Standard Life, Others Said to Face FCA Questions Over Carillion

(Bloomberg) -- The U.K.’s markets regulator will question Standard Life Aberdeen Plc and other asset managers about their decision to sell stakes in Carillion Plc before the construction giant’s demise in January.

The Financial Conduct Authority has called in Standard Life -- which once had a 10.8 percent stake in Carillion -- for an interview with the meeting to take place in the coming weeks, according to two people with knowledge of the situation. Other firms have also been asked to answer questions, according to one of the people, who didn’t want to be identified because the FCA request was private.

Carillion, an outsourcing company with contracts in everything from hospitals to the HS2 high-speed rail project, collapsed in January after failing to shore-up finances and get a government bailout. The builder left behind debts of about 1.6 billion pounds ($2.2 billion) after a series of construction deals soured. The failure has prompted a debate in Britain about both how companies are run and the extent to which the government relies on service providers.

Standard Life began selling Carillion shares in December 2015 due to concerns about financial management, strategy and corporate governance, Britain’s largest active money manager told lawmakers’ in writing earlier this year. The investment company said it raised the concerns with senior executives in regular meetings until it sold its full stake in July 2017.

Executives from Standard Life and BlackRock Inc. will be questioned Wednesday as part of a separate parliamentary inquiry. The Work and Pensions Committee and Business, Energy and Industrial Strategy Committee are investigating how Carillion, a company that KPMG LLP said was solvent in spring 2017, could spiral out of control so quickly. The U.K. Financial Reporting Council opened a probe into KPMG’s Carillion audits in January.

A spokesman for the FCA declined to comment. A spokeswoman for Standard Life couldn’t immediately comment.

Standard Life Plc merged with Aberdeen Asset Management Plc in August 2017. Aberdeen had a very limited holding in Carillion, according to the firm.

Executives from investment management company Kiltearn Partners LLP and accountants Ernst & Young LLP will also appear before lawmakers this week.

More than half Carillion’s borrowing was owed to banks led by a 835 million-pound loan from lenders including Barclays Plc, Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc, according to a September company statement and data compiled by Bloomberg. The company also had about 630 million pounds of privately placed and convertible bonds outstanding. Its pension plan had a deficit of 587 million pounds at the time of its collapse.

--With assistance from Lukanyo Mnyanda

To contact the reporters on this story: Suzi Ring in London at sring5@bloomberg.net, Franz Wild in London at fwild@bloomberg.net.

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Anthony Aarons, Neil Callanan

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