Wolverhampton-based Carillion reveals it is under investigation by the Financial Conduct Authority

The Financial Conduct Authority oversees the behaviour of companies and financial markets in the UK.

According to Carillion in a brief statement to the City today, the FCA has said: "it has commenced an investigation in connection with the timeliness and content of announcements made by Carillion between December 7, 2016, and July 10, 2017.

If the FCA decides there has been wrongdoing, it can apply a range of sanctions including unlimited fines. Last year it fined Deutsche Bank £163m for failing to maintain adequate anti-money laundering safeguards and slapped a £27m fine on Rio Tinto for breaching disclosure and transparency rules, for failing to write down the value of its Mozambique mines.

Wolverhampton-based Carillion, struggling under the weight of massive losses that hit £1 billion last year, said it was 'co-operating fully with the FCA".

The December 7 announcement in 2016 saw Carillion claim it was expecting to increasing operating profit as a result of strong revenue growth, predicting total new orders of £4.5bn by the end of that financial year.

But instead, despite winning a string of defence and building work, in July Carillion revealed profits and revenue would be substantially down after racking up hundreds of millions of losses on major construction projects.

Chief executive Richard Howson stepped down as Carillion's share price crashed.

Further warnings followed as the shares hit all time lows, despite continuing to win work on major rail projects such as HS2, as Carillion started selling off assets like its healthcare operation. Unveiling its half year figures in September it revealed losses had grown to £1.15 billion, blamed on the construction woes at home and in the Middle East.

The company employs around 400 at its headquarters on Wolverhampton’s Ring Road St Mark’s. Around 20,000 of its 43,000 strong workforce is based in the UK, where it has major contracts working on road and rail schemes and maintaining military bases.

It is also building the new Midland Metropolitan Hospital in Smethwick and is working on the huge Paradise redevelopment in Birmingham city centre.

But the Midland Met hospital is now about a year behind schedule, as is its work on Liverpool's new Royal hospital.

As well as announcements of contract wins, the period under investigation by the FCA includes Carillion's full year 2016 financial statement of rising profits and turnover, including a bullish forecast for the year, a full year trading update,an annual general meeting statement and a 2017 first-half trading update. Until the announcement in July there had been no clue of the crisis to come.

But Keith Cochrane, who was parachuted in as temporary chief executive after the crisis broke, rapidly itentified that the company had been taking on too many unprofitable contracts.

He has unveiled the rescue plan that is seeing Carillion selling off some businesses and pull out of PPP work. After the sale of its UK healthcare arm is is also in talks to offload its Canadian business.

Under Mr Cochrane's plan, construction will shrink to just a £600m a year business, handling around 15 projects at a time, while Carillion concentrates on £2.4bn a year of support services work for Government departments like the MoD, corporate customers and regional public authorities and on infrastructure projects, primarily road and rail.

Mr Cochrane said the company "took on too many unprofitable contracts".

"In too many cases we were building a Rolls-Royce but only getting paid to build a Mini," he said. In future Carillion would be more choosy on the work it took on. This has already seen Carillion pull out of £10 billion-worth of contracts it had previously been considering.

The company is also aiming to cut its pension costs and try to cut its growing debt mountain.

Mr Cochrane is due to step down this month, although will remain as an advisor, as newly appointed chief executive Andrew Davies starts work on January 22 – more than two months earlier that originally scheduled.