Retrieved 16 May 2018.
  17. "Carillion contracts complete transfer". The Insolvency Service. 6 August 2018. Retrieved 6 August 2018.
  18. Adam, Richard. "Mischaracterisation of Evidence - letter to Select Committees" (PDF). Commons Select Committees - Carillion Inquiry. Parliament UK. Retrieved 21 May 2018.
  19. "Committees publish former Carillion Finance Director Richard Adam's response to final report". Commons Work and Pensions Committee. Parliament.uk. 17 May 2018. Retrieved 21 May 2018.
  20. Tute, Ryan (22 August 2018). "Carillion: "Akin to a ponzi scheme" with a "culture of fear", new documentary reveals". Infrastructure Intelligence. Retrieved 23 August 2018.
  21. "Carillion: Responses from Interested Parties to the Tenth Report of the Business, Energy and Industrial Strategy Committee and Twelfth Report of the Work and Pensions Committee". Parliament.uk. Retrieved 13 July 2018.
  22. Howson, Richard (12 July 2018). "What the MPs Missed". The Construction Index. Retrieved 12 July 2018.
  23. Price, David (13 November 2020). "Carillion directors 'recklessly' misled the market, says watchdog". Construction News. Retrieved 13 November 2020.
  24. Partington, Richard (13 January 2021). "Legal bid launched to ban ex-Carillion directors from top boardroom roles". Guardian. Retrieved 13 January 2021.
  25. "Carillion directors face boardroom bans". The Construction Index. 14 January 2021. Retrieved 14 January 2021.
  26. "Wincanton announces Richard Adam to Board as Non-Executive Director". Talent for Boards. 9 April 2014. Retrieved 21 January 2018.
  27. "Countrywide appoints Jane Lighting and Richard Adam as Non-Executive Directors". Talent for Boards. 9 June 2014. Retrieved 21 January 2018.
  28. "Countrywide non-exec resigns, share rally ends". The Negotiator. Retrieved 19 January 2018.
  29. "Countryside non-exec to step down". Stockwire. 2 October 2017. Retrieved 19 January 2018.
  30. Martin, Ben (18 July 2017). "FirstGroup investors revolt over appointment of former Carillion finance chief". Telegraph. Retrieved 20 January 2018.
  31. "FirstGroup Non-Executive Director Richard Adam Resigns". Interactive Investor. 18 September 2017. Retrieved 19 January 2018.
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