Malcolm Walker, the former Iceland chairman, admitted yesterday he was aware of falling sales at the frozen food retailer before he sold shares worth £13.5m in the company.
But he said he had done nothing wrong because he believed Iceland was still on track to achieve its profit forecast.
In an interview with the Liverpool Daily Post, he defended an internal memo, dated 16 October 2000, in which he said sales had "fallen off a cliff".
"I wrote the memo. It was anything but secret," he said. "It was circulated to everybody in the company and there was nothing unusual about it. It dealt with day-to day-trading and there was nothing in it that was new, original or surprising.
"It is important to differentiate here between sales and profits.
"The memo talked about sales. I knew what they were and I knew there was a dip. But I still believed we would make our profits forecast." Mr Walker sold his shares in mid-December, just weeks before a profits warning.
The matter is presently being investigated by the Financial Services Authority and the Department of Trade and Industry.
Iceland declined to comment yesterday.Reuse content