Robert East, the incoming FD of troubled sub-prime doorstep lender
faces the peculiar situation of controlling the company’s finances without being
appointed to the board.
The arms-length approach has been taken as James Corr was still FD, but the
company faces an in-depth investigation by internal auditors Deloitte into
whether there has been a misrepresentation of Cattles’ provisions for bad debts
in its Welcome Financial Services division.
Corr put off his retirement as the accounting issues were uncovered and
originally said he would remain in his role until the impairment provisions
review was completed, which left East in limbo. He has now been suspended by the
In a statement to the City, Cattles said: ‘In his absence, Mr East has agreed
to take on Mr Corr’s responsibilities, although his appointment to the board
remains deferred until further notice.’
Corr initially stayed on to help with the review, with Deloitte sifting
through the books of Welcome Financial Services, the department where accounting
issues have been uncovered.
In light of its issues Cattles has had to shelve its annual results. It is
also fighting to shore itself up from the threat of collapse.
Cattles has approached its bankers in a bid to renew its lending facilities,
but the issues have also caused major implications at management level.
Along with Corr, Welcome Finance FD Peter Miller; John Blake, managing
director; and Mick Belcher, operations director have been suspended. They are
currently under the spotlight of a separate Deloitte inquiry.
Welcome’s COO and chairman Ian Cummine and Adrian Cummings, compliance and
risk director, take the suspensions to six.
On 3 March, Cattles said: ‘The review of the Group’s impairment provisions,
which is being conducted by Deloitte continues.
‘Based on work carried out to date, the board believes that there has been a
breakdown in internal controls which has resulted in the group’s impairment
policies having been applied incorrectly.
‘Although it is still not possible to quantify the effect on the group’s
financial statements, the board believes that profit before tax for the year
ended 31 December 2008 is likely to be substantially lower than its expectations
as at 20 February 2009.’
On 4 March, shares in Cattles plunged 40% to 3.1p, valuing the company at
just £10m, as the City reacted to the news.
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