Molins reveals hole in accounts

The chartered accountants KPMG are at the centre of a second auditing nightmare - this time at Molins, the tobacco machinery company. Michael Orr, chairman of Molins, stunned shareholders at yesterday's annual meeting with revelations of a potential multi-million pound hole in its accounts after identifying "certain financial irregularities" at Langston Corporation, its US corrugated board machinery subsidiary.

Mr Orr told the meeting: "Preliminary indications suggest that the cumulative overstatement of profits could be in the region of $12m (pounds 7.4m)."

He said that after tax relief the figure could be reduced to $7.2m. Of this about $1.8m after anticipated tax relief appeared to relate to the 1996 accounts. This compared with the corrugated board division's operating profits last year of pounds 3.7m and overall Molins group pre-tax profits of pounds 24.9m.

Two senior American executives, Leo Maynes, president, and Walt Belville, chief financial officer, have been sacked. Mr Orr has sent in two replacements from the UK - Tony Stroud, group international director of sales, as Langston's new general manager, and Bart Van Egmond as finance director.

Molins has also called in Price Waterhouse to work with KPMG on an immediate investigation. Asked by a shareholder if he thought KPMG were "blameworthy", Mr Orr said: "The very fact that we have asked Price Waterhouse to work alongside KPMG speaks for itself. We as directors of the company must take the blame. Perhaps the auditors share in that."

KPMG is already at the centre of a row at National Westminster over the pounds 90m the bank lost in its interest rate options department. An investigation into the NatWest affair by Coopers & Lybrand, chartered accountants, and Linklaters & Paines, the law firm, will examine the role of auditors KPMG.

The US losses at Molins sent the shares 97.5p lower to 645p, wiping pounds 35m off the company's stock market value. They have fallen nearly 400p from last year's peak.

Problems at Langston first surfaced 10 days after release of annual accounts in the middle of last month.

"We were alerted by a phone call from a former employee of Langston who had recently resigned from the company," Mr Orr revealed. "At first the problem appeared to be a small one and in any case the allegations were unproven."

But by the end of March both Mr Maynes, who had been running the US operation since 1987, and his finance director, Mr Belville, were suspended. Both lost their jobs on Monday.

Mr Orr insisted that there was no suggestion of cash being taken out of the business but said overstating profits would have affected staff bonuses.

Suggested Topics
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave long-running series
Arts and Entertainment
Game Of Thrones
Uh-oh, winter is coming. Ouch, my eyes! Ygritte’s a goner. Lysa’s a goner. Tywin’s a goner. Look, a dragon
tvSpoiler warning:The British actor says viewers have 'not seen the last' of his character
The Etihad Stadium, home of Manchester City
premier league

The Independent's live blog of today's Premier League action

Rumer was diagnosed with bipolarity, attention deficit hyperactivity disorder and post-traumatic stress disorder: 'I was convinced it was a misdiagnosis'
peopleHer debut album caused her post-traumatic stress - how will she cope as she releases her third record?
Life and Style
Couples have been having sex less in 2014, according to a new survey
Holly's review of Peterborough's Pizza Express quickly went viral on social media
ebooksAn unforgettable anthology of contemporary reportage
Radamel Falcao was forced to withdraw from the World Cup after undergoing surgery
premier leagueExclusive: Reds have agreement with Monaco
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
A long jumper competes in the 80-to-84-year-old age division at the 2007 World Masters Championships
Arts and Entertainment
tvReview: 'Time Heist' sees a darker side to Peter Capaldi's Doctor
Life and Style
Walking tall: unlike some, Donatella Versace showed a strong and vibrant collection
fashionAlexander Fury on the staid Italian clothing industry
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam