Out of the darkness and into the whitewash

Since they sell the stuff, we should perhaps not be too surprised to discover that Wickes shows a dab hand at applying the whitewash. And, boy, is there plenty of it covering the six-page letter from Michael von Brentano, explaining how shareholders came to be stung by one of the more spectacular accounting scandals of our time.

The feeble attempt to news manage the story by selectively leaking it has, as so often happens, backfired spectacularly as well. No one emerges with any credit from this shabby episode. Henry Sweetbaum, former chairman and chief executive, is held "ultimately responsible" and the company is left wondering if it has any future.

But back for a moment to the stuff that washes whiter. Here we have a company that has overstated profits by pounds 51m in the past four years, miraculously transformed a pounds 9m operating loss in 1995 into a pounds 17m profit and comprehensively pulled the wool over investors' eyes. We also know that "senior management and the auditors" (Arthur Andersen) were given warning signals in the shape of "instances" which came to light in 1995 of long-term supplier rebates being booked as instant profits.

And yet it was a full six months, probably longer, before Wickes decided to share these interesting titbits with the outside world.

Where was the audit committee, you might ask? Where, for that matter, were the non-executive directors, including the present chairman, while all this was going on? They were never properly informed, is the lawyer- approved answer.

Very well, then who pays the price? Hardly Mr Sweetbaum, who still walks away with a pounds 2.9m pension, one-third of his bonuses and an agreement that the company will make no claim against him. Ditto the former finance director and group administration director. Which just leaves two directors of the buying department of a group subsidiary and an unspecified number of middle-ranking managers and junior employees to carry the can.

It may be the case that pursuing lawsuits against former directors would have been an extravagant distraction when the more urgent task is to save the ship. That is going to take some doing.

Set against the misdemeanours of the past, the revelation that shareholders will have to take a further pounds 10m hit on Wickes' costly disposals of Builder's Mate and Hunter Timber seems small beer.

All the same, the extra write downs have conspired to blow to bits what little remained of shareholders' funds. Meanwhile net debt is pounds 65m and losses are piling up at the trading level.

The proposed solution is to shore up the balance sheet with a pounds 30m rights issue once the directors get around to refiling the 1994 and 1995 accounts.

But having been kept largely in the dark for four months and deprived of the opportunity to bale out of the stock since its suspension in June, why should any shareholder want to join Mr von Brentano in his mission impossible to "build a new business ethic" around the Wickes trading concept?