Ernst & Young quits Wembley contract

ERNST & Young today sensationally quit as auditors to the Wembley casinos and dog-tracks group ahead of next month's high-profile bribery trial in the US.

News of the move came as the group announced the appointment of a new chief executive to replace Nigel Potter, who was put on gardening leave to prepare for the trial.

Potter is alleged to have been the ringleader in a conspiracy to gain more slot machine licences for Wembley's Lincoln Park casino in Rhode Island by making bribes to a law firm. The company denies the allegations and has pledged to fight them in court.

It is believed E&Y's UK partners did not want to resign but their peers in the US insisted on the move. The Americans are thought to be worried about being associated with the trial allegations in the post-Enron environment where auditors are being closely watched.

E&Y was Wembley's auditor at the time the grand jury indictment alleges the Lincoln Park business was 'a criminal organisation'.

While the resignation of E&Y was seen as a blow to Wembley, investors were pacified by the appointment of big-hitting KPMG as its replacement.

Since Potter's absence, chairman Claes Hultman has been acting as chief executive as well as retaining the chairmanship. The chief executive-role is now being taken on by finance director Mark Elliott, 39, who joined the group in 1990 and has been finance director since 1998.

He admitted the trial was casting a shadow over the group, which earlier this year saw two potential bidders walk away. 'While there are these serious allegations hanging over the group as a whole, it does create problems,' he said.

Meanwhile, the group is likely to take a writedown on its small Colorado dog racing division, which failed to win a major gambling licence.

Elliott said the group had received takeover approaches for its British greyhound racetracks from venture capitalists, property investors and rival track operators.