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August 17, 2015

Quindell replaces CEO as it braces for criminal probe

Software firm bedevilled by accusations of bookkeeping problems.

By Jimmy Nicholls

British insurance tech firm Quindell replaced its chief executive on Monday as it looked to weather a criminal investigation into the firm’s accountancy practices.

Indro Mukerjee will join the company after four years at the electronic paper maker Plastic Logic, and is tasked with reversing dipping shares and millions of pounds of losses revealed in the scandal.

"I’m of course aware of the challenges the company has been facing and respect the chairman, board and rest of the team for the way that they have been identifying the issues of the past, and dealing with them resolutely and rapidly," the incoming chief executive said.

"My immediate priority will be to identify how to drive the development of both to serve our customers and create value for our shareholders."

The probing of Quindell, which at £3bn was the largest firm on the London Stock Exchange’s junior market Aim in 2014, began last April when Gotham City Research published an investigation into the company.

Central to the allegations were questions on how what was "little more than a country club" until 2008 could have changed so quickly into a highly profitable software firm with margins of Microsoft or Google’s ilk.

At the time the researchers wrote that "42%-80% of Quindell’s profits are suspect, as we are unable to reconcile the whole with the sum of the parts", adding that the company’s balances sheets "do not resemble" those of a true software, cloud or software-as-a-service (SaaS) firm.

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The scandal also led to the ousting of the firm’s founder and former chair Robert Terry, who left with a £1.5m severance package shortly before selling some 25 million shares, worth £11.4m.

In the wake of the exposé Quindell was forced to revise down its revenues for 2013 and 2014 by millions of pounds, with the firm recently revealing an annual post-tax loss of £350m earlier this August.

Quindell shares dropped from a height of around £6.27 in April 2014 to a low of £0.38 by December, recovering to £0.94 at present.

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