Mr Sweetbaum is a director and major shareholder in a travel business, Statesman Travel, which provided Wickes with group travel and accommodation arrangements for senior management.
In a prepared statement, Mr Sweetbaum, through his secretary, said: "The relationship between Statesman Travel and Wickes was a normal arm's length trading relationship, fully disclosed to the board and the auditors of Wickes, and the board resolved the relationship was immaterial, and did not require disclosure."
Wickes owns a number of overseas businesses so group travel would not have been insignificant. Statesman Travel, for example, booked all the flights for overseas non-executive directors who attended an emergency board meeting on 26 June to discuss its accounting problems. The travel operator also booked a number of directors into London's Dorchester Hotel.
Under Schedule 6 of the Companies Act, a company should disclose any transactions where a director has an interest, if the board believes it to be material. The question of materiality, however, should be based on whether the board believes shareholders would see it as material - and not solely on how material the contract may be to the company, or to the director. One company lawyer says: "In the best spirit of the Act, and the Cadbury Code, investors would expect to have this information revealed in a note to the accounts." Another investor echoed this sentiment. "It's only when things go wrong that this sort of information leaks out. We would have preferred to have known about it," he says.
On 31 March, 1995, Mr Sweetbaum owned 40,800 shares in the travel company. The other two main board directors, Richard Boddie and Donald Cleary, between them owned 21,852 shares. Huntingdon Securities - another vehicle of Mr Sweetbaum - owned 32,334 shares, while a Panamanian shareholder, Oxford Corporation, owned 4,357.
Statesman Travel is a successful, established travel operator. Most of its work - 95 per cent, according to Barry Walker, sales manager at its Frith Street branch in Soho - is for business accounts. Despite this, profits at the company are relatively low. In the last accounts filed by the company, sales of pounds 12.25m translated into a pre-tax profit of pounds 21,586. Wickes refused to comment on the arrangement, including the budget allocated to Statesman.
In addition, Statesman Accounting, controlled by the directors of the travel firm, provided the latter with accounting and administrative services, for the sum of pounds 227,331.
During his time at Wickes, Mr Sweetbaum has also been paid some of his remuneration through HASS Corporation, a US registered company. Mr Sweetbaum has retained his US nationality since he took over at Wickes in 1983.
Payment through HASS (Henry Alan Sweetbaum Services), would have provided him with an efficient way to minimise his tax bills, in the UK and the US. HASS, says a representative for Mr Sweetbaum, was used only for payment of work carried out overseas by Mr Sweetbaum. Otherwise, his remuneration for work in the UK was paid directly to him, he says. A brief mention of HASS's existence came in the listing circular of 1987, at the time of Wickes's stock market flotation. It states that HASS would be paid an annual fee of pounds 40,000 a year, plus a discretionary bonus, by Wickes BV and Wickes NV - the company's Dutch and Belgian subsidiaries.
However, HASS crops up elsewhere, as the owner of Huntingdon Securities. Huntingdon bills itself as an "investment and financial consultancy". It adds that associated undertakings have carried on the business of travel agents. It is unclear what role Huntingdon serves in Mr Sweetbaum's private interests.
Mr Sweetbaum became a director of Statesman Travel in 1975, where he joined chartered accountant Richard Boddie. The two have a well-established business relationship. As well as serving on the board of Statesman, the two share directorships of Huntingdon Securities, and Rutland Securities - another Sweetbaum vehicle. Mr Boddie is also a director of Arlington Enterprises, the business of Anne Sweetbaum, Mr Sweetbaum's wife. His son, Barry, has also become a director of Statesman.
The arrangements Mr Sweetbaum had between his private interests and the quoted company he served call into question the commitment of the company at the time to the Cadbury Code on corporate governance. The 1995 report and accounts states: "For many years, the Board ... has conducted the company's affairs in accordance with the principles expressed in the Cadbury Committee." It emphasises that the compensation committee, which sets boardroom pay, consists entirely of non-executives. However, of the three non-executives who run this committee, one of them, Mr Sanford Sigoloff, aged 65, worked with Mr Sweetbaum when Wickes was a US business. Another non-executive, Mr Sanford (sic) Kaplan, aged 79, also lives in Los Angeles, making regular, direct contact with the business harder to maintain. Peter Humphries, aged 75, the only British national on the compensation committee, is a former partner of Ernst & Young, auditors to Statesman Travel.
Mr Sweetbaum's pay package in 1995 was pounds 1.2m, of which only pounds 296,000 was basic salary. Some pounds 750,000 came from a longer-term incentive scheme, linked to the rise in share price. The final sum was topped up by various benefits and incentive schemes.
Mr Sweetbaum was co-founder, with Saul Steinberg, of Leasco - the computer leasing company that later became notorious when Steinberg sold it to Robert Maxwell, and it became the subject of a DTI investigation after it then went bust.
In 1982, he was called in to save the non-US parts of Wickes. It was eventually floated in 1987 on the Stock Exchange. But Wickes has had a chequered career as a listed firm. In 1988, it bought Hunter Timber from Hillsdown Holdings, but had to sell it for just pounds 45m last year, forcing it to write off pounds 186m.
Managers at Wickes are contemplating a management buy-out of the UK business. A source close to the company says a group of senior managers are trying to gather the backing to purchase the UK retail operations from the company.
Shares in the group were suspended after accounting irregularities were uncovered in June. It is believed that up to pounds 30m of profits, reaching back at least to 1993, may have been distorted by the practice of booking the profit in the year one, whereas the money was to have been paid over two to three years.
The news will fuel speculation that a full-scale bid, or break-up of the group, is the most likely outcome of its present woes.
Michael Corner, a Wickes director, who is in charge of group operations, is understood to be leading the MBO efforts. Other senior managers who are believed to have a close involve- ment include Terry Carson, finance director of Wickes Building Supplies, and Richard Bird, the acting trading director.
Arkadi Bykhovsky, a former board director, who ran the Hunter Timber subsidiary, has also expressed interest in a new role at the business.
The news of the MBO will concern shareholders, however, who have seen the value of their investment fall 41p, before the shares were suspended at 69p a month ago. Institutional shareholders would want to be sure that any deal was in their best interests, and that the core business would be sold off at a fair price.
However, an MBO may prove a long shot. The on-going investigation into supplier discounts, by Price Waterhouse, and Linklaters & Paines, would deter investors, analysts say. One shareholder predicted a trade sale as a more likely outcome. "You can do a lot with capital structures in these situations, but with up to pounds 30m in doubt, I think they'll find it hard," he says. Kingfisher - through B&Q - and RMC are the two leading bid contenders.