Who is Zafar Khan, and why is he important?

In the past, the level of scrutiny on directors may have been low enough that most wouldn’t need to worry. Now, it’s a different story. If companies run into trouble – especially big companies – and regulators find one or more board members share some responsibility, they will act. 

Here are the details of Khan’s example:

In July 2023, it emerged that the British accountant and businessman Zafar Khan had been barred from holding UK directorships.

Announced by the country’s Insolvency Service, the decision ended a long-running probe into the collapse of construction giant Carillion in 2018. 

Khan will now be ineligible to serve on the board of any British company until the year 2034.

He’s a British businessman, a graduate of the University of Warwick and a qualified chartered accountant. 

His career has centred on providers of infrastructural services. Before joining Carillion in 2011, he served nearly ten years at Associated British Ports. His forte has been in financial controller/director roles.

First off, he’s not alone. Regulators have targeted several other senior Carillion leaders for their roles in the scandal. Khan’s case carries large weight, though; as of July, his fate is set. 

Khan and certain colleagues were accused of misleading shareholders by presenting Carillion as more stable than reality during its final days. 

Khan only served as Finance Director for eight months – between January and September 2017. 

During that time, however, he was found to have authorised corporate announcements and the payment of dividends. Both painted the company’s financial state as better than it was, and did not give a “true and fair view” of its performance – breaking both UK and EU law. 

Ultimately, a director in his position is supposed to keep the shareholders’ interests at the top of the priorities list. Here, he appears to have withheld or dressed up important and dire information.

Let’s look at two things:

“The length of the ban is in the top tier of director disqualification periods, reserved for only the most severe breaches of a director’s duties,” Fladgate law firm partner Ben Drew told the Financial Times. 

This is why directors should pay attention to Khan’s case. It’s a sign of heightened responsibility, extra pressure facing directors, and the more serious ramifications for wrongdoing – whether Kahn agrees or not. 

Directors are simply not the rubber-stamp people they used to be. They’re now expected to act as core decision-makers; if that means more responsibility, so be it. 

Realistically, directors in the UK could face anything up to jail time if they screw up badly enough. Whatever the punishment, it’s unlikely to help anyone’s career when it comes.

Khan received his ban six years after the alleged incidents took place. That’s a long time. 

Whatever warning the first point sends to directors, this point will dilute. The gap between offence and penalty has been criticised, especially given the scale of Carillion’s ultimate collapse. 

It is perhaps an indicator that while authorities are bedding up measures to ensure good governance, they haven’t got the capacity to match those measures yet.

Zafar Khan is the most recent example of a former director penalised for bad governance. His boardroom career in the UK is over for at least a decade, and the publicity accompanying that crime will stick with him for a long time elsewhere.