Two key Connaught executives are silenced after their exit

By TOM BAWDEN
Updated: 20:40 EST, 17 August 2010

Two key executives at the heart of Connaught’s troubled council house maintenance arm have abruptly departed, amid allegations that the division routinely withholds payments to suppliers.

Tony Rogers, area operating director for social housing in the South East of England, and John Boomsma, who worked alongside him as commercial manager for the South East, have left Connaught as suppliers complain that they are owed huge amounts of money by the company.

Putting them last: The housing firm is accused of boistering its finances by paying suppliers late

And it emerged that the pair have been gagged by Connaught after signing a ‘compromise agreement’ that prevents them from speaking about their departures.

Boomsma would only tell the Daily Mail: ‘I am sitting here wrapped up in a compromise agreement. You’ll get no comment from me.’

Some industry insiders accuse Rogers and Boomsma of attempting to bolster Connaught’s finances by paying suppliers late.

But others insist they were keen advocates of prompt payments, but were forced to deploy delaying tactics by Connaught.

A friend of the pair said: ‘They were not responsible for people not getting paid. In fact, they were the biggest advocates of people getting paid and that’s why they left the business.’

Connaught denied their departures were related to subcontractor payments, but declined to say why they left.

The departures of Rogers and Boomsma emerged as Connaught fights for its survival.

The company, which makes the bulk of its money from maintaining council houses, has lost about 95 per cent of its value since its first profits warning on June 25, when it said government spending cuts would knock about £80m off its revenues this year.

Since then, the chief executive and finance director have resigned, City watchdog the Financial Services Authority has begun two separate investigations into the company and two further profits warnings have been issued.

Furthermore, key shareholders have bailed out and creditors have sold their loans to the company at a fraction of their face value.

Meanwhile, Deloitte is in the midst of examining the way Connaught accounts for the upfront costs associated with winning a new project, such as buying equipment.

Connaught is facing a severe cash flow problem as suppliers call in their fees and demand upfront payments to continue working with the company.

This has left the company struggling to repay its debts.

Connaught’s creditors recently agreed to extend £15m of additional emergency financing, allowing the company to postpone its debt payments in July and August.