Sanctuary Group, the troubled record label and artist management business, has removed its founder and chief executive, Andy Taylor, from the board after discovering "fundamental errors" in its accounts.
However, Mr Taylor remains an employee, collecting full pay on "gardening leave" for the next year. He will receive nearly £500,000 while he sees out his 12-month contract at home. Company sources suggested that, for legal reasons, it was too tricky to sack him.
Sanctuary's acts include Iron Maiden and James Blunt. The company pioneered a once-feted "360 degree" business model whereby it would act as manager and record label for many of its artists, handling tours and merchandising as part of the service. James Blunt is a management client only.
Bob Ayling, the former chief executive of British Airways who joined Sanctuary as chairman last month, had already axedits auditors, Baker Tilly, in favour of KPMG.
Mr Taylor, 55, a chartered accountant who started the business in 1976 with Ron Smallwood, a friend from Cambridge University, was previously executive chairman. The two founders created a multimillion-pound independent music business, which had revenues of £221m in 2004. Mr Smallwood still works at the company but is not on the main board.
Frank Presland, who runs an artist management company that Sanctuary acquired last year, will replace Mr Taylor until at least the end of 2006. Mr Presland, 62, is a solicitor with a career spanning 25 years in the music industry, and has advised the Beatles, Dusty Springfield and Sir Elton John.
Sanctuary said in a statement: "The board's decision to remove Mr Taylor followed their conclusion that certain of the prior-year adjustments made in the 2005 accounts should have been presented as a correction of fundamental errors and not as changes in accounting policy."
The company said it reached this decision in the course of responding to questions over its accounts raised by the Financial Reporting Review Panel (FRRP) watchdog. Its investigation is ongoing.
In its 2005 accounts, which were qualified by Baker Tilly, Sanctuary "de-recognised" previously reported turnover of £89m and operating profit of £55m.
Sanctuary's business has been torn apart by a disastrous US acquisition, Urban Records, bought from Mathew Knowles, the father of the R&B star Beyoncé. Sanctuary has said it would release no more records under the Urban label.
The company went through a £110m rescue rights issue this year. Mr Taylor had said that he hoped the fundraising would mark the end of the company's troubles.Reuse content