"Often copied, never equalled" is the motto which once adorned the Powerscreen business cards given out by former chief executive, Mr Shay McKeown.

From its modest Dungannon base, he helped build Powerscreen into a leading player in the manufacture of equipment for use in the mining, quarrying, construction and waste disposal industries.

Such was the company's dominance in the materials screening industry that it claimed to have become the generic term for mobile screening equipment in a manner similar to Hoover's place in the vacuum cleaner industry.

A 1997 Finance magazine survey of fund managers, in which Powerscreen was voted one of the most admired companies on the Irish stock market along with CRH and Bank of Ireland, provides eloquent testimony to the esteem in which it was held in the investment community.

But last January's revelations about accounting irregularities at its Matbro subsidiary have left the company, described as "the jewel in the crown" of Northern business, looking distinctly tarnished.

Irish fund managers, who were among those who subscribed for an £18 million placing in December and are now nursing losses running into millions of pounds, are particularly incensed by developments at the company. It has warned that it will turn in losses of £65 million this year instead of the £50 million profits that were expected.

Not least among the ironies in Powerscreen's current predicament, is that a company that staunchly resisted borrowing and instead funded most of its acquisitions with cash, finds itself saddled with debts of more than £60 million.

The precise reasons for Powerscreen's rapid fall from grace remain far from clear but there may be some clues in the way the company is structured and in its rapid development in recent years.

Powerscreen has an unusual structure based around sub-contractors, an idea it once credited to ail politician the Minister for the Marine, Dr Michael Woods. The company said he suggested to senior executives that a sub-contracting scheme he had seen in Germany could suit Powerscreen's manufacturing operation and the company subsequently adopted it in most of its core businesses.

Powerscreen employs a core staff in administration, sales and marketing, but the bulk of the manufacturing work is carried out by a team of sub-contractors each of whom hires a team of workers. Among the advantages of this system is that it keeps costs down and allows the company to remain flexible.

"The concept of subcontracting out the work was ingenious. It meant the pressure was on the subcontractors to perform and the pressure on Powerscreen was only to sell," one long-term observer of the company says.

But for the system to work, strict quality and accounting controls had to be in place. The irregularities uncovered in the Matbro accounts involved: the mispricing of machines; inaccurate and misleading recording and discounting of bills of exchange and warranty costs; and unauthorised discounts offered to customers. They suggest that controls in the company's material handlings division fell a long way short of what was needed.

The company's information technology systems may not have been all they should be either. One professional, who briefly undertook some work for a Powerscreen subsidiary, was shocked to find only one computer dating from the 1970s on the premises.

Some observers suggest that the company's rapid expansion in recent years may have been at the root of the problem. To keep increasing turnover, Powerscreen kept expanding, acquiring 13 firms in Ireland, Britain and the US in the last 10 years. In the rush to grow and to sell, the niceties of proper reporting and accounting procedures may have been pushed to one side.

"It's just like having a star trader like Nick Leeson. If you have a guy who is bringing in millions, nobody's going to question too much how he's doing it. It's only when it goes wrong that people start looking more closely," says one analyst.

Powerscreen's collapse may have shocked investors in Dublin and London but it has come as less of a surprise to local observers.

"A lot of people wondered how it could keep expanding at that rate. It was seen as a bubble waiting to burst," one local observer noted.

Reaction in Dungannon to the company's plight is mixed.

"Shrewd" and "ruthless" are the words most frequently used to describe Mr McKeown, one of the North's best paid businessmen and the driving force behind Powerscreen. A Dungannon man and an accountant by training, he joined the company's accounts department shortly before an IRA bombing in 1980 and quickly worked his way up the ranks. Said to be benevolent to his friends, he is not without enemies pleased to see his departure from the company. But generally, the news is viewed with concern.

Mr Peter Dolan, president of the Northern Ireland Chamber of Trade and a past president of the Dungannon chamber, says Powerscreen had helped boost the manufacturing and industrial presence in an area once seen as one of the North's unemployment blackspots.

Although Dungannon's jobless rate remains above the Northern Ireland average, it has improved significantly in recent years, thanks to Powerscreen among others. But the recent troubles at the company are particularly worrying for local business as they coincide with attempts to downgrade the local hospital which would involve the loss of 300 jobs.

"Powerscreen put a lot of money into the local community and was seen as giving good jobs for young workers which is why it would be worrying if there were any job losses," Mr Dolan says.

Opinion, both expert and local, is divided as to where the company goes from here. Some believe it will be able to trade its way out of its difficulties provided the company's bankers give it the time and space to do so. One source close to the company says the order books are full and business has picked up after a downturn in March and April. The time taken between ordering and delivery of a machine is now at least five weeks compared to one week earlier in the year.

Provided the company can reduce its debt burden by disposing of its non-core materials handling business, leaving it with only the core crushing and screening business, it may have a future.

But others fear the problems at Matbro may only be the tip of the iceberg and point to the apparent discrepancy between falling profits at Brown Lenox, part of Powerscreen's crushing division, and the commentary on the subsidiary in the 1997 annual report.

This raises worrying questions as to issues such as the treatment of research and development spending on the balance sheet and Powerscreen's deferred tax liabilities.

"There is a huge amount of uncertainty surrounding the company and its future viability," says Mr Philip Molloy, analyst at ABN AMRO. "The biggest problem for investors is that no one knows how bad current trading is or how bad the balance sheet is."

Acquisition by a rival is seen as unlikely until the full scale of the problems at Powerscreen are revealed. Meanwhile, there are fears that if the worst comes to the worst, the company could suffer a credit squeeze as suppliers refuse to provide credit lines and the banks decline to provide any more money, forcing it into receivership where it would provide rich pickings for its rivals.