Harland under investigation

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The Independent Online
THE Stock Exchange is understood to be investigating the possibility that Harland Simon, the troubled control systems group, may have misled the stock market.

The exchange's insider dealing group is believed to have been taking an interest in Harland for months. Despite the name of this unit, the exchange is not necessarily looking at allegations of insider dealing. One concern is whether false and misleading statements were made to the market.

Shares in Harland, which traded at 655p earlier this year when the City was led to expect profits of pounds 13m, have crashed to 16p after a profit warning, heavy losses and the qualification of its accounts.

Roy Ashman, Harland's former chairman, left the group with pounds 360,000 in compensation after the surprise profit warning in February. He held out the prospect of 'further progress' at Harland's interim results in December. Besides the gap between the expected profit and pounds 6.3m loss, the exchange is expected to focus on the off-balance sheet company that prompted Price Waterhouse to qualify the accounts.

The earlier treatment of Perfect Information, an on-line information supplier in which Mr Ashman retains a 27 per cent stake, enabled Harland to boost its 1991 profits by up to pounds 2m.

The auditors have been unable to decide whether Perfect should have been consolidated in Harland's 1991 results because they have been unable to identify the owners of a key stake in Perfect.

The Swiss company that is supposed to have financed the purchase of the stake told the Independent it did not make 'any investment in any company whatsoever' in its dealings with Harland.