Cambridge Biotech Corp.'s (CBC) president and CEO has left thecompany following an audit and subsequent investigation of thecompany's financial statements over the past few years.New information from the investigation, released Monday by theWorcester, Mass., company, also revealed "the existence of severalsignificant transactions for which revenues were recognized in fiscal1991 and 1992 which do not appear to have been bona fidetransactions."Patrick Leonard, president and CEO for five years at CambridgeBiotech, left the company. Jim Bass, chief financial officer sinceSeptember 1993, resigned, and will stay with the company in aconsulting role on an interim basis. Also, Frederick Casselman resignedas vice president of legal affairs and technology, general counsel andsecretary. The company will retain Casselman as a businessdevelopment consultant. Karen Meenan, CBC's associate generalcounsel, would not say what relationship those involved in the shake-up had in the alleged improprieties.Jeffrey Beaver, who's been on the company's board of directors since1983, now is acting CEO and president, where he will remain until anew CEO is found.On March 30, auditors from Deloitte & Touche, working on CBC'sfinancial statements for 1993, resigned, citing concerns about certaintransactions.On April 27, in a letter to shareholders, CBC said the auditorsquestioned four sales totaling about $1.57 million in June, Novemberand December 1992. The auditors said some of the sales may actuallyhave been in November 1993. And the auditors alleged that CBC paidsome $52,000 to officers of a European company in exchange for theirhelp in the alleged scheme. (See BioWorld Today, April 28, 1994, p.1.)Deloitte & Touche told CBC some of those transactions would bereviewed to determine whether they were made to inflate revenues orto get around regulatory requirements.The law firm of Hale & Dorr was brought in as special counsel afterthe auditors' resignation, and Hale & Dorr hired accounting firmCoopers & Lybrand to help in the investigation. CBC said Monday thatCoopers & Lybrand will stay on to audit fiscal year 1991, 1992 and1993 financial statements.The inclusion of 1991 transactions in Monday's announcement couldsignal a broadening of the allegations against CBC."As the audit proceeds, we will be able to talk more about the specificfindings," said Alyson Stone, CBC's coordinator of investor relations.
-- Jim Shrine
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