Whitewash worries at Wickes

Lawyers' report expected not to urge action against former chief over pounds 50m of overstated profits

Fears are growing that a long-awaited report into DIY chain Wickes's overstated profits of at least pounds 50m will amount to little more than a whitewash of top management.

Directors are considering the latest draft of the report, by City lawyers Linklaters & Paine, before discussing the findings at a board meeting this week. They will report to shareholders next week.

On Friday, the company said it would miss a self-imposed deadline tomorrow to explain what went wrong over the accounting of pounds 87m of supplier rebates in 1994 and 1995. It now expects to make an announcement tomorrow week.

Investors, as well as current and former members of staff, fear that the group will recommend no action against former chairman and chief executive Henry Sweetbaum and other directors over their management of the DIY chain.

Mr Sweetbaum resigned in June after discovery of the accounting irregularities in an investigation pursued by former finance director Stuart Stradling, who was appointed last year.

Wickes shares have been suspended at 69p pending the review and negotiations with suppliers over the rebates.

So far only two other executives, group trading director Les Rosenthal and UK commercial director Chris Miles, have also resigned after first being suspended by the group.

The report is understood to conclude that Mr Sweetbaum, as well as administration director Michael Corner and Trefor Llewellyn, Mr Stradling's predecessor, "should have known" about the irregular practices.

Other executives interviewed by the lawyers say attempts will be made by the board, headed by chairman Michael von Brentano, to lay some blame on managers - including former managing director Bill McGrath - who left as long ago as 1993.

This is despite the fact that rebates demanded from suppliers totalled just pounds 26m from 1987 to 1993 and were in line with industry practice, against the accelerating amounts subsequently which concealed falling trading profits from Mr Sweetbaum's price-cutting strategy.

Several non-executive directors, as well as Mr Corner, retain close links with Mr Sweetbaum.

Suppliers were forced to sign two sets of documents to conceal the true nature of cash rebates and discounts from the auditors, which should have been accounted for over three years.

Trade sources say Wickes' is exerting immense pressure on small suppliers over rebate terms as it seeks to shore up its balance sheet ahead of an expected pounds 30m rights issue later this year.

Some, including Manchester-based Regency Kitchens, have refused to yield and have been dropped by the chain, leading to job losses in the sector.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Recruitment Genius: Experienced Financial Advisers and Paraplanners

Negotiable: Recruitment Genius: This extremely successful and well-established...

Guru Careers: FX Trader / Risk Manager

Competitive with monthly bonus: Guru Careers: We are seeking an experienced FX...

Guru Careers: Investment Writer / Stock Picker

Competitive (Freelance) : Guru Careers: An Investment Writer / Stock Picker is...

Day In a Page

How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map
Lionel, Patti, Burt and The Who rock Glasto

Lionel, Patti, Burt and The Who rock Glasto

This was the year of 24-carat Golden Oldies
Paris Fashion Week

Paris Fashion Week

Thom Browne's scarecrows offer a rare beacon in commercial offerings
A year of the caliphate:

Isis, a year of the caliphate

Who can defeat the so-called 'Islamic State' – and how?
Marks and Spencer: Can a new team of designers put the spark back into the high-street brand?

Marks and Spencer

Can a new team of designers put the spark back into the high-street brand?
'We haven't invaded France': Italy's Prime Minister 'reclaims' Europe's highest peak

'We haven't invaded France'

Italy's Prime Minister 'reclaims' Europe's highest peak
Isis in Kobani: Why we ignore the worst of the massacres

Why do we ignore the worst of the massacres?

The West’s determination not to offend its Sunni allies helps Isis and puts us all at risk, says Patrick Cockburn
7/7 bombings 10 years on: Four emergency workers who saved lives recall the shocking day that 52 people were killed

Remembering 7/7 ten years on

Four emergency workers recall their memories of that day – and reveal how it's affected them ever since
Humans: Are the scientists developing robots in danger of replicating the hit Channel 4 drama?

They’re here to help

We want robots to do our drudge work, and to look enough like us for comfort. But are the scientists developing artificial intelligence in danger of replicating the TV drama Humans?
Time to lay these myths about the Deep South to rest

Time to lay these myths about the Deep South to rest

'Heritage' is a loaded word in the Dixie, but the Charleston killings show how dangerous it is to cling to a deadly past, says Rupert Cornwell
What exactly does 'one' mean? Court of Appeal passes judgement on thorny mathematical issue

What exactly does 'one' mean?

Court of Appeal passes judgement on thorny mathematical issue