Merck's woes bring British worries

Two of the best-known business leaders in the British Isles have been caught up in the latest batch of accounting scandals to rock the US.

Niall Fitzgerald, the chairman of Unilever, is a non-executive director of Merck, the US pharmaceutical giant which last week withdrew the planned flotation of its subsidiary, Medco, after admitting it overstated sales at the business by some $14bn (£9bn).

Sir Derek Birkin, the former chairman of mining giant Rio Tinto, retired from the Merck board in 2000 but was a member of the drugs group's audit committee when the questionable accounting practices were going on. The US Securities and Exchanges Commission said it will investigate Merck accounting issues. The group employed Andersen as its auditor at the time.

Although no criminal charges are expected to arise in the Merck case, the dangers of being embroiled in a US accounting scandal were shown by Lord Wakeham, the former Conservative, who was forced to resign as chairman of the Press Complaints Commission because he had been a director at Enron.

Mr Fitzgerald, who declined to talk about Merck, is understood to have been recommended to the US group by Sir Derek, who had previously been an advisory director at Unilever.

Sir Derek, who retired from Rio Tinto in 1996, also served as a non-executive at Barclays and Carlton Communications.

Last week, he was also named in a report into the Irish offshore banking scandal surrounding Ansbacher bank.

Sir Derek was identified as an account holder at the bank. Irish investigators have been probing whether any of more than 150 accounts at the bank were used to avoid tax. In the report, it emerged that Sir Derek paid £100,000 into an account used by a woman called Barbara Leigh-Mason.

Sir Derek was unavailable for comment about his role at Merck or his involvement in the Ansbacher affair.