Five former directors of Durex maker SSL charged with fraud
Thursday 06 November 2003
Five former directors of SSL International, including two ex-chief executives and the former finance director, have been charged with overstating sales figures after the conclusion of a two-year investigation by the Serious Fraud Office.
Iain Cater, who was ousted as chief executive of the Durex condoms maker in 2001, and his interim replacement, Dieno George, appeared at Macclesfield magistrates' court yesterday, pleading not guilty to charges of making false statements, as did Paul Sanders, the former finance director.
The SFO said no existing employees of SSL, nor the company itself, would face prosecution over the affair. Its inquiry was sparked by an internal investigation by the company and SSL's admission in June 2001 that sales had been overstated by £22m and profits by £19m.
Mr Cater was "invited to step down" as chief executive in February 2001. SSL said in May 2001 that a review of its sales practices had prompted "a separate investigation by external advisers into the overstatement of results".
The company was already in turmoil after several profit warnings and revelations of trade loading, a legal but frowned-upon practice whereby wholesalers are given incentives to take on more stock than they can sell and which inflated SSL's sales by an estimated £63m.
Mr Cater had been at the helm since 1990, forging a conglomerate from what was then Seton Healthcare, through a number of big deals in the late Nineties. Mr George had been managing director of the European operations before briefly serving as acting chief executive. Mr Sanders joined Seton in 1997 after a career at Arthur Andersen, the now defunct auditor, and left SSL in September 2000 to join the internet security software group Baltimore Technologies. He was briefly acting chief executive at Baltimore, but left the company after a year.
Two former senior managers at SSL's British division, Christine Davenport, who was finance director, and Brian Ruane, a sales director, yesterday denied making false statement and additional charges under the Prevention of Corruption Act.
Colin Wilson, former purchasing director of the private Coventry wholesaler AAH Pharmaceuticals, an SSL customer, also pleaded not guilty to corruption charges. The accounting mis-statements alleged by the SFO took place over the 25 months to March 2000, stretching back into the period before SSL was created by the merger of Seton Scholl and London International Group in 1999.
SSL's shares lost 40 per cent of their value in the period between the revelations of trade loading and the final restatement of its financial results.
Ian Martin, who became chairman in 2001 after the scandal had prompted a boardroom clear-out, said yesterday that SSL had been "fastidious" in providing information and assistance to the SFO, which had taken up substantial management time over the past two years.
He said: "Now that, so far as the company is concerned, this unfortunate matter is closed, we can look forward to focusing exclusively on building our business and particularly our high-value global brands, Durex and Scholl."
Brian Buchan, who joined as chief executive in March 2001, is restructuring the group, selling off the hospital supplies businesses, which represent about a third of the sales, to focus on the consumer brands.
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