Small firms lobby group ISME was thrown into further turmoil yesterday when six of its eight directors resigned. They include two of the organisation's founders and best known representatives - Mr Eoghan Hynes and Mr Terry Hobdell.

The move follows sharp differences of opinion between the directors - who believed they were ultimately responsible for the overall running of the organisation - and others within ISME. A serious rift occurred earlier this year when the then chairman Mr Peter Faulkner resigned following differences with then chief executive Mr Frank Mulcahy.

Central to the row was the running of ISME's finances. One issue was a cheque for £26,000 which Mr Mulcahy had written for a deposit on a house he bought at auction. Mr Mulcahy has maintained he was owed the money by way of outstanding bonus payments. The matter was investigated by a finance committee during the summer.

It is understood that there was also dissatisfaction over Mr Mulcahy's handling of an issue which involves a libel settlement in excess of £60,000 which ISME will have to pay.

Mr Terry Hobdell said last night that the directors had tendered their resignations with regret. Earlier this year, he said, an investigation by the board had concluded that Mr Mulcahy owed ISME £20,000. The resigning members believed this was still the case.

Mr Hobdell said nothing had changed since the issue had been investigated by the finance committee, which he described as "ad-hoc". This committee now felt all decisions should be referred to it, he added, and that the directors were answerable to the national council, a 40-strong committee.

Mr Hobdell said he felt that, as a director, he was being "placed in the wrong position" because of the current situation. "The association has to have a leadership and a management; you cannot rule by Soviet commune," he added.

Sources said several directors felt the finance committee had not carried out the root and branch investigation that they had thought it would. It was also suggested that Mr Mulcahy, who has resigned as chief executive to take up the role of director of communications within ISME, was resisting some of the proposed changes.

Mr Mulcahy could not be reached for comment last night.

ISME chairman, Mr Seamus Butler, said he regretted the resignations. The directors had made a very valuable contribution to the organisation and he would have liked to have their input as proposed changes are implemented.

He said there had been a disagreement on the future direction of ISME. Mr Butler declined to comment on the suggestion that Mr Mulcahy owes ISME £20,000. "The figure that has been arrived at will now be presented to Frank," he said. "Today was the first time I had seen it."