Iceland facing full fraud probe

THE Serious Fraud Office is to launch a full-scale investigation into retailer Iceland, now part of the Big Food Group.

A file on the company was handed to the SFO in the spring. Most of the material came from Department of Trade and Industry inspectors who had been asked to look into suspicions of insider dealing in shares.

The DTI probe was ordered after former Iceland chairman Malcolm Walker offloaded a stake worth £13.5m in December 2000 when the company's share price was riding high - one month before a profits warning sent it tumbling. After examining the material, the SFO this month agreed to press ahead with a full investigation.

The SFO's investigation covers more than just the insider dealing allegations. The fraud busters are also looking into the company's finances before new management was installed in early 2001.

They are concentrating on Iceland's results for the first half of 2000, and whether investors were given a true picture of the way the company was performing.

The profits announcement was delivered to investors in September 2000 and covered the 26 weeks to July - Iceland's last six months as a separate company before it merged with cash-and-carry operator Booker - and gave no indication that Iceland faced problems.

Walker quit following the furore over his share sale, and Iceland's new management, headed by chief executive Bill Grimsey, then revealed that operating profits for the whole of 2000 were just £26m - £13.5m less than Iceland's old management claimed the company had made in the first half alone.

Big Food Group said it had nothing further to say regarding any SFO investigation.

A spokesman for Malcolm Walker said: 'He has heard nothing from the Financial Services Authority, the DTI or the Serious Fraud Office for more than two years.'