The City watchdog is probing allegations of insider dealing in shares of collapsed construction giant Carillion as part of a wider investigation into the firm, it has emerged.
The Financial Conduct Authority (FCA), which is investigating events that led up to the company’s demise, disclosed in a letter to Labour MP Frank Field that it is “looking into” the matter, although the claims are not yet part of any formal investigation.
Penned by FCA chief Andrew Bailey, it reads: “We are also considering whether earlier announcements made by Carillion were false or misleading.
“Our investigation currently covers potential breaches of the Market Abuse Regulation, Listing Rule and Principles.
“We are aware of allegations of insider trading in Carillion’s shares prior to its trading update on July 10 2017 and are looking into them.”
Field, who alongside fellow Labour MP Rachel Reeves chaired a Commons committee inquiry into Carillion, told HuffPost UK: “This is a real bombshell and a turn up for the books from the FCA.
“I want the regulator to behave in such a way so that people feel that some agency is on their side in all of this.”
The revelation comes days after The Pensions Regulator (TPR) confirmed it is considering issuing a “contribution notice” - a legally enforceable demand for a financial contribution to the pension deficit - against former Carillion directors.
Currently, the Pension Protection Fund (PPF) will be forced to pick up an approximate £800 million bill left in the wake of the company’s collapse.
But the TPR is investigating whether the firm or its directors attempted to avoid their obligations to Carillion’s pension schemes.
Field, chair of Parliament’s Work And Pensions Committee, has calculated that former directors Richard Adam, Richard Howson, Philip Green, Keith Cochrane, Alison Horner and Andrew Dougal pocketed nearly £17 million over a decade at Carillion.
Carillion - which employed 20,000 British people and held public sector or public/private partnership contracts worth a staggering £1.7bn - also left behind £5bn of liabilities and a long list of unfinished projects.
The group’s massive portfolio included providing school dinners, cleaning and catering at NHS hospitals, building HS2 and maintaining 50,000 army base homes for the Ministry of Defence.
A report by the National Audit Office found earlier this month that the cost to the taxpayer of Carillion’s collapse is almost £150m, with that amount likely to climb.