Ex-Wickes boss cleared of fraud

A FORMER top executive of a DIY giant was cleared today of helping put a bogus £40m gloss on the company's profits.

But in an extraordinary development after the case, jurors trying Leslie Rosenthal - one-time group tradings director for Wickes - were told he had once admitted to hiding documents central to the case.

Legal restrictions had prevented the prosecution using that confession as evidence against him.

The unusual revelation by Serious Fraud Office QC Anthony Hacking marked the end of a series of court hearings estimated to have cost £18 million and borne of a fraud everyone involved accepted had occurred but for which no-one had been convicted.

The scam grew out of Wickes's ill-fated £283m acquisition of subsidiary Hunter Timber, which seriously undermined the company's financial well-being. Amid fears of a £50 million hole in the balance sheet, evidence suggested that profits began to be falsified as early as 1990.

At the heart of the deceit was a carefully crafted 'two-letter system'. It not only allowed bogus profits to be recorded but protected the company's share price by hiding the true level of trading between the group and its suppliers. London's Southwark Crown Court was also told it also enabled serious financial irregularities in its books to be concealed.

One set of documents detailed the true terms of deals with those stocking Wickes' stores, while the other, created for 'audit confirmation' purposes, did not.

Rosenthal, 53, of Loxheath, Southampton, had denied one charge of making a false statement to the company's auditors. The Crown alleged he played a 'principal role' in what occurred during 1994 and 1995. For his part, Rosenthal accepted there had been a fraud, but insisted he was innocent of any wrong-doing.

However, after more than eight hours of deliberations over three days, the jury had to be discharged after failing to reach a verdict.

Mr Hacking said that as the SFO had already decided a retrial under such circumstances would not be in the public interest, he was formally offering no evidence against the allegation Rosenthal had faced, as well as a charge of fraudulent trading which had not appeared on the indictment.

After trial judge Mr Justice Mitting had directed that not guilty verdicts on both counts should be entered on the court records, Crown Counsel then outlined some of the history to the case.