SFO in raids on Worthington

By Simon Fluendy for MailOnline
Updated: 09:13 EDT, 22 June 2008

An investigation by the Serious Fraud Office into the affairs of services group Worthington Nicholls began last week with a series of dawn raids in Cheshire.

Financial Mail revealed last year that after raising £20m from a share placing, the company had to issue a string of profit warnings.

Chief executive Mark Worthington and chairman Alastair Stoddart, who is also High Sheriff of Cheshire, were ousted by furious shareholders after revelations about how the company was run.

The firm was taken over by company turnaround specialist Simon Beart. It has changed its name to Managed Support Services and is starting to trade profitably.

Teams from the SFO, under lawyer Kwadjo Adjepong and Cheshire Police Economic Crime Unit boss Chief Inspector Giles Orton, searched three homes in the Poynton area of Cheshire and removed documents and computers.

Two of the properties belonged to Mark Worthington and his father Peter, who founded the company in 1973.

The focus of the investigation is on company accounts prior to the flotation and up to November 2007, when Beart took over. Last week the group announced it had lost almost £9m in the second half of last year and was co-operating with the SFO.

The company is also pursuing the previous management through the courts for civil damages, but this will be suspended if a criminal action begins.

Financial Mail has established that former finance chief Tim Hunt had grave concerns about the company and tried to resign in the wake of the share placement in June 2007.

Hunt, a former KPMG accountant, wrote a highly damning letter to the board. 'Based on my experiences of working in a plc environment for the previous ten years, I am of the opinion that the company's procedures and systems were, and are still, not suitable to sustain the provision of reliable financial information to the market notwithstanding the analytical detail to support it...this causes me great concern as finance director,' he wrote.

Hunt added that due to lack of evidence to support sales and margins forecasts he had been unable to endorse some company announcements. But the board refused to accept his resignation and he was not allowed to step down as a director until mid-September. 'Hunt's letter makes it clear that this company was in no fit state to be brought to market and once listed, none of its statements could be relied on to be true and fair,' said one City source.