Woodford has hired Elliott Leary, an FBI special agent for 35 years to investigate allegations of financial irregularities that cost him a £16m paper loss at Northwest Biotherapeutics, an American drug developer.
The SEC filing made by Woodford on Tuesday calls for the appointment of an independent non-executive director and, following this appointment, the convening of a special committee of non-executive directors to investigate the unproven allegations.
The filing asks Linda Powers and shareholders to “formally accept our proposal to appoint an independent non-executive director to the board. As we have stated, we believe that, at your current stage of development, the company and its shareholders would greatly benefit from the appointment of one or more directors with the skills and experience to provide significant contributions and oversight to the company’s operations and growth.”
The document also states that Leary, who is known for taking on the mafia and for tracking down fraudsters and white-collar criminals, met with the board last week. Moreover, Woodford Investment Management hired Freeh Group International Solutions, a specialist firm serving in the areas of business integrity, compliance and investigations, to provide risk management services in relation to the investment in Northwest Bio.
Leary worked as an FBI special agent for more than 20 years, responsible for a wide range of corporate investigations and white collar crime. He is also a former partner of KPMG, where he was a director of forensic accounting from 2001-2011. He is currently a managing director of Freeh Group, which assists corporations with accounting matters, risk assessments, investigations and related corporate governance issues.
“We believe the candidate’s skills are especially suited to the current situation of the company in relation to the various allegations of financial improprieties and regulatory failure that have been published by at least one anonymous source,” said the report.
It further stated: “We would like to note that we only became aware of certain of these allegations after the completion of our recent investment in the company comprising $30m in new equity. We believe that best practices for companies addressing allegations of this nature require the board to convene a special committee composed only of conflict-free non-executive directors and engaging external counsel who have not previously provided legal services to the company.”
Woodford holds a 28% stake in the company and is thereby the second largest shareholder. His fund has invested $95m in the company.
Northwest has dismissed the allegations and plans to defend the complaint against it.
