An inquiry into alleged accounting irregularities at troubled software provider iSoft - the company at the heart of the troubled NHS computer upgrade - has been welcomed by former director Sir Digby Jones.
ISoft, which was founded by the late Midland businessman Roger Dickens, has been told by the Financial Services Authority that it is to undertake a formal investigation.
The Manchester company, which last year closed its office on Aston Science Park in Birmingham, alerted the FSA after its own investigations found evidence of irregularities affecting the financial years ending April 2004 and 2005.
Sir Digby was a non-executive director of the company between May 2000 and June 2004, and still owns 25,000 shares in the firm.
He said: "I welcome the investigation by the FSA. I hope it brings clarity to what has been happening at the company. This will draw a line under the past and enable it to move forward with a clean slate."
Sir Digby said he did not know of any irregularities during his time at the company, where he served on its audit committee until June 2004.
He retired as a director in 2005.
"With software companies it is all about long term contracts over five, ten or fifteen years," he said.
"There are complicated accounting practices about when you can book the money from these contracts.
"I was on the audit committee and the chairman was Euryl Gwllwm. He and I are both in favour of this inquiry.
"But if you are a non-executive director and the auditors of the company tell you the accounting policies are ok, and are not even as aggressive as other players in the industry.
"If they are telling you that, and at the same time the executive directors are telling you the contracts are good, what else as a non-executive director can you do?
"We are reliant on the information they give you."
Shares in the company fell another eight per cent yesterday to 38.5p following news of the FSA investigation. The stock had been trading at 461p at the start of the year.
Sir Digby, the former director general of the CBI, said he thought the company could recover.
He said: "The share price is not very healthy at the moment, but it has got some good people, some good contracts, and it is a key provider to the NHS's IT programmes.
"I still have my shares today. I've seen them go up and I've seen them go down, I've not sold one. I will be keeping my shares now." iSoft has until the end of this week to publish its twice-delayed financial results after a turbulent year for the software firm, sparked by delays to a project to put patient data on to a central NHS computer.
If it does not, it risks its shares being suspended.
Yesterday the company said: "Tomorrow is the last trading day of the period, so it would be reasonable to assume the accounts will be published as planned."
Earlier this month iSoft said its own preliminary investigation found that the principal effects of the possible irregularities appeared to have been to "recognise revenues earlier than they should have been".
In a statement yesterday, iSoft said: "The findings of the initial investigation were passed by the group to the FSA. The group has now received notification from the FSA that they will be under-taking a formal investigation into the possible accounting irregularities."
Paul Farrelly, Labour MP for Newcastle under Lyme who has been calling for an inquiry of the last two years, said: "It is not before time that the FSA is investigating Isoft's conduct."
Shares closed up 0.75p at 42.5.