They said it was "inconceivable" that the top directors had no knowledge of the matter. They also expressed concern over the deals struck between the company and the former directors which have led to Henry Sweetbaum, the former chairman, and Trefor Llewellyn, the former finance director, paying back bonus payments in return for the company taking no action against them.
One major shareholder said: "The top people must have known. Either they knew or they were incompetent. One has to ask, 'Are they fit to be directors of public companies?' "
The shareholder said: "I do have a concern over a deal being struck over the bonuses being repaid in return for the company agreeing not to make a claim [on the former directors]."
These concerns will fuel expectations that the Serious Fraud Office and the Department of Trade and Industry will launch investigations into the Wickes affair. "There is such a serious [profits] over-statement here that one would expect it," the shareholder said.
Wickes has admitted that the SFO and the DTI contacted the company in June when news of the profits scandal first broke. Yesterday both offices said they had not yet launched an inquiry.
With criticism of Wickes' non-executive directors also mounting, it is now expected that Sanford Kaplan and Sanford Sigoloff will resign from the board by the end of the year. Mr Kaplan is now 80 while Mr Sigoloff is 66. Both are based in the US and are colleagues of Mr Sweetbaum.
It is thought the City would be reluctant to subscribe to the planned rights issue unless replacement non-executives are recruited.
It also emerged yesterday that Wickes' stockbroker, SBC Warburg, suggested that Stuart Stradling should take over as chairman when Mr Sweetbaum resigned abruptly in June. Mr Stradling, a former Warburg director, succeeded Mr Llewellyn as finance director in August 1995 and resigned from the company earlier this month.
Wickes maintained yesterday that it had no knowledge of demands by suppliers to Hunter Timber, a former Wickes subsidiary, for repayment of rebates when the business was sold in September 1995. The report issued by Wickes said that "instances came to light" during 1995 that supplier rebates and contributions were being booked as profits earlier than was justified. The company declines to be more specific on when in 1995 these "instances" occurred.
Institutional investors said the jury was out on whether the planned rights issue would be able to go ahead. One said he would be worried if a trade buyer did not come forward before then. However, he added that if the offer was so low, then investors would probably prefer to subscribe to the issue. "We still believe it is a reasonable franchise. It has a lot of good sites and its market position is believable."
Potential trade buyers include Kingfisher, which owns the B&Q chain. However many of Wickes sites are too small or in locations unsuitable for a branch of B&Q. Trade buyers will want to see further details of Wickes' financial position before they go ahead.