FSA's damning rebuke for Iceland

THE Financial Services Authority is set to deliver a damning rebuke to supermarkets group Iceland - now called the Big Food Group - over how it was run under former boss Malcolm Walker.

The watchdog's report discloses that profits were running 45% below budget around the time when Walker sold £13.5m shares in the frozen food chain in December 2000. Walker was forced to resign six weeks later. The DTI is investigating the share sale.

Walker quit before the FSA got new powers and it cannot criticise him directly. On December 13, 2000, Iceland said: 'The management remain positive on future prospects and are confident that all the expected benefits of the merger with Booker are achievable.' It did not disclose that profits had nosedived. Walker sold 4m shares during the week that followed, when the shares were 339p - close to an all-time high.

Walker has defended himself, saying: 'When I sold, I had every reason to believe that we would meet the numbers.' The report will also criticise Iceland for failing to issue a profits warning in early January.

Chief executive Bill Grimsey, who had just joined, announced on 22 January that sales had slumped. The shares crashed 15%. The FSA reckons this disclosure was not early enough, though there is no suggestion that Grimsey could have known the situation any earlier. He issued a second profits warning a week later and criticised Iceland for 'inadequate management controls'. He followed with yet another warning in March.

The Big Food Group has never recovered. Within three months, the shares had slumped to 163p. Now they are 105p.