The annual report of former AIM-traded company Meldex International plc for the December 2008 year end has been published and includes revealing statements from the new CEO about the serious lapses in corporate governance during the tenure of his predecessor.

In June 2009, Meldex, the Cambridge-based pharmaceutical company whose shares were suspended in December 2008, commenced legal proceedings against its former chief executive Richard Trevillion and chief development officer Stephen Martin seeking substantial damages. Such action was taken in light of material mis-statements having been made in a trading announcement and the 2008 interim financial statements and the severe deterioration in the performance of the Company under their control.

Announcements and interim financial statements released by the company in 2008, gave shareholders the impression that the company was operating successfully and growing rapidly. However, that could not have been further from the truth.

The new CEO and original founder of the company, Barry Muncaster (who in 1990 in the matter of Tansoft Ltd was disqualified as a company director for a period of seven years), in his statement to shareholders delivered with the financial statements for the year ended 31 December 2008, said,  ‘It is difficult to accept that a board of directors operating in a regulated environment can have individually and collectively failed to be aware of the Company's parlous financial position, which was poor prior to the start of the year and worsened considerably from then on, and the impact it would have on operations to the extent that any reasonable level of diligence would have been discovered that it would have been impossible to achieve the Company's stated goals for the financial year’.

According to Muncaster, the operational update on 11 July 2008, a pre-close trading statement on 1 August 2008 and interim financial statements on 30 September 2008, all misstated the Company’s financial and trading position and a review of the company’s documents identified a number of questionable transactions, often with related or connected parties.

Further Reading

Another one for the Aim Hall of Shame