"Crushing the competition" is how Powerscreen International, the Northern Ireland engineering company, was perceived by Davy Stockbrokers, in an upbeat review of the company, last July. But Davy was not alone; Powerscreen was one of the shining lights of enterprise at work in Northern Ireland. Now following revelations of irregularities at its Matbro subsidiary - it manufactures tractor units with telescopic arms resulting in a proposed write off of £46.7 million sterling, it is being shunned by investors. The sheer size of the provision is mind-boggling. The figures, put into perspective, speak for themselves.

The market wrote off an incredible £300 million from the value of the company, at one stage, to £170 million. The shares have since come off the bottom (the market capitalisation is now £204 million) but the £300 million fall in the value of the company is equivalent to more than three times the value placed on Arnotts, or a combination of three companies; Abbey, Golden Vale and Heiton.

The £46.7 million write off is equivalent to £250,000 for each of the 208 employed at Matbro.

It is 14 time the £3.3 million paid for the company in 1991.

It represents five years dividends at last year's level.

It will lead to a £10 million loss this year instead of an anticipated profit of £50 million.

Net assets per share will be reduced by 51p.

The figures are pretty horrendous; they leave an indelible market but at least they appear to be defined. In time the losses should be erased.

It will not be so easy to rub out the damage done to the company's reputation. Powerscreen had been held up as what was best in Northern Ireland.

That image has now been well and truly sullied. The company has denied that it knew of the irregularities in Matbro at the time of the raising of £16 million through a Goodbody Stockbrokers' share placing last December (at 530p sterling compared with Friday's closing price of 220p, up 19p on the day), despite rumours circulating a month earlier. Nevertheless the rumours raise a very valid question. If those in the trade knew, why did the management not know? The sequence of events raises other important questions.

November 1997. Management of Matbro changed.

December 17th, 1997. Placing of shares. No mention of potential problems.

"Towards end December 1997" (Powerscreen's quotation) identified problems and sent in auditors to investigate.

January 26th, 1998. Powerscreen board considers KPMG report.

January 27th, 1998 (7.30 a.m.). Powerscreen announces £46.7 million write off.

Note the proximity of December 17th and "towards the end of December". Regardless of the questions that is bound to raise, it is unacceptable that the shareholders were not alerted to the potential problems when it sent in the auditors. And why did Powerscreen wait for the auditors to quantify the losses before it told its owners, the shareholders?

Powerscreen, in a damage limitation exercise, moved last week to try to renew confidence in the company. This involved the resignation of Mr Patrick Dooey, Powerscreen's sales and marketing director and a director of Matbro, and the appointment of Mr Hubert Watson, managing director of Powerscreen's Pegson subsidiary to the group board. Mr Watson who has taken control of Matbro is tipped to take over as chief executive of Powerscreen, from Mr Shay McKeown, who is under pressure from institutional investors to resign, .

The other move in the damage limitation exercise involved the appointment of an independent accountancy firm to look into the losses currently being investigated by KPMG, Powerscreen's auditors. This is an essential move. While there is no evidence that Powerscreen's 1996/7 accounts, audited by KPMG, were overstated, a suspicion that they were will remain until the accounting investigation is completed.

Powerscreen is the second publicly-quoted Northern Ireland company to cause dismay among its shareholders. Mackie International, for example, had to restate its results. That makes two out of the 13 quoted Northern Ireland companies, or 15 per cent of the total. If the same percentage (excluding exploration companies) had problems on the Irish exchange, that would have represented about 10 companies! Indeed, if a company of Powerscreen's stature had the same problems in the Republic, it might have been difficult to hold back an investigation into the company by Minister Harney.

Powerscreen needs to finalise its investigation as quickly as possible. The findings will have to be unambiguous and those responsible for the irregularities, will have to be identified. Also, investors will want to know why the internal management accounts did not identify the problems earlier. Even then, the company will face a long rehabilitation period.