Small Talk: The £8m question for Easier's David Gough

Bids for Durlacher; Croma chases deal

Fulton Partners, an offshore investment company run out of Mayfair in London, is at the centre of two similar mysteries at cash shell companies, where auditors cannot find the main asset: millions of pounds of cash.

Fulton Partners, an offshore investment company run out of Mayfair in London, is at the centre of two similar mysteries at cash shell companies, where auditors cannot find the main asset: millions of pounds of cash.

Fulton, chaired by 74-year-old David Gough, is the main shareholder and investment adviser to Boustead, a former engineering company whose shares were suspended last week in a dispute over the whereabouts of £2.6m.

But it also controls Easier, an AIM-quoted shell which was delisted last year, leaving hundreds of small shareholders in the dark about its financial affairs. There, an even bigger sum of money is unaccounted for. It has emerged that Easier's auditors, Deloitte, have quit, telling the company: "During the course of our audit, we have requested information regarding the company's investments. This information has not been forthcoming".

Its statement was filed at Companies House in December, after Easier made an unsuccessful legal bid to have it blocked or changed. It was not, however, distributed to Easier's shareholders, who have been unable to trade the stock since its suspension last June.

A spokesman for Easier said the company is less than two weeks away from getting its disputed financial results signed off by new auditors, and it would update shareholders then. He said the company is planning a return to AIM after completing a reverse takeover deal.

Easier floated at the height of the dot.com boom as an online estate agent but got out of that business and has lain dormant since 2001, with £5.4m in the bank. Fulton Partners took control in September 2003, when Mr Gough became chairman. On 30 June 2004, one day before the shares would have been automatically suspended because the company had failed to file its accounts, the company asked for trading to be halted. It said it was in talks over a property deal. Shareholders have heard nothing since but it is understood that the deal did not go ahead.

The company said over the weekend that its assets were now £5.5m, with £3.4m of that in quoted US equities, although its spokesman declined to give details of when the money might have been invested in American stocks or what those stocks might be. "It is right that shareholders should be told first," the spokesman said. Mr Gough declined to discuss Easier directly with Small Talk, and he denied any role in the disputed events at Boustead.

Mr Gough's partner at Fulton is Brian Copsey. The pair were paid £200,000 last year by Boustead for work to find merger and acquisition activity for the company, although its chairman, 84-year-old Sir Thomas Macpherson, said he has since cut that fee to £100,000 because of dissatisfaction with their performance. Boustead's chief executive since July 2003 is the Cayman Islands-based Robert Lyons, an associate of Messrs Gough and Copsey.

Boustead's shares were suspended last week by the Financial Services Authority, "pending clarification of its financial position". The company's auditors, Kingston Smith, refused to sign off its last accounts, saying that it could not account for £2.6m.

Sir Thomas said the money had been lent to a business partner in the Far East, which needed security for a government engineering contract, and that Fulton had been involved in setting up that deal. "The contract was [arranged by] Mr Lyons, the contacts were a joint effort," he said.

Boustead said last year that the money was held in the Cayman Islands and the paperwork to prove its existence had been delayed because of hurricanes in the autumn. Now it has been moved to a Hong Kong bank, where the Chinese New Year had delayed the preparation of the necessary documents, Sir Thomas said.

Boustead said last week that it wanted to sack Kingston Smith for alleged breach of confidentiality, but the auditors say it wouldn't be in the best interests of shareholders to quit until the money has been found. Boustead must decide whether to go ahead with an extraordinary shareholder meeting to oust them. Kingston Smith would then get a public opportunity to set out the details of their search for the cash and their ongoing concerns.

Mr Gough, however, is not on the board of Boustead and will therefore not have to face public questions unless Easier returns to AIM. Small Talk, like Easier's hundreds of small shareholders, is eager to see that happen.

Bids for Durlacher

The public relations officer for Durlacher rang to shout at Small Talk for the piece last week which questioned the value of its merger with Panmure Gordon.

We reported a rumour doing the rounds internally about the one-third slug of the combined company being given away to employees, namely that 25 of the 33 per cent will be split among four top executives, two from Durlacher. Simon Hirst, chief executive and one of those two, told staff on Monday that the rumour was way off the truth, which is good to hear since it would represent a massive incentive for him to pursue the Panmure Gordon deal over any other which may emerge. On which subject ... we are told that a number of informal bid approaches were made for Durlacher last year. The existing merger deal may not be the only game in town.

Croma chases deal

Shares in the surveillance equipment company Croma have soared since the start of the year. It is getting cross-selling benefits from a number of acquisitions in 2004 but, most intriguingly, it is believed to be pursuing another big deal. Expect news within a few months.