The British Serious Fraud Office (SFO) is investigating the irregularities discovered at the Powerscreen subsidiary Matbro, the office announced yesterday.
The investigation began on April 28th following the referral of a report to the SFO by the Department of Trade and Industry (DTI). Officers from the DTI have been in contact with Powerscreen since the January announcement by the company that a provision for £46.6 million was being made as a result of the discovery of irregularities at Matbro.
"The company has been in contact with the regulators since the announcement of the accounting irregularities at Matbro Ltd on January 27th, 1998 and will continue to give every assistance to the SFO with their important investigations," the company said. Sources said the company was not surprised by the development.
The SFO was established in 1987 and is an independent body which investigates and, if it deems it necessary, prosecutes serious and complicated fraud cases. Its staff of 180 includes lawyers, accountants and information technology experts. A number of police officers are attached to the office. A spokesman for the office said they had looked at the Matbro situation "and decided it satisfies our criteria for cases. An investigation is taking place and we are not saying or suggesting anything further than that".
Almost half the stock market value of Powerscreen, the second largest publicly quoted company in Northern Ireland, was wiped out on the day of the Matbro announcement. Matbro is a subsidiary based in Dungannon, Co Tyrone, with an administrative operation based in Gloucester. Last month its business was sold to the US engineering group, John Deere, for £7 million sterling.
The irregularities uncovered at Matbro concerned the mispricing of machines, unauthorised discounts offered to customers, inaccurate and misleading recording and discounting of bills of exchange and warranty costs. No information has been given as to how long the irregular practices have been in operation.
It emerged after the January announcement that news of Matbro's difficulties was circulating within the trade late last year and one month before the Dungannon group raised more than £18 million in a share placement with Irish investors.
Earlier this week Powerscreen announced it had retained a London firm of solicitors, Herbert Smith, to consider the legal implications of the irregularities at Matbro. It also announced that an unnamed firm of accountants was being engaged to carry out a review of the irregularities and of a report which has prepared by Powerscreen's auditors, KPMG.
