Wickes won't sue auditors over fraud

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The Independent Online
Wickes, the troubled DIY chain, has ruled out suing its former auditors Arthur Andersen, any of its advisers or senior management over the pounds 100m accounting fraud that pushed it to the brink of collapse.

With the decision, the group is seeking to draw a line under the scandal that led to a pounds 53.2m rescue rights issue last week.

Instead, it is relying on a Serious Fraud Office inquiry into its former management, including ex-chairman Henry Sweetbaum and buying director Les Rosenthal, to bring the perpetrators to book.

Mr Sweetbaum has denied any knowledge of the fraud.

"We have not waived all our rights, but at the moment we do not intend to take action," chairman Mich-ael von Brentano said this weekend.

"To prove negligence or mismanagement alone in court is not sufficient. And would it be in the interests of our shareholders now? The answer would have to be an emphatic no."

Nonetheless, the statement is likely to infuriate small shareholders in particular, who have lost millions.

SBC Warburg, the group's merchant bank, is earning pounds 1.25m for advice on the reconstruction and lawyers SJ Berwin have received fees of pounds 896,000 since the start of 1995.

Robert Burrow, the SJ Berwin partner who was on Wickes' audit committee, remains a non-executive director.

Mr von Brentano said, however, that both Mr Burrow and US non-executive Sanford Sigoloff were expected to resign shortly to complete a near clean sweep of the board.

Mr Von Brentano intends to stay at least until the annual meeting in April, but is prepared to serve a further year.

The rights issue, at just 15p per share, has been deliberately priced low as an incentive for investors to stump up more cash or alternatively face a massive dilution.

Wickes shares were suspended at 69p in June, and analysts expect them to start trading at 20-25p in early January, wiping pounds 166m off its previous pounds 260m market valuation.

A bidder may put Wickes out of its misery. Rivals RMC and Kingfisher lead several informal approaches so far.

Dutch DIY retailer Intergamma and a venture capital group are also interested in its European operations, for which Belgium's Kredietbank has been trying to find a buyer.

New chief executive Bill Grimsey and finance director Bill Hoskins will together be in line for a pay-off of at least pounds 850,000 on a takeover.

They also have options over pounds 1.26m of shares.