Investors force Fowler to quit as CSG chairman

CORPORATE SERVICES Group (CSG), the recruitment company at the centre of a pounds 282m bid from the Conservative Party treasurer Michael Ashcroft, was plunged into chaos yesterday as its chairman bowed to shareholder pressure and resigned.

In a surprise statement, the group said Jeffrey Fowler was stepping down as executive chairman, to be replaced by Ralph Hulbert, a non-executive director.

However the departure of Mr Fowler, who could receive a payoff of more than pounds 400,000, did not placate CSG's three largest investors, who have called for a complete board shake-up. Mercury Asset Management, M&G and Schroders vowed to press ahead with plans to call a shareholders' meeting to oust Mr Hulbert, the commercial director John Abrahamson and two other non-executive directors.

The investors blame the current board for CSG's poor performance. The company issued two profit warnings last month and has seen its shares slide from a year's high of 261p to 91p yesterday.

The rebel shareholders yesterday said their proposal was backed by investors controlling over 50 per cent of CSG's shares. Success by the three fund managers would scupper the bid by New Carlisle, a service group owned by Mr Ashcroft.

The Tory fundraiser has the right to withdraw the complex cash-and-shares offer if the composition of the board changes. Mr Ashcroft was consulted over Mr Fowler's resignation and it is understood that his bid will remain on the table despite the board change. However, New Carlisle is set to withdraw its offer if the bulk of the board went. Mr Ashcroft declined to comment.

CSG yesterday told shareholders to take no action on the Ashcroft bid.Analysts believe the company has not recommended the bid because it believes that other predators could table a higher offer.