Steve Corcoran, group chief executive at Speedy Hire has resigned following the announcement that a legal investigation into accounting irregularities in its international division has been launched.

The Finance Director of the International Division has been suspended and other senior divisional management are the subject of further investigation.

The Board has engaged Addleshaw Goddard LLP to conduct an independent legal investigation and forensic accountants are in the process of being appointed.

In a statement, Speedy Hire said that following management changes within Speedy Hire's International Division, which operates principally in the Middle East, information had very recently emerged indicating the mis-statement of a number of accounting balances within the Division over recent accounting periods.

The information currently available suggests that certain control processes within the International Division have been repeatedly and deliberately circumvented.

The issues are believed to affect a limited number of smaller contracts which are unrelated to Speedy Hire’s ZADCO and Al Futtaim Carillion contracts or the Kazakhstan joint venture. The International Division accounts for approximately 5% of total Group revenue.

The Board said that at this point no final conclusions can be drawn as to the timeframe nor the results of the investigations. However, while it is not possible to be definitive until the full results of the investigations are known, the Board believes, based on the currently available information that the accounting mis-statements are isolated to the International Division and are not expected to have a material impact on cash.

The total aggregate impact of the irregularities is estimated to be around £4.5 million - £5.0 million. Of this amount it is estimated that profit before tax for the current financial year to 31 March 2014 is likely to reduce by around £3.0 million.

The Group's UK businesses, which represented 95% of Group revenue and 96% of Group EBITA in the year ended 31 March 2013 are unaffected by the problem at the International Division.

However, although the Group remains in compliance with the financial covenants under the Group's banking facilities the circumstances have resulted in a breach of certain other terms. The Group is now engaged in what the Board describes as a constructive dialogue with its lenders.

The statement says:

“Given these events, Steve Corcoran believes it is appropriate that he resigns as Group Chief Executive, will be stepping down from the board of Speedy Hire and will be leaving the company at a date to be finalised. He will remain with the business for a period to allow for continuity with customers, suppliers and employees and pending the appointment of a new Group Chief Executive.”