Interserve faces probe over £25m invoice hole

Interserve, the building services and maintenance group whose clients include
BP and Heathrow airport, is facing questions over its accounting after
disclosing a £25m hole.

Investigators Linklaters and KPMG, called in to look at the issues raised,
are to deliver a preliminary report on the issue in a fortnight’s time,
Accountancy Age understands.

The group revealed the problems this month, which led to the suspension of
six senior finance employees. A spokesman for the group refused, however, to
confirm whether its industrial services financial director was involved in the
row.

The problems had arisen in the industrial services division. Industrial
services FD Alex Corless left the company two weeks before the irregularities
were discovered.

A company spokesman said they could not discuss any individuals who may or
may not be involved in the problems. But he did confirm that six senior finance
employees have been suspended since the company’s new head of the industrial
division, Bruce Melizan, exposed the false accounts last week.

Melizan discovered what was happening during a series of review meetings held
during the merger of Interserve’s industrial division and the MacLellan
division.

In the meantime, sources close to the company said the falsifying of accounts
dated back to 2001, and related to a problem over invoicing.

‘Invoices were destroyed, but not before they were entered into the company’s
accounts, inflating the division’s turnover or reducing costs. Credit notes were
raised to cancel them out, and then new invoices reissued to roll the missing
money forward,’ the source said.

Law firm Mishcon de Reya has been hired by disgruntled shareholders to
consider whether to sue the support services company, individual directors and
auditor Deloitte.

The shareholders, who had owned stock in Maclellan, which bought Interserve,
are considering whether or not any information was kept from them when they
bought the building group.

Former Maclellan chairman Bob Morton is amongst those pondering the action.
‘We need an investigation to discover the facts. If we had known about this
problem we might not have done the deal or we might have revised the terms,’ he
said.

COMPANY REPORTS

Higginson cashes in

Tesco finance director Andrew Higginson cashed in more than £900,000 pounds
worth of shares last week as the retailing group’s shares hovered around an
all-time high.

The company announced that Higginson had exercised a total of 523,544 share
options at a price of £3.70 last Tuesday. The options, with a strike price of
just under £2, would have yielded a gain of £903,113.

The company’s shares reached a peak of just over £3.70 recently. The
48-year-old FD was appointed to the board in November, and is also a chairman of
Tesco Personal Finance and a non-executive director of BSkyB Plc.

According to company reports, Higginson took home a total of £2.3m last year.

Staunton appointed

Former ITV finance director Henry Staunton has been appointed a non-exec at
Ladbrokes.

Staunton, 58, was previously the FD at ITV and Granada Group and before that
he was a senior audit partner at Price Waterhouse. He is currently a
non-executive director of Legal & General and Standard Bank.

Sir Ian Robinson, chairmanof Ladbrokes, said: ‘I am very pleased to welcome
Henry to Ladbrokes. His experience in financial, leisure and media matters will
be of a great benefit to the Board.’