Troubled healthcare software supplier iSoft Group yesterday suspended its commercial director - one of the founders of the company - after an initial investigation found evidence of accounting irregularities in the 2004 and 2005 financial years.
ISoft said that "under the circumstances" it considered it appropriate to suspend Steve Graham, pending the outcome of a formal investigation.
Mr Graham pocketed £8.5 million in June last year when he sold two million iSoft shares at 425 pence each.
"The conclusion of the initial investigation is that there is evidence of irregularities affecting the financial years ended 30 April 2004 and 2005," the UK company said in a statement.
"The principal effects of this would appear to have been to recognise revenues earlier than they should have been. They do not have any effect on the cash position of the group."
One other employee has been put on "special leave of absence", while other employ-ees that "appear to" have been involved in the accounting irregularities have since left the group, iSoft added.
ISoft, which has made a series of profit warnings over the past year and is holding discussions about changing its banking facilities, announced the accounting investigation last month.
The company, which last year closed its office on Aston Science Park, is a supplier for the £12.4 billion upgrade of the NHS computer network, an ambitious project which has been plagued by delays and rising costs.
In June, iSoft changed its accounting policy on when it recognises revenues, slashing its expected full-year profit to between £3 million and £7 million, from £17 million to £22 million.
Later that month Tim Whiston resigned as chief executive to avoid "negative speculation" over his continued role.
Kevin Ashton, technology analyst at Bridgewell Securities, said yesterday: "The bottom line is that iSoft is trying to renegotiate its banking covenants and this announcement will make it hard for the banks to identify the group's operating cashflow."
Shore Capital's Robin Speakman also said the announcement of a formal investigation into accounting irregularities was as expected but added that the group still has a lot of hurdles to overcome.
Shares closed down 3p at 56.5.