Goldshield 'failed to announce true profits'

Pharmaceuticals firm Goldshield might have understated how much profit it made for several years before management bought the company from Stock Exchange investors for £179 million in December, it emerged today.

Legal experts said the revelations could lead to former shareholders demanding compensation from management and their backers, private equity firm Hg Capital, for buying it unfairly cheaply.

Hg tonight said it had uncovered evidence suggesting the potential misreporting during the course of its normal post-deal accounting process and was attempting with new auditors, KPMG and Linklaters, to assess what the correct figures should have been.

It is the latest in a string of controversies to hit the company which was the subject of a failed NHS price-fixing fraud prosecution brought by the Serious Fraud Office.

Last year, the two founders, Ajit Patel and Kirti Patel, launched rival bids for the company. Kirti and his team, backed by Hg, won against Ajit, who was backed by the wealthy Israeli Fuhrer family.

A spokesman for Hg said: "We are extremely disappointed to have discovered this evidence and are investigating it thoroughly."

He refused to comment on the amount by which profits were understated or the reasons behind it. Grant Thornton was the previous auditor.
The previous shareholders who accepted the terms of Ajit's takeover include BlackRock, UBS, Barclays and Legal & General.