John Bairstow, the founding chairman and one of several directors to resign, yesterday welcomed the move: 'I said weeks ago that if there is something worth looking in to I will co-operate fully, as I'm sure will other former directors.'
The DTI inspectors, Adrian Burn of accountants BDO Binder Hamlyn, and Patrick Phillips QC, have been appointed under section 432 of the Companies Act, which covers cases of suspected fraud, misconduct or withholding information from shareholders. They have wide-ranging powers to demand the production of documents and information from witnesses.
Last week David Howell, the former Tory minister, and John Gale, a former National Westminster banker, resigned as directors of QMH after criticism of their failure to spot the company's unfolding financial crisis.
Earlier this month QMH announced pre-tax losses of pounds 1.04bn and debts of pounds 1.2bn in 1992. Andrew Coppel, new chief executive, disclosed he had told the DTI and Stock Exchange of three years of possibly 'unlawful' dividend payments, and property deals in Germany that broke the Companies Act because shareholders were not informed.
The DTI inspectors have not said which areas of the company's accounts they will investigate. But a statement from QMH implies it is the matters that the company brought to their attention. QMH said it 'welcomes the announcement . . . that inspectors have been appointed to look into various matters drawn to the department's attention by the company. The board of Queens Moat believes that it is in the best interests of shareholders and creditors that matters should be fully investigated.'
Mr Bairstow, who resigned on 20 August, five months after the company's shares were suspended at 47.5p, hoped the investigation would also look into the disputed property valuations.
Weatherall Green & Smith and Jones Lang Wootton came up with valuations that differed by pounds 1bn. The Royal Institution of Chartered Surveyors called in both firms to explain their reasons for the difference, and an announcement is expected next week.Reuse content