Three former directors of the Corporate Services Group (CSG), owner of secretarial recruiter Blue Arrow, have been charged with fraudulent trading following a Serious Fraud Office (SFO) investigation. None of CSG’s current board was under suspicion.

The former directors were charged after an investigation by the SFO and Leicestershire Constabulary into accounting irregularities at CSG during the accounting years 1997 and 1998. Those charged were John Abrahamson, Geoffrey Brailey and Roger Eden.

CSG’s current management were swift to emphasise that the SFO inquiry related to “historic accounting practices under the previous management”. The legal proceedings will have “no material adverse impact on the company’s financial position or current trading prospects,” the company said.

The investigation started in September 2000. At that time the CSG annual report noted: “It became apparent that in the preparation of the 1998 results, certain of the Group’s accounting policies had been applied aggressively and in some cases there had been material errors.” A review of the company accounts identified a number of “material irregularities” in the head office records. The 1997 and 1998 accounts were restated.

This was “a significant operational issue” said chairman Michael Davies. “The business had not been invoicing or collecting debts in a timely or proper manner.”

The fraud at CSG pre-dated the board’s reorganisation in Spring 1999, and the appointment of Davies as chairman in May 1999. Peter Owen, former director of Sun Life and Provincial Holdings, was appointed chief executive in December 1999.

Since his appointment, Davies has taken steps to stabilise the problems. The company has pursued outstanding debtors and has streamlined many business processes. Last year the company sold its debt-ridden French subsidiary, Euristt, for £77m.

CSG was the subject of a failed hostile takeover bid in 1999 by former Tory party treasurer Lord Ashcroft. In November last year Ashcroft increased his stake in the company, fuelling speculation that he might make a fresh bid in the future.