PW to pull out of Powerscreen inquiry

A Conflict of interest discovered by the accountancy firm inquiring into the scandal at Powerscreen means they are now going to withdraw. The development is likely to delay the inquiry by a number of weeks.

Price Waterhouse (PW) was called in to review aspects of a report prepared by company auditors KPMG following their study of allegations of false accounting and mispricing at the Powerscreen subsidiary, Matbro.

However, the discovery of a conflict of interest which means the PW will have to withdraw was conveyed to executives of Powerscreen last week and the announcement of a replacement for PW is now expected. Powerscreen executives are understood to be furious with the development.

The group had been hoping to reveal details of how the losses at Matbro came about to shareholders some time later this month. A statement to that effect was issued last week but the timetable for the issuing of the report will now have to be revised.

In January the company shocked the markets when it announced a £46.6 million provision to cover losses at Matbro.

Last week Powerscreen confirmed that it had sold the debt-ravaged Matbro subsidiary to the US engineering group, John Deere, for £7 million sterling. It also stated that the investigation by KPMG had confirmed the provision against losses taken at Matbro.

Institutional investors are awaiting the Powerscreen report as they contributed £18 million to a Powerscreen rights issue six weeks before the Matbro debacle became public and long after it was known in the trade that Matbro was going through difficulties.